3M Co. said Tuesday that its second-quarter profit grew 3.4 percent. That's not bad, but it would have risen more if not for the earthquake in Japan and a big slowdown in its business making coatings for LCD television screens.
With TV prices falling, manufacturers have been pushing for a while to get prices down. In some cases that means doing without 3M's coatings, or getting 3M to lower prices.
Chairman and CEO George Buckley told analysts on a conference call that he thinks the market will eventually divide into one for high-end TVs (where 3M will do the most business), in contrast with mass-market and low-end TVs.
One analyst asked him to expand on where he sees 3M's optical business headed, including the portion that makes coatings for TVs.
BUCKLEY: This ends up being a very good business -- you know, $1.6, $1.7 billion. Twenty points, 25 points margin, that kind of spread. You could say at one level, `What's not to like?' Well, what's not to like sometimes is the ups and downs. ...
It bodes well, generally speaking, for the company that as optical becomes less and less a factor, and as that business comes closer and closer to maturity, stability will ensue in that market. The market players will establish themselves in a quality end, that will be the place we play, and I think overall in the next two to three years, we'll see this business stabilize into a much more regular kind of commoditized, consumer-type pattern, with some (price declines), but not with the kind of bouncing around that we see today.