) to underweight from equal-weight.
S&P cut Corning's corporate credit rating to BB+, one notch below investment grade, citing depressed conditions and poor prospects for recovery in the company's core fiber segment.
Analyst David Jackson says there's serious liquidity/dilution risk due to restructuring, capital expenditures, considerable debt and the relatively weak cash position.
Jackson doesn't think the company will have the cash to meet its $2 billion put option that is likely to be exercised in 2005. He believes the company's margin recovery may be slowed by unfavorable fiber market fundamentals, and the likelihood of a fiber sales rebound after general telecom equipment. Jackson sees addtional restructuring for Corning to achieve profitability during 2003. He sees a $0.31 2002 loss, and a $0.16 loss for 2003.