Per the agreement, Corning will repurchase outstanding shares worth $1.25 billion. The exact number of shares repurchased and retired will be based on Corning’s volume-weighted average stock price during the term of the transaction. Corning plans to use the available cash in hand to fund the ASR.
The $1.25 billion ASR is part of Corning’s previously announced $2 billion share repurchase program made effective along with the closing of Samsung Corning Precision Materials Co., Ltd. acquisition (now Corning Precision Materials) on Jan 15, 2014. As part of this acquisition, the company also issued new convertible preferred shares to Samsung Display with an aggregate face amount of $1.9 billion.
Corning is a leading manufacturer of specialty glass and ceramics. In the recently concluded fourth quarter, the company spent $140 million on cash dividends and used $1.08 billion to repurchase its common stock. At quarter-end, the company had cash and short-term investments balance of $5.24 billion. Including long-term liabilities and short-term debt, the net cash position was $307 million at the end of the quarter.
We believe a strong balance sheet will help Corning to capitalize on investment opportunities and make strategic acquisitions, further improving its growth prospects. Additionally, we remain positive about the display market given increasing demand for larger displays in consumer electronics such as mobiles, tablets and TVs.
Currently, Corning has a Zacks Rank #3 (Hold). Other stocks that are performing well at current levels include Clearone Inc. (CLRO), Audiocodes Ltd. (AUDC) and Plantronics Inc. (PLT). All these stocks carry a Zacks Rank #2 (Buy).