For the average person, I don't think they know anything about Corning.
You want to start in the beginning? Yeah. Let's start with Thomas Edison.
Actually, I keep that in my office. The very first order that he ever gave to Corning for the first time he came to us for glass envelopes.
Yes. I keep that in my office to remind me that big things start out very small because that is a very small order.
This week on Bold Names we have Corning CEO Wendell Weeks. Now what does Corning do? They have made everything from the glass in Thomas Edison's light bulbs to the glass screens on every iPhone ever manufactured. They also make the glass fibers and the fiber optic cables which comprise the internet and which are huge now because of the AI boom. So how has this company remained relevant from the 1800s until the present day? That's what's next.
Wendell, welcome to the show. I hear you endured the dot bubble.
So talk to me about what happened, right? Because there was the telecom boom. Yes. You guys were a big part of it in a way that isn't often acknowledged or known because you were building the fiber optic cable that was being put into the ground by companies that you know later went bankrupt that affected you. What was the peak? What was the trough?
So at the peak, our optical communications business was far and away the core of our market value. At that point in time, I think our shares hit a high of about $100 per share in that zone. And because of our core invention, fiber optics, we did another one that went itself beautifully to long-distance transmission, which is what the internet was about. And so when that then went through its cycle, probably 90% of our revenue in our photonics business disappeared.
So 90% of your revenue in photonics and probably about half of fiber optics.
And we moved to a loss position and at that point in time our stock got as low as $15 and you could have bought the whole company for a billion and a half dollars.
So you were kind of on death's door or private equity's hit list.
Yes, I am sure. Yes. So that happened pretty rapidly. And so what we had to do is first just quickly right the ship, but then after that we went through a deeply reflective process about, okay, if we want, we've just lasted 150 years, if we wanted to last another 150 years after this near-death experience, I mean the harshest time in our company's history, right, what would we have to do?
What was that process of recovery then?
Well, in the early days, what we really felt was we had broken the social contract with our people because they had trusted us. They had signed up with us. We are a company that has very low attrition rates. We tend to hire, we're a little old-fashioned, we tend to hire for a whole career. So, we had to let a large number of our folks go to get the liquidity right. So, that was enormously painful. And of course we went through a period of where leadership had low credibility. So what we had to do is decide what do we want to build on top of this once we righted the ship and we ran a process that did that and involved our folks and really changed a lot of not only how we ran the company but also the attitude the leadership brought to it.
Yeah. I mean you use the phrase social contract. I've never heard those words out of any CEO's mouth other than the chiefs of maybe Costco. So, I'd just love to dwell on this for one more moment. You said you feel like you have a social contract. You want low turnover. But in this day and age, why do employees find that credible?
It's easy to keep the commitment that you have to folks when either things are going really well for you and that person is a high performer. What is hard is either when things are going poorly for the company. We just had a cycle with that back post pandemic all of our balance normally balanced businesses were force correlated during the pandemic and so they all went down at the same time and we had the longest decline period for us in revenue, six or seven quarters since the telecom downturn. And what we decided to do was rather than to adjust our size by taking out another sort of 4,000 people is to say no, like we believe in our innovations. Like we're down because our markets are down.
So just very quickly, how did you make that work financially?
Basically, we made it work financially by letting our returns drop. There's no magic math, right? We kept higher fixed cost than our revenues would normally support. So our profitability dropped pretty significantly. And what we basically said is like we're willing to be misunderstood for periods of time so that we can live to what it is we believe in. And at that time we were just kind of midcycle into our Gen AI products we've been working on for four years. And that really helped lift us out.
So you said you're willing to be misunderstood for a long period of time. What are you working on now that might be misunderstood or underappreciated that you think is going to drive your growth 10 years, 20 years beyond?
But right now, we're just opening up the largest solar wafer manufacturing facility in the United States of America because what we believed is that the US would need to have energy independence and that included renewables and that is a market that has been dominated largely by China. And we knew because we understood the base material well and we make that for use in semiconductor. You use a dirtier form of that for solar. And we took the opportunity to move forward in the value chain and build this because we believed that we could build a really significant business and that solar would take a very large position over time in our energy mix in the US. And so that is largely unappreciated right now because we went through an investment cycle through it. But I think that's going to be a tremendous growth. You know there's two rules in life, right? Number one is never get into a land war in Asia.
Oh baby, you're my kind of people. If we're good to two Princess Bride, you and I are going to get along.
But number two though is it's a close corollary. Never get into a business that the Chinese government is willing to subsidize for all eternity. So why are you getting into solar panels when your opponent is literally the CCP and for 30 years completely taken over the global solar panel market?
So, first of all, this is something we've done a lot of. So you've got to realize in stuff like fiber optics, in display, in mobile consumer electronics, all of those products, we compete against Chinese companies both in China and around the world and we've done it quite successfully. The way we do it is we're always the lowest cost producer in the world, right? in what we do.
So, you're confident that with this new plant, which I think is in Michigan, you're going to be able to beat the subsidized cost of Chinese solar?
For a start, the government policy gave us a head start, which is the US is either going to protect this market through tariff structures, which they're doing, or through what they did in the tax code to say yet there's tax credits available if you manufacture renewable. That gave us the opportunity to do this, be able to quite confidently believe we'll get twice our money back that we're investing and then after that that will give us enough time to reinvent solar and we have a number of ways which we think we could do that.
Okay. Well, let's talk about that reinvention. We can talk about it in terms of solar if you want or in terms of your overall product strategy. Outside of let's say defense contracting the number of companies that are doing US R&D for hardware for stuff for atoms rather than bits that generally is in decline. What is it about Corning that allows you to do so much of that R&D domestically?
I think people misunderstand innovation quite often especially in the material space which is they think the most important piece of innovation is invention and it actually isn't right in many ways that's sort of the most trivial part right. What we try to do is build the whole company to deliver a real innovation and that means we have to invent yes but then we have to make, we have to be deep experts in it and we invent our own manufacturing processes. We build all of our own equipment ourselves, right? Because that's how we develop these high proprietary vantage plastics and processes that allow us to compete against anybody.
