Creative Back To Profitability In 1st Quarter FY2008 ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Wednesday, October 31, 2007

Creative Back To Profitability In 1st Quarter FY2008



Aurvana X-Fi headphone
In the first quarter of FY2008, Creative reports a profit of US$1.3m, however, it is due to a $4.4million investment gain in selling its manufacturing operations in Malaysia to a group of third-party investors. Still not a very convincing return to black or profitability. Creative CEO Sim Wong Hoo also promises more innovative products to engage Creative into new markets and next stage of developments. This statement sounds like a whole new range of product which is currently not provided by Creative yet. The current focus now is the Aurvana X-Fi noise cancelling headphone which they claim that none of the competitors can match its performance. They are also very confident that they will do well in the Christmas sales in the 2nd quarter of the year.

Full Report:
SINGAPORE – Oct. 31, 2007– Creative Technology Ltd., a worldwide leader in digital entertainment products, today announced financial results for the first quarter of its 2008 fiscal year, ended September 30, 2007. All financial results are stated in U.S. dollars. Revenues for the first quarter were $184.6 million, compared to revenues of $241.5 million for the same quarter last year. Net income for the first quarter was $1.3 million, with earnings per share of $0.02, including a net investment gain of $4.4 million. This compares to a net loss of $21.0 million with a loss per share of $0.25 for the same period last year.

The net investment gain of $4.4 million for the quarter is comprised of an investment loss of $2.5 million, and a gain of $6.9 million resulting from the sale of 80.1 percent of Creative’s manufacturing operations in Malaysia to a group of third-party investors.

“During the quarter we made significant progress in the areas of focus that we shared last quarter. We increased our gross margins by two points quarter-over-quarter to 22 percent, operating expenses were below $50 million, and we achieved positive net income as we continue to focus on profitability in the holiday quarter and moving forward,” said Craig McHugh, President and COO of Creative Labs, Inc. “We launched two important products in the first quarter: our ZEN credit card-sized portable media player with the stunning 2.5-inch screen that supports up to 16.7 million colors; and our premium $300 Aurvana X-Fi Noise-Canceling Headphones, introducing our proprietary X-Fi audio technologies in an exciting new market for Creative. Since we introduced the Aurvana XFi, it has received numerous top editorial awards and accolades.”

Creative Technology Q1 FY08 Results
“With the improvements in our operations that we’re making, we are targeting profitability in the current holiday quarter,” continued McHugh. “We also believe that we will improve our year-over-year operating results in each quarter in calendar year 2008, with gradual improvement in gross margins, and reduced costs and operating expenses.”

“As we look into 2008, we are preparing to unveil innovative new products which will create new markets, propelling Creative to the next stage of its development,” said Sim Wong Hoo, Chairman and CEO of Creative.

Share Buyback Program
During the first quarter, Creative purchased 500,000 shares under its share buyback
program at an average price of $4.01.

Completion of Voluntary Delisting from NASDAQ
On September 4, 2007, Creative announced that it completed its voluntary delisting of the Company’s Ordinary Shares from the NASDAQ Global Market. The last day of trading on NASDAQ was August 31, 2007. To view the press releases pertaining to the voluntary delisting, visit www.creative.com/corporate/investor.

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