Creative Q3 FY08 To Announce Operating Loss ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Monday, March 24, 2008

Creative Q3 FY08 To Announce Operating Loss




Amidst all those good news like '1 million zen stone shipped to Europe', 'Shipping of 32GB ZEN across Europe' Creative still has to announce an operating loss for the quarter. Creative is also liquidating its iconic Singapore HQ building for S$250 million. This looks like a bad news but you can look at it from another angle. Our view is that it is likely that Creative is adopting an asset-light business model. In today’s market, businesses are choosing to outsource their real estate functions to real estate companies, so that they can focus on their core activities.

There are some outsourcing companies out there that can help companies go asset-light by acquiring their existing properties and facilities and then leasing them back to them on a long term basis. This asset-light business model not only releases valuable capital, enabling organizations to deploy them to finance their business expansion or set up additional properties locally or across Asia, it also relieves them of the hassles of handling assets and managing their properties so that they can focus on their core business.

That's exactly what Creative is doing :)

Press Release:
SINGAPORE – March 24, 2008– Creative Technology Ltd, a worldwide leader in digital entertainment products, today announced that the Company’s revenues for the current third fiscal quarter will come in below target, with expected revenues of approximately $150 million. Operating expenses will be above the Company’s original target primarily due to the impact of currency exchange rates, and the Company will report an operating loss for the quarter.

The Company also announced today that it has completed the sale of certain of its investments in the current quarter. Creative will recognize a gain from investments of approximately $20 million.

The Company expects that it will still achieve its previously announced target of overall profitability in the period.

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