Creative Biggest Quarter Loss - US$31.7 Million ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Thursday, August 7, 2008

Creative Biggest Quarter Loss - US$31.7 Million

Net loss due to decline of its music players

CREATIVE Technology has posted its biggest loss in nine quarters after sales of its music players declined.

The net loss was US$31.7 million ($43.7 million) in the fourth quarter ended June 30, widening from $19.3 million a year earlier. Sales dropped 16 per cent to $139.5 million.

Creative is best known as the maker of Zen and MuVo music players as well as accessories for Apple’s iPod.

Looking forward, Creative forecast lower sales this quarter because of “adverse’’ economic conditions. The company also faces more competition after Dell last week said it may introduce a range of portable devices, including a music player.

“Due to adverse macroeconomic conditions, which we see continuing through our fiscal second quarter, and because we may be de-emphasising some of our underperforming businesses, we are projecting lower year over-year revenues,’’ Mr Craig McHugh, president of Creative’s US unit said in a statement.

The company estimated sales at US$130 million to $140 million for the three
months ending Sept 30, falling from US$184.6 million a year earlier.

Creative turned to making iPod accessories following its failure to narrow Apple’s lead in music-player sales, and after winning a US$100-million payment from the Cupertino, California-based company last year as settlement for patent lawsuits.

In the last quarter, the sales contribution from personal digital entertainment products such as music players fell to 50 per cent of the company’s total, from 57 per cent a year earlier.

Audio devices such as computer sound cards accounted for 13 per cent of sales, down from 15 per cent, while the share from speakers and headphones rose to 28 per cent from 21 per cent.



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