Creative Announces US$32.4 million Loss In Q2 FY09 ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Friday, January 23, 2009

Creative Announces US$32.4 million Loss In Q2 FY09



Another bad quarter for Creative. Historically, this is supposed to be the best performing quarter for Creative as it is during the Christmas festive seasons. If they cannot do well doing during this quarter, things will not be good for the rest of the quarters in 2009. What’s more, with the US and global recession going on, it will be a challenging year for Creative.

SINGAPORE – Jan. 22, 2009– Creative Technology Ltd today announced financial results for the second quarter of its 2009 fiscal year, ended December 31, 2008. All financial results are stated in U.S. dollars.

Revenues for the second quarter were $155.7 million, compared to revenues of $262.5 million for the same quarter last year. Net loss for the second quarter was $32.4 million, with loss per share of $0.44. This compares to net income of $7.6 million with earnings per share of $0.09 for the same period last year.

“Based upon the continuing decline we saw in market conditions in the second quarter, we took aggressive actions to reduce our inventory position, which negatively affected our gross margins in the period. We reduced our inventory position to $57.3 million, a 45 percent reduction from last quarter. Our performance was further impacted by the downward shift in other currencies against the US dollar from the previous quarter, which reduced our revenue and gross margins in Europe and contributed to a significant currency exchange loss in the period,” said Craig McHugh, president and COO of Creative. “Looking forward, we expect that the difficult market environment will continue to deterioriate. We are evaluating the structure of our field organizations so we can significantly reduce our operating expenses.”

Share Buyback Program
During the second quarter, Creative purchased 4.65 million shares under its share buyback program at an average price of $2.44.

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