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Thursday, April 2, 2009

Say Something, Mr Sim

Say Something, Mr Sim
OVER the past three years, Creative Technology has been having a tough time. While its stock price grew increasingly cold, the once-mighty Singaporean soundcard maker was clocking losses, slashing staff numbers and struggling to keep up sales.

Now, it faces another set of challenges.

Two independent directors have quit Creative’s six-man board in the three months since January.

On Tuesday, the company said in a stock exchange filing that Mr Tang Chun
Choy, 60, had stepped down on March 30 “due to other personal commitments”.

Shortly before that, another independent director, Mr Tan Lip-Bu, 48, had
left on Jan 30, citing “other work commitments”.

In form, the company has met its obligation, stating the reasons behind the
directors’ departure.

But in spirit, it has not adequately informed shareholders of what exactly is
transpiring in the boardroom.

For one, both independent directors are the longest-serving non-executive directors in the firm, having joined the board in 1990.

Isn’t there more that can be said about their decision to leave?

In the case of Mr Tan, he had even stood for re-election last October.

More importantly, the departure of the two independent directors leaves Creative’s audit committee with less than the minimum of three members.

As of press time, Creative had yet to appoint new IDs. It must “endeavour to fill the vacancy within two months, but in any case not later than three months”, according to the Singapore Exchange listing manual.

Who’s left on the board?

Chairman and chief executive officer Sim Wong Hoo, chief financial officer Ng Keh Long and two non-executive directors Lee Kheng Nam and Ng Kai Wa.

The latter two men are the only ones currently making up the audit committee — which can only mean a greater burden on them to keep tab on internal controls and risk management.

And as non-executive directors, they also have a huge responsibility to ensure that shareholder value is enhanced — especially at this time.

Creative is presently fighting one of its greatest crises as a business. In January, it revealed that it cut 2,700 jobs, or almost half its global workforce, in the
last fiscal year, as the global recession is hurting electronics makers. It posted a net loss of US$19.7 million ($29.9 million) in the last fiscal year ended June 30, on sales of US$736.8 million, the lowest revenue in five years.

And the first six months of this financial year is not shaping up to be rosy, as the firm suffered net losses of US$32.2 million in the first quarter and US$32.4 million in the second.

Sales have been on the downtrend since 2005, partly because its subsequent offerings, including MP3 players, have not been able to replicate the global success of its 1989 “killer app” Sound Blaster audio card.

Also, investor confidence, although undoubtedly short in general amid the economic recession, has been weak for some time now: Creative shares have been heading south since 2005, from $27.20 to the rock-bottom level of $2.54 in October last year.

Thankfully, it has regained some ground in the past five months, closing at $3.35 yesterday.

But anyone who has stuck by Creative through the pain deserves to know more about the state of the business and, better still, hear from Mr Sim himself.

via Today


Varuna Singh said...

interesting.. I don't know if he will speak up until some big announcements.
When is the next Press meeting ?

Jimmyboy88 said...

i think its in april, coming soon

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