Mr Sim shared about more Zii products such as the ZiiEagle HD Movie Box which has a large collection of classic Chinese movies. Is Creative going into content provider business?
He also mentioned about the ZiiBook for kids to help them in their learning experience. Is this ZiiBook the mediabook that we are always talking about?
Fiscal 2010 continued to be another difficult and challenging year for Creative. Our financial performance continued to be adversely affected by the uncertain market conditions, particularly in Europe and the US.
The global economic environment remained uncertain, and the overall market for our products remained difficult and unpredictable.
However, with the aggressive restructuring efforts we have taken in the previous year, we are now a much leaner company with a lower operating cost structure, which allows us to weather these challenges.
In the previous financial year, with the onset of the crisis in the global financial markets and the resulting global economic downturn, we took aggressive measures to position Creative to meet the challenges in the tough period ahead of us. We undertook a complete restructuring of our worldwide sales and marketing operations, including closing or consolidating certain operations that were too costly or under performing. We significantly lowered our operating expenses by sharply reducing our international headcount and infrastructure costs, primarily in Europe and the US, even as such actions negatively impacted on revenue, resulting in substantially lower revenues.
During fiscal year 2010, we have continued with the restructuring and consolidation efforts, and worked towards building a leaner company with a lower operating cost structure that is more in line with resulting lower revenues.
The result of these efforts is reflected in the financial results for the year – significant improvements in gross margins and a large reduction in operating expenses, albeit with substantially lower revenues, and a significant reduction in net loss for the year.
Sales for fiscal year 2010 were US$275 million, 41% lower than the previous fiscal year sales of US$466 million. Gross profit as a percentage of sales came in at 25% in fiscal 2010, a significant improvement from 17% in fiscal 2009. Net loss for fiscal 2010 was US$38 million, compared to a net loss of US$138 million in fiscal 2009.
In my message to you last year, I shared with you the progress on the development of our Zii Platform and the ZMS System Module, and our plan to utilize the Zii Platform in a new line of our own Zii-branded products, including portable media players, speakers, audio solutions and other personal digital entertainment devices.
We had also announced our planned marketing program to sell these solutions, using our Zii Platform and ZMS-05 System Module, into the huge ‘Shanzhai’ OEM market in China. These enterprising OEMs can leverage on our state-of-the-art technologies and brand equities to rapidly bring a plethora of high quality and low cost Zii-powered products to market.
For the past year, despite the difficult market conditions, we have continued with our significant ongoing investments in research and development for products and services under the Zii Platform. While strong focus has been placed on the Zii Platform, we have also continued with the development and launch of new products in our other product categories.
In early 2010, we pioneered a new line of wireless speaker system, ZiiSound, with the launch of our “Pure Music Everywhere” campaign that was fronted by our comprehensive range of industry-leading wireless speakers, aimed especially at the mobile device market such as the iPod, iPhone and iPad. The lineup consisted of the flagship ZiiSound D5, the Inspire S2 Wireless, the Creative D200, the Creative D100 and the Creative T12 wireless speaker systems. These elegantly designed speaker systems effortlessly stream music from any compatible stereo Bluetooth devices, delivering the purest wireless audio listening experience in their respective classes.
We also introduced “Pure Listening” solutions that comprised in-ear earphones such as the premium Aurvana In-Ear2, the EP-3NC active noise-cancelling earphones, and the versatile HS-930i headset.
Expanding our Sound Blaster Wireless Ecosystem, we have introduced the Sound Blaster Wireless Headphones and Sound Blaster Wireless Rock Speaker, two new ways to enjoy music wirelessly inside or outside the home.
Looking ahead, for the current fiscal year, we expect to start seeing the results from our ongoing investments in research and development with the introduction of more new products and services under the Zii Platform, mainly in the second half of the
financial year. These new product will cover both our Zii-branded products, as well as OEM Zii-powered products.
In addition to continuing our investment in product research and development, to support the marketing and sales of the new products and services, we expect to incur additional sales and marketing expenses, in line with the revenue from such new products and services.
The Group is also expected to incur more capital expenditure in the current financial year, mainly by its subsidiary, QMax Communications Pte Ltd, as it starts to invest in a new island-wide fourth generation (4G) WiMAX Wireless Broadband network in Singapore. The new WiMAX network is expected to provide opportunities to introduce service offerings that can be synergistic with some of the new products and services under the Zii Platform.
Going forward, as we sharpen our focus on the Zii Platform, we will soon deploy Zii products that can herald the future of movie entertainment and future mobile learning. The ZiiEagle Vision will present a new, fun, effective and safe way to enjoy all future movies, while the ZiiBook will provide a captivating learning experience for our kids, both indoors and outdoors. I am very excited about this coming future and would invite you to share our Vision.
Sim Wong Hoo
Chairman and Chief Executive Officer
Please feel free to let us know in the comments section below.