Creative Announces Q3 FY11 US$27.4 million Loss ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Friday, April 29, 2011

Creative Announces Q3 FY11 US$27.4 million Loss




Creative announces Q3 FY11 net loss of US$27.4 million. Drop in net sales and lower revenue due mainly to difficult market conditions particularly the competitive mobile personal devices. Creative is expecting operating loss in the next quarter and will also be conducting restructuring exercise to streamline its business and product categories.

Net Sales
Net sales for the third quarter of FY2011 decreased by 10% compared to the same quarter in FY2010, and net sales for the cumulative nine months ended 31 March 2011 decreased by 15% compared to the same period in FY2010.

Revenue was lower in the third quarter and cumulative nine months ended 31 March 2011 as the Group continues to be affected by the difficult market for its products, particularly for the personal digital entertainment products.

Gross Profit
Gross profit margin at 24% in the third quarter of FY2011 and 25% in the cumulative nine months period of FY2011 was consistent with the mix of products sold and comparable to the gross profit margin of 26% in the third quarter and 25% in the cumulative nine months period of FY2010.

Net Loss
Net loss for the third quarter of FY2011 was US$13.0 million compared to US$20.8 million in the third quarter of FY2010. Net loss for the cumulative nine months ended 31 March 2011 was US$27.4 million compared to US$27.1 million of the same period in FY2010.

Research and development expenses in the third quarter and the cumulative nine months period of FY2011 increased by 21% and 16%, respectively, compared to the third quarter and the cumulative nine months period of FY2010.

There was an increase in research and development expenses as the Group needs to continue to invest in product research and development in areas that are strategic to the Group, cutting back research and development spending only in product areas that are not strategic to the Group.

Other gains of US$6.7 million in the third quarter of FY2011 was mainly due to foreign exchange gains of US$4.3 million and gains on disposal of investments of US$2.2 million. Other gains of US$22.4 million in the cumulative nine months period of FY2011 was mainly due to foreign exchange gains of US$20.0 million and gains on disposal of investments of US$2.3 million. Other losses of US$7.4 million in the third quarter of FY2010 were mainly due to foreign exchange losses of US$7.7 million. Other gains of US$5.7 million for the cumulative nine months period of FY2010 comprised a US$4.9 million gain on disposal of investment in an associated company, US$1.7 million government grant to a subsidiary company and foreign exchange losses of US$1.8 million.

The functional currency of the Company and its subsidiaries is predominantly the US dollar and accordingly, gains and losses resulting from the translation of monetary assets and liabilities denominated in currencies other than the US dollar are reflected in the determination of net income (loss). The exchange differences were mainly due to the cash and cash equivalent balances held by the Group. Besides US dollar, cash and cash equivalents were held mainly in Singapore dollar, Euro, British Pound and Japanese Yen. In the third quarter and the cumulative nine months period of FY2011, the exchange gains were due mainly to the appreciation of these currencies against US dollar. In the third quarter of FY2010, the exchange loss was mainly due to the depreciation of Euro and British Pound against US dollar and for the cumulative nine months period of FY2010, the exchange loss from the depreciation of these currencies was offset partially by gains from appreciation of Singapore dollar.

PROSPECTS
For the current quarter, the overall market for the Group’s current products remains challenging and the Group expects to report an operating loss.

In the current quarter, the Group will be taking steps to reduce operating expenses to bring them in line with the Group’s revenue and gross margins. The Group will undertake a restructuring exercise, including worldwide headcount reductions as well as streamlining of certain businesses and product categories. With this restructuring exercise, the Group is expected to incur restructuring charges in the current quarter of about US$8 million to US$10 million and the Group is targeting to return to profitability by the end of this calendar year.

Please feel free to let us know in the comments section below.

28 comments:

Anonymous said...

everybody reporting record revenues . here creative reporting record loses, quarter after quarter year after year...

Jimmyboy88 said...

not much choice, i think the zii chip is not selling well too..

Anonymous said...

i know you are likely to vote for pap, but everyone here please consider voting for the opposition. the dynasty is threatening and fearing us again. newspaper, tv pro dynasty. only freedom is internet.

yll said...

I must say this ge, the opposition is very strong and pap knows it. nwc announced more salary at this time as a bribe? I think pap need to look at singapore and themselves, why are the opposition so strong now? is it because they didn't do a good job? if they perform well, there will not be any opposition right?

Anonymous said...

Yes, you are right. Vote for the opposition regardless your stock goes up or down, whatever sweet promises pap give later these few days, whatever tatics they used during cooling day.

Jimmyboy88 said...

pap talk is full of threats, beware of your property price, environment, lift upgrading, etc a few opposition win will make them think before they say or act. nwc is already raising salary, looks like its working already :)

Anonymous said...

my parents and most of my relatives are voting for pap means pap likely win big. onie me vote for opposition. sad.

Jimmyboy88 said...

still i think pap will win overall, but i hope they lose a grc or 2 :) then they will be humble

Anonymous said...

Then you die die muz vote opp. else we lose a critical chance for democracy. Sob... Think we have to wait a few more decades.

Jimmyboy88 said...

everyday 7pm is rally time :) i know those gen Y will support opp. vote the party by your heart not by your money sense

Anonymous said...

LHL went kakibukit support aljunied...state media helping pap...tv, newspaper....bleak...low chance wp can get aljunied...wp fail, cst fail, nsp fail....bai bai democracy in singapore...my uncle says wp ltk too fierce anyhow whack....but i think is pap whack wp, pap salvo came first...and continously using state media to their advantage...hate the word used by lky "repent". older gen and new citizens quite likely to vote for pap. housing policy is flawed since gct 1990+ that we can't fix it without pain.

Jimmyboy88 said...

this GE2011, the opposition party have many high calibre people like lawyers, doctors and ex perm secretary. but eventually everyone just vote for pap :( conservative

Anonymous said...

http://www.facebook.com/nicoleseahnsp?sk=wall
please like it. lky suddenly catching up, suspect pap behind it. tell everyone to like nicole seah.

Anonymous said...

sad, come 8 may morning all opposition & democracy hope will be nerfed by singaporeans and pap. i will still vote for opposition though.

Jimmyboy88 said...

lets hope this ge2011 will be different

Jimmyboy88 said...

pap change tactic from tough talk to soft approach. admit mistakes and agree that they are not perfect

Anonymous said...

election ploy. during the last election he focused on "cctv" and refused to talk about issues people faced the next 5 years. now the problems surfaced and due to opposition strength and united he just say sorry. it is like someone driving a bulldozer and knock you down and say sorry. rubbish! don't fall for it. vote for the opposition!!!

Anonymous said...

since he admits mistakes it means opposition are largely right and they have been wrong for the last 5 years at least. so vote for opposition!

Anonymous said...

LHL confident pap will win aljunied. tonight going there to continue his election ploy. sad... me have feeling opp onie win 1 or 2 smc seat same or worst than last one. the rest smc and grc all lose. pap likely 60 plus percent overall. sun morning will be the worst day for those who support opposition and democracy. vote for all opposition including wp and nsp!!!

Jimmyboy88 said...

after PAP saw how strong the opposition and the wp supporters. PAP made these improvements within this short week:
1. NWC recommends salary raise
2. Mr Mah says will adjust salary ceiling for HDB BTO
3. PAP changes from tough talk to soft approach, admit govt not perfect, etc

See how effective now even though the voting has not started

Anonymous said...

NO! Vote for OPPOSITION! Aljunied GRC is the best hope! Lose it and lose all!!!

Jimmyboy88 said...

went to wp rally at serangoon stadium the supporters are overwhelming! the stadium was flooded with people and people have to stand outside the stadium! got a strong feeling that wp will win aljunied GRC!

Anonymous said...

Tell everyone you know to vote for WP aljunied!!!

Anonymous said...

Ask your parents and family to vote for opposition!

Anonymous said...

Just voted for opposition. good luck! chances of opposition progressing is low, be prepared for bad news tomorrow. please vote for opposition for your kids for change!

Jimmyboy88 said...

I think opposition will have outstanding result this ge

Anonymous said...

why? My auntie in aljunied grc as grassroot her whole family vote pap! And somemore she is confident pap win and say win by a lot. Sheer arrogance pap! Hope pap lose at least one grc but not confident after hearing auntie say.

Jimmyboy88 said...

aljunied grc first grc to fall into opposition

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