Creative CEO Message 2012 ~ Creative Labs Zen MP3 Players Sound Blaster Card
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Monday, October 15, 2012

Creative CEO Message 2012

Times are still bad for Creative, looks like there's not much improvement in their balance sheet and Europe is going to be in recession and it will be even more difficult for Creative to recover during such difficult times. Mr Sim mentioned that they are looking forward to the Sound BlasterAxx to help them bring in some growth and revenue. Surprisingly HanZpad was not the product to help Creative tide over this critical period. Not sure if the HanZpad is in some trouble or has hit some obstacle?

Dear Shareholders,

Fiscal 2012 continued to be a difficult year for Creative.

Our financial performance continued to be adversely affected by the difficult and uncertain market conditions for our products, in the midst of the global economic uncertainties, particularly the ongoing Eurozone debt crisis, which impacted sales across all regions and resulted in lower revenues and gross margins.

In the previous financial year, with the continuing difficult market and uncertainty in the global economic environment, and its negative impact on revenue, we took steps, including worldwide headcount reductions as well as streamlining of certain businesses and product categories, to reduce operating expenses to bring them in line with the Group’s revenue and gross margins. This has resulted in a significant reduction in operating expenses and an improvement in operating results in fiscal 2012.

Sales for fiscal year 2012 were US$192 million, a reduction of 17% compared to US$231 million for fiscal year 2011. Gross profit as a percentage of sales was 19% in fiscal 2012, down from 21% in fiscal 2011. Net loss for fiscal 2012 was US$84 million, compared to a net loss of US$47 million in fiscal 2011. While sales and gross profit were lower in fiscal 2012, operating results for the year had improved due to the significant reduction in operating expenses of US$42 million as a result of the cost cutting actions taken in the previous financial year, as mentioned earlier. Despite the improvement in operating results, net results for the Group in fiscal 2012 were negatively impacted by other losses of US$33 million, mainly due to impairment charges as detailed in the “Financial Highlights and Review” section of the annual report.

During the past year, despite the challenging market conditions and our cost cutting actions, we have continued with our research and development efforts in the key product categories and introduced new products in these areas.

In the area of the ZMS StemCell processors and the Zii Platform, we unveiled the new hanZpad Platform in China to target the vast China education markets. The hanZpad Platform comprises the energy-efficient 100-core ZMS-40 media-rich chip optimized for high performance Android 4.x tablet computers, the latest Android 4.x reference tablet designs and a powerful Chinese operating system. The complete, ready-to-go hanZpad reference kits support tablet designs as slim as 7.95 mm in thickness, and weighing only 480g. Its powerful, feature-rich yet low cost solutions enable OEMs to customize and launch their own tablet computers to meet the explosive demand for the next-generation Android tablet computers.

In the area of audio products, we re-engineered the Sound Blaster and created the unique and highly innovative Sound BlasterAxx − a new genre of audio devices that we believe will change the way the new generation of networked mobile device users interact with music, videos, movies, games, as well as voice communications.

Powered by the multi-core SB-Axx1 audio processor, the flagship Sound BlasterAxx SBX 20 combines the legendary audio quality of Sound Blaster together with high-performance wireless speakers into one revolutionary product. Elegantly designed in the form of a hexagonal tower speaker with a sleek backlit touch-sensitive panel, the Sound BlasterAxx SBX 20 works wirelessly with any Bluetooth-enabled device, including the iPhone, iPad, Android tablet, smartphone, PC and Mac, to deliver superb audio performance for entertainment and voice calls.

For Sound Blaster PC sound cards, we announced the new ultra high-performance Sound Blaster Z-Series of PCI-Express sound cards, comprising the Sound Blaster ZxR, the Sound Blaster Zx and the Sound Blaster Z, elevating the standards of technology and performance for the future of gaming and entertainment on the PC.

Recently, the Sound Blaster Tactic3D Rage gaming headsets, available in both wireless and wired models, were announced to complement our premium range of high performance Sound Blaster gaming headsets. Both headsets feature customisable SBX Pro Studio sound and voice audio technologies to arm gamers with the competitive advantage of the most immersive and accurate 3D acoustic environment. They are the most customisable headsets in the market.

Besides the Sound Blaster family of products, we have also continued with the development and launch of new products in our speaker and headphone product categories.

In the speaker products category, we continue to offer a comprehensive range of Bluetooth wireless speakers in this segment from the premium ZiiSound T6 Series 2 Wireless Speakers that deliver the highest quality wireless audio with surround sound for music, movies and games; to the versatile ZiiSound Dx Series of Pure Wireless Modular Bluetooth Speakers, and the very affordable onepiece Creative D-100 and D-80 Bluetooth Speakers that deliver great audio performance and great value. Previewed at IFA Show in Berlin 2012 were two new additions to this exciting product line, the ZiiSound D5xm and D3xm – the world’s first self-calibrating wireless speaker systems.

Looking ahead, for the current fiscal year, the global economic environment remains highly uncertain, particularly with the ongoing Eurozone debt crisis, and the overall market for the Group’s products remains difficult and unpredictable. However, we now have a lower operating cost structure and our new products, particularly the Sound BlasterAxx family of products, provide good potential growth opportunities. This positions us well to take advantage of any recovery in the global economy and re-grow our business.

Thank you

Sim Wong Hoo
Chairman & Chief Executive Officer

We want to hear from you, please feel free to let us know in the comments section below.


Anonymous said...

I guess you are shorting creative stock or have sold off yours.

Anonymous said...

sold all, will return when creative turn around. it still has credible product.the 3m things looks right. ride on the winner. just need to get a few more big one and they will look like arm.

Anonymous said...

you must have made a big loss

Anonymous said...

Sales for fiscal year 2012 were US$192 million

Really? Worldwide Leaderrrrrrrrr?

Some businesses make more than that doing business just with in Singapore.

Anonymous said...

if they can get their product into other people product, they ride with their host. nothing is impossible. wish sim success.

Anonymous said...

did anyone grill sim yesterday during the AGM on what happened to hanzpad?

Anonymous said...

Ya whatever happens to the HANZPAD!

Anonymous said...

there is a cum dividend of 5 cents.

Jimmy Loh said...

yea any updates from those who went there?

Anonymous said...

wait....they are losing huge money, why is there dividend???

Anonymous said...

i think their audio products are gradually making a comeback. i can see more and more retail stores showcasing their audio products which is a good sign. they might be able to break even this quarter if they beef up their marketing.

Anonymous said...

wtf, sound blaster Z out of stock across US and europe.

Jimmy Loh said...

isnt it a good sign?

Anonymous said...

Something is brewing. Buy up all the sell queue if you can.

Anonymous said...

Jimmy will be informed by Creative in due time. Maybe he can do some insider trade and profit again.

Anonymous said...

Something is brewing. Buy up all the sell queue if you can. This time is for real. Market is bad, very good opportunity to accumulate.

Anonymous said...


Anonymous said...

Jimmy is silently confident...

Anonymous said...

Creative shares open at 3.32 with all the sell queue snapped up. If you listen to me ..... but anyway we will not whack the are forgiven....move on

Anonymous said...

Something is also still brewing. This is REAL. Buy up all the sell queue....

Anonymous said...

very happy for creative to see their initial success. ride their products with the market leader.

Anonymous said...

The Tide is Changing !!

Creative is on the way UP UP UP !!

Anonymous said...

Not really. People not jumping in yet. But something is brewing for sure. Jimmy will be informed in due course.

Anonymous said...

Creative book value now S$3.50 and mostly cash.

Anonymous said...

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