Creative managed to pull through 2013 and post a net profit of US$17 million but that is because of its selling of the GPU subsidary and licensing agreement. I think for 2014, there wouldn't be much things to look forward to, Creative will be focusing on the usual soundblaster sound card, earphone, headphone and the speaker product segments.
Its good to see some innovative product like the Creative Senz3D which is a gesture recognition webcam for PC just like the Wii or Kinetic. But the success of this product is dependent on how well the gamers love to play these games on their PC and its still too early to tell as there are limited such PC games in the market at the moment.
Let's all hope to see some surprises in 2014 :)
Fiscal 2013 was another difficult year for Creative.
We had continued to focus on the development and introduction of new products in the key product categories, and had launched a series of new exciting products that provide good potential growth opportunities.
However, our financial performance continued to be adversely affected by the difficult and uncertain market conditions for our products, which impacted sales across all regions and resulted in lower revenues. Nevertheless, despite the lower level of sales, with a lower operating cost structure from the cost cutting actions in the previous years, we were able to achieve an improvement in operating results in fiscal 2013.
Sales for fiscal year 2013 were US$165 million, a reduction of 14% compared to US$192 million for fiscal year 2012. Gross profit as a percentage of sales was 33% in fiscal 2013, up from 19% in fiscal 2012. Net profit for fiscal 2013 was US$17 million, compared to a net loss of US$84 million in fiscal 2012. While sales were lower in fiscal 2013, operating results for the year had improved due mainly to the higher gross profit and a reduction in operating expenses of US$19 million. Gross profit was higher due mainly to a US$20 million licensing income received for the licensing of certain technologies relating to high performance GPU technology. Net results for the Group in fiscal 2013 included other gains of US$28 million, comprising mainly a US$27 million gain on the divestment of a subsidiary. The US$20 million licensing income and the divestment gain were in relation to an agreement entered into by the Company in November 2012 to license certain technology and patents from ZiiLABS Inc. Ltd, a wholly-owned subsidiary, as part of a US$50 million deal which also included the divestment of a subsidiary. Further highlights of the Group’s financial performance are detailed in the “Financial Highlights and Review” section of the annual report.
During the year, we continued with our research and development in the key product categories that are strategic to our business. In particular, a strong focus has been placed on the core audio technology behind the Sound Blaster brand and the applications of its technology into the Sound Blaster family of products that includes ultra high performance sound cards, innovative intelligent wireless sound systems and premium gaming headsets.
For Sound Blaster audio products, we have recently introduced the Sound BlasterAxx AXX 200 sound system - a game-changing audio product that I envisage will radically transform the way the new generation of networked mobile device users interact with music, videos, movies, games, as well as voice communications.
Powered by the built-in multi-core SB-Axx1 audio processor that enhances all audio in real time, the AXX 200 is not just a high-end Sound Blaster and a powerful portable wireless speaker. Despite its small size, it is also packed with a host of intelligent features that greatly empowers the user. These technologically advanced features include an integrated MP3 Player, a Super Megaphone with a unique “karaoke anywhere” feature and a radical teleconferencing feature that delivers great clarity in conference calls with recording capabilities. All for a game-changing price of US$149.
For Sound Blaster sound cards, during the year, we introduced the ultra high performance Sound Blaster Z Series of PCI-Express sound cards, namely the Sound Blaster ZxR, the Sound Blaster Zx and the Sound Blaster Z. These powerful sound cards set new standards for audio technology and performance for entertainment and gaming on the PC. More recently, we introduced three more new high performance sound cards – the Sound Blaster Omni Surround 5.1, Sound Blaster Audigy Rx and Sound Blaster Audigy Fx, covering both external and internal connections that provide the latest and most advanced surround sound audio performance for an immersive listening experience with laptops, PCs or Macs.
In the area of Sound Blaster headsets, we took a big step forward in technology advancement by being the first to incorporate a builtin advanced audio processor into a headset for the enhancement and customization of audio quality for playback of music, movies and games, and for voice communications with the launch of the Sound Blaster EVO series of wireless headsets.
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
With a built-in multi-core Sound Blaster SB-Axx1 sound chip, the Sound Blaster EVO ZxR and Sound Blaster EVO Zx headsets can now deliver detailed, immersive audio that was previously only enjoyable with a Creative Sound Blaster PC sound card. These headsets can intelligently enhance audio in real time, and can even enhance the dialog clarity of movies with our proprietary SBX Dialog Plus technology.
In the speaker products category, we complemented our comprehensive range of wireless speaker systems with even more exciting new models - the flagship self-calibrating modular Creative D5xm and Creative D3xm; the high-performance Creative T4 Wireless Signature Series 2.1, Creative T30 Wireless Signature Series 2.0 and Creative T15 Wireless 2.0; the power-efficient, multi-channel Inspire T6300, Inspire T3300 and Inspire T3150; and the fun and versatile Creative Airwave HD and Creative Airwave series of portable Bluetooth wireless speakers specially designed for a vibrant mobile digital lifestyle.
For the earphones and headset products category, new models were added to the premium Aurvana series and the trendy Creative Hitz series was created to complement the new lineup of headsets. Previewed at the recent IFA Show 2013 in Berlin, the Aurvana Platinum and the Aurvana Gold are audiophile-grade headsets packed with a dazzling array of groundbreaking technological features such as the all-new ShareMe technology that allows two listeners of ShareMe-enabled Creative wireless headsets to easily link the two headsets wirelessly to a single smart device and share their audio simultaneously.
Looking ahead, for the current fiscal year, the Group expects no major improvement in the difficult and uncertain market conditions, and the overall market for the Group’s products remains challenging. However, the recently introduced new products provide good potential growth opportunities for the Group. Together with a lower operating cost structure, we are in a good position to start to re-grow our business.
In addition, following on from the licensing agreement mentioned earlier, we will also be engaging in discussions to further monetize our valuable patent portfolio, particularly our formidable collection of over 100 patents in the field of 3D graphics and media processing.
Sim Wong Hoo
Chairman & Chief Executive Officer
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