Synapsid,
<However, I think it is fair to say that Creative's management of its graphics strategy has been absolutely abominable.>
Remove, "of its graphics strategy" from you sentence above and you have summed up CREAF's problems in a nutshell.
Despite a solid set of products, great brand recognition, tremendous retail presence, and solid engineering, Sim has not been able to grow this company according to the plan he outlined almost 3 years ago. His lack of leadership has become quite apparent during that time. He was late to MP3 (a segment which was right in CREAF's back door), he was incredibly late to develop an internet strategy (which many of us here called for a couple years or more ago, and he squandered nearly $50m on a dividend which should have been used to grow the business instead of providing himself and other Singapore investors with a tax free bonus (i.e. dividend).
IMO, management is the single most important criteria for any successful long term investment. After following CREAF's management for nearly 3 years, I would rate them as weak to outright incompetent. It's no wonder that NONE of the insiders except for Sim have a meaningful position in their own company.
Disclaimer: I have 1/3 of my original position and like many others I am waiting for the next short term pop to unload it. I sold 2/3 of my original position at 15 earlier in the year.
If you are interested in this company I suggest you look at the earnings and operating income TRENDS....the balance sheet still is very strong but the the income statements over the past few years show that the fundamentals continue to deteriorate. Last quarter's operating income was the worse in more than 3 years. This quarter is suppose to be even worse. In fact, CREAF will struggle just to remain profitable this quarter. The following quarter (i.e. Christmas) will be strong as usual (although probably show a decline YTY). I hope expectations of a strong Christmas quarter will provide the boost for a short term pop so I can unload my remaining position.
Good luck,
FF |
