Creative soars on Dell rumour
biz.yahoo.com
Thursday October 18, 12:22 am Eastern Time
(UPDATE: Adds comments from Dell and Creative, updates share price)
SINGAPORE, Oct 18 (Reuters) - Shares of Creative Technology Ltd (NasdaqNM:CREAF - news) jumped about seven percent to a day high of S$9.20 on Thursday on rumours the Singapore-based computer peripherals maker won a US$1 billion contract from Dell Computer Corp.
At 0418 GMT, Creative was up 50 cents or 5.8 percent at S$9.10 on volume of 1.2 million shares. Its American Depositary Receipts closed at US$5.00 in New York on Wednesday.
Creative, known for its SoundBlaster sound card and Nomad JukeBox portable music player, has underperformed the broader Straits Times Index (^STI - news) by about 40 percent in the last six months.
``We've seen some significant interest in Creative shares overnight and this morning on the rumour that it won an order from Dell for its sound cards, speakers and maybe even DVD drives,'' said Samuel Wong, an institutional dealing manager with Daiwa Securities.
``But part of the share price action could be due more to short-covering as the stock has been heavily short-sold in recent sessions.''
A Creative spokesman told Reuters the company could not comment immediately on the rumour.
A spokeswoman for Dell Computer Asia in Singapore said: ``We are unaware of this (deal) at this point in time.''
Gregory Yap, head of research at OCBC Investment Research, dismissed the Dell rumour and urged investors to be cautious.
``We think the likelihood is slim to the point of non-existence. With the PC industry in the uncertain times that it is now, why would even the market leader want to increase their inventory so substantially?'' he said.
``For that matter, why would a direct PC seller want to stock up on readily available parts such as sound cards? This does not make sense.''
Analysts estimate Dell -- already a Creative customer -- contributes about 20 percent to Creative's sound card revenues and about 12 percent of its group revenues. |
