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Technology Stocks : Creative Labs (CREAF)
CREAF 0.4400.0%Dec 11 9:30 AM EST
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To: Brian Lempel who wrote (6710)12/7/1997 1:03:00 PM
From: Hitch  Read Replies (2) of 13925
 
Brian: the 12.5% revenue growth figure was based on info available prior to the estimated 15 -20% slowdown in Asia. Also the .83 - .90+ was calculated prior to the announcement of product rebates.
The revenue numbers for this quarter and next are open for debate--I think the slowdown in Asia is a given, but any Asian slowdown of less than 20% this quarter should be considered a plus, and any growth in excess of 12.5% in the US/Europe markets should be considered as a significant plus.

One thing that Doug and I failed to discuss was the impact of the rebates on the profit margin in the next two quarters. I don't know what the typical response rate is for rebate programs (rebate claims) (perhaps someone out there has this info). If the response rate is high then we have to believe that it will impact the bottom line to some extent over the next two quarters. The impact of course could be offset to some degree if the rebate program results in significantly higher sales than would have otherwise occurred. Perhaps someone out there has a better handle on the effect of rebates on the overall picture for a company like CREAF. I know that margins are squeezed but are sales generally increased enough to offset the lower margins?

Best Wishes

Hitch
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