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Technology Stocks : Creative Labs (CREAF)

CREAF 0.370

-21.3%

Oct 31 1:10 PM EST

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To: Mark Brophy who wrote (13629)	4/3/1999 1:30:00 PM
From: Fred Fahmy	Read Replies (1) of 13925

Mark, I do think CREAF would make a very attractive take-over target. And I think there are companies which would make a great match (i.e. Sony or Panasonic). However, Sim is an isolationist. I don't think Sim has any interest is losing total control. This is his baby and he is running it like a dictator. That's why the BOD is only made up of 4 stooges. This is an example of a fine company that should have never ever gone public. <The fact remains that Creative makes a lot of money, while AMD loses a lot of money.> This is very true yet the market values AMD at a 50% premium to CREAF. That's because they are hoping (foolishly IMO) that AMD is going to turn it around. Always "next quarter" with AMD. I maintain that CREAF with the exact same products, same global macro economic conditions, same competition, same everything would be trading at twice its value (at ANY given time), if Sim was replaced with someone who could better articulate CREAF's potential and who could find better ways to use the cash that they are generating. The dividend was a tactful admission that Sim has no idea of how to increase long term shareholder value. I've said it before and I'll say it again. CREAF is going to have to become part of something bigger. Either they have to acquire or they have to be acquired. This segment is in desperate need of consolidation. If CREAF was smart they would buy NMGC right now while the price is right. This would give them an "in" to notebook sound and video as well as grass roots (i.e. components) in DVD and digital photography in the near future. If Sim were to announce that the company has hired a strategic advisor to pursue alternative strategies (including possibly selling the company), I think the stock would double in a matter of days, if not hours. FF

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