I almost forgot, we didn't have the very negative article by Bloomberg yet...there it goes :
Creative Faces Profit Drop With Price Competition (Update1) (Adds closing price.)
Singapore, April 27 (Bloomberg) -- Singapore's Creative Technology Ltd., the world's largest maker
of sound cards for PCs, is expected to report a 41 percent drop in its fiscal third- quarter profit as it
faces price competition on its main product.
Profit for the three months ended March 31 could fall to $26.6 million, or 29.6 cents a share, from
$45.2 million, or 48 cents a year ago, according to a Bloomberg News poll of four analysts.
Estimates range from $21.2 million to $32.1 million. The earnings results are expected to be
released Wednesday at 5 p.m. New York time. ''Revenue growth is going to decline and we're
looking for more price pressures on the audio products, which have in the past held up pretty
well,'' said Jatin Doktor, an analyst at Paribas in Singapore, who rates the stock a hold.
Creative's sound cards, which enhance audio in personal computers, are its key product and is
sold under the brand name ''SoundBlaster.'' Creative, whose shares also trade on Nasdaq, has
about half of the world's sound card market.
The lower earnings estimates come as the company warned of a tougher third quarter. In a
briefing for only the local press, Chief Executive Sim Wong Hoo said sales for the third quarter
would fall between 10 percent to 15 percent, the Singapore Straits Times reported Feb. 2. Sim
also said Creative's business would be hurt by Brazil and Asia, both hit by the currency and debt
crisis.
Brazil makes up almost a tenth of its sales, while Asia accounts for almost a quarter, analysts
estimate.
Creative, which has seen margins erode with severe price competition for its graphics, would be
hit even harder by price pressure on its sound cards.
Analysts estimate that graphics products account for about a fifth of Creative's sales, while sound
cards make up about half.
The stock was unchanged at S$23.40 in Singapore trading. |
