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Technology Stocks : Creative Labs (CREAF) -- Ignore unavailable to you. Want to Upgrade?

To: JP Sullivan who wrote (13904)	3/25/2000 2:44:00 AM
From: Flint	Respond to of 13925

Creative will NOT be reporting revenue growth for Mar 2000 quarter. Dec qtr is seasonally the best quarter due to X'mas hence expect the Mar2000 to be obviously down qtr on qtr. Compared to Mar1999 qtr, Mar 2000 will have significantly lower graphics (lousy margins) contribution and there is no way the other parts of the biz will take the slack here. Watch for the gross margins to close in on their historical highs tho' and for net margins to go the same way, i.e. historical levels. By Dec 2000, the gross margins should have breached historical highs... and likewise net margins because the mix of products will change significantly and "e" sales of their low margin products will have shown the impact... plus Jukebox plus other PDAs plus err ... exceptional gains from sale of stocks from investments. Oh yeah ... Dec 2000 qtr should have record sales figures too... on top of record gross margin and net margins.. Go figure where earnings should be. If you are BUYing for revenue growth in Mar2000, then forget it. It shouldn't happen. My Target ? US$88. Would re-examine reasons for holding the stock at that point. Cheers

To: JP Sullivan who wrote (13904)	3/25/2000 7:23:00 AM
From: Fred Fahmy	Read Replies (2) \| Respond to of 13925

Winston, <Seems like CREAF is positioning itself to be perceived as a dot-com company.> Actually, this has been going on for some time now. I believe it started around mid-year 1999. In addition, their venture capitalist activities have been very successful. The returns from money that they have invested in internet startups and other techs (such as NVDA) have been excellent. They are also getting ready to ipo hifi.com in the coming months, followed by other possible ipo's. Finally, their traditional core business appears to have finally bottomed out. Although revenue will be down this quarter vs. last year, it should start showing some growth again in coming quarters. What's much more important is that the trend in margins appears to have finally reversed. Hopefully, this will lead to growth in gross profit and operating income for the first time in a long time. In summary, I think the stock is doing well because: 1) WS is buying into their internet strategy. 2) VC activity has been very successful and they have plenty of cash flow to fund more of this activity. 3) The traditional core business appears to have turned the corner after many quarters of negative growth. 4) Expectations have finally come down in line with reality (if anything, probably conservative now). It was impossible for CREAF to go up when they were consistently guiding WS to numbers which they would then miss. I think Sim finally figured out that being overly optimistic and then not delivering was a losing proposition. FF