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

To: Douglas V. Fant who wrote (6647)	12/6/1997 4:27:00 PM
From: Hitch	Read Replies (1) \| Respond to of 13925

Douglas, I agree fully with your statements. I feel that the Asian currency problems ,while significant have been overblown as to their ultimate effect on companies like CREAF. My humble estimates as I posted yesterday will give CREAF 80% sales in the US/Europe markets (strong currency regions) and 20% sales from weak currency regions such as Asia and South America. If my calculations were correct, a 10% increase in sales in the US/Europe market accompanied by a 20% decline in the rest of Creative's world market will still give Creative some top line growth during the next 2-3 quarters, and being that the 80% of sales are coming from strong currency areas I feel that CREAF will exceed the current earnings estimates for at least Q2 and Q3 due to currency translation. As the dollar begins to weaken against SE Asian and South American currencies I expect to see a resurgence of sales from those regions as pent up demand is released and consumer spending increases dramatically. As this happens I would not expect to see a decline in US/Europe sales as long as those respective economies stay fairly healthy, and I don't see any slowdown in the next 12 months. As a result of a pickup in future sales in Asia and South America we would see resonable top line growth for Creative that I feel would offset the loss of the current benefit that Creative is enjoying in currency translation. So; we currently have (IMHO) slowly growing top line with very good margins due to company specific efforts at controlling costs, and the currency translation effect. And; what we will see a few quarters down the line; (IMHO) increased rate of growth to the top line, slowly decreasing margins related to the weakening dollar which will result in higher revenues ---somewhat lower margins--and increased net profit. IMHO I feel that Creative is in a win/win situation as far as regional sales percentages and the currency translation, both currently and in the future. Of course all of the above is dependent on Creative's ability to continue producing competitive products. As Usual I welcome any input Best Wishes Hitch