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

To: Jumper who wrote (8843)	1/24/1998 3:46:00 AM
From: Y. Samuel Arai	Read Replies (3) \| Respond to of 13925

Creative sees Asia crisis denting sales Reuters Story - January 24, 1998 03:16 By Josephine Ng SINGAPORE, Jan 24 (Reuters) - Asia's financial crisis will eat into multimedia company Creative Technology's revenue in the current quarter and possibly longer, chief executive officer Sim Wong Hoo said on Saturday. "Asia will shave off about 10 percent of group revenue in the third (fiscal) quarter and going forward," Sim told reporters when asked how the region's economic turmoil would affect the company for the rest of its fiscal year, which ends June 30, 1998. He added it was difficult to predict when a turnaround would come. Late on Friday Creative, which made its name with its Sound Blaster range of products, reported net income for its second quarter ended December 31, 1997, fell to US$14.67 million against $56.93 million in the previous year. Revenues in that quarter rose to $395 million compared to $386 million a year ago. Creative shares fell in U.S. afterhours trading in the wake of the results, slipping to 19-7/8, below an unofficial close of 20-1/8. It had gained more than a point during regular hours trading. Net income was dragged down by one-time write-offs totalling $60.3 million related to its acquisitions of Ensoniq, Cambridge SoundWorks and the NetMedia group of OPti Inc . Sim said Creative's second quarter sales in Asia, which includes the Middle East, fell by 28 percent year-on-year and led to a lower contribution of 16.5 percent to its worldwide revenue. Asia normally makes up 20-30 percent of its global sales, Creative officials said. "If you take out Asia, the rest of the business actually grew 11 percent," in the quarter, Sim said. Asian sales were worse hit in Thailand and Indonesia while India and Vietnam saw some growth, Creative officials said. Looking ahead, Sim said the company was looking to achieve gross margins in the "low 30s" range. Gross margins in the second quarter were close to 33 percent. Sim declined to comment on the company's expected performance for the third quarter. Analysts told Reuters that after their meeting with Creative on Saturday, they expected its third quarter revenue to be flat. Creative was relying on four main areas of products to grow, Sim said. These were audio products, PC Digital Video Disks (DVD), speakers and graphics cards. Sim recent acquisitions would help it to address the low-end sound market, an area in which Creative had not paid much attention to in earlier years, he said. The new acquisitions could contribute about 10 percent to total sales in its third quarter, he said. "We are executing a strategy to take on the whole market. We have gained more strength with these three acquisitions which allow us to go into every segment of the market," he said. Analysts have expressed concern that Creative's traditional high-end sound market was shrinking as the low-cost personal computer (PC) market grew. Sim said its Ensoniq purchase would help it gain share in the high volume PC original equipment manufacturers (OEM) market with customers like Hewlett-Packard and Gateway 2000 . He said Creative was negotiating with other OEMs but declined to be specific. The company was slowing down its pace of acquisitions after three recent ones, he said. But he would not discount making an acqusition if a good, complementary technology came along. As of the quarter ended December 31, 1997 Creative had cash of $376 million. -- Singapore Newsroom (65) 870-3080; Fax (65) 776-8112 -- Email: singapore.newsroomreuters.com END OF STORY This article sounds a bit bearish... Sam