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

To: Dennis G. who wrote (9183)	1/28/1998 11:58:00 PM
From: Fred Fahmy	Read Replies (2) \| Respond to of 13925

Dennis, <I for one hope they put a moratorium on further purchases, at least until after they buyback a nice chunk of their own cheap shares.> The recent acquisitions were excellent strategic fits. I would love to see CREAF find more if they exist. Lack of revenue growth is what is holding back the stock and giving it such a low P/E. The recent acquisitions will play a key roll in growing revenue. In addition, to helping grow revenue directly, an even larger potential is being pursued. Namely, consolidating a total multimedia package soundcards(both ISA and PCI)/speakers/DVD (and to a lesser extent video) which they can offer to OEMS. In addition to rounding out the high end, Ensoniq should help CREAF get their foot in the door with some of these OEMS. I believe we will see further strategic acquisitions because this is the best use for the cash stash. I think a dividend would be, by far, the worse way to spend our money. CREAF needs to reinvest this money to grow. If CREAF were to initiate a significant divident program, I would liquidate my long term holdings the day after the first payment. I am not a huge fan of stock buybacks, but at these levels I think it would be justified if there were no further strategic acquisition candidates. I continue to sense your impatience and, believe me, I can sympathize. However, there are now quick fixes. We don't need a quick pop because we announce a stock buy back. We need a strategy (which requires the occassional use of cash) to grow the top line so that our more than adequate margins can generate sustained EPS growth. CREAF can not, and IMO does not, expect to grow earnings through margin expansion forever. Long term investors just have to suck it up and wait for the numbers to develope. If CREAF is successful in their strategy, like many here think, they will continue to deliver the numbers and the stock will eventually catch up with reality. BTW, in addition to concerns over revenue, I think that being located in Asia has* created fear, uncertainty, and doubt which is less warranted for CREAF than just about any other tech stock (including those who's stocks are doing well). Most companines are losing some revenue in Asia, but few have virtually all of their costs there. In CREAF's case, favorable currecy does help to mitigate revenue losses somewhat. That's one reason we have been seeing such great margins. Oh well...hope WS comes around sooner than later but as long as the fundamental story looks good, I feel comfortable. FF