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

To: burn2learn who wrote (11111)	4/29/1998 6:34:00 AM
From: Savoirman	Read Replies (1) \| Respond to of 13925

FWIW, my assessment: Solid quarter, although no big upside surprise. Gross margins were practically unchanged at 32.3 versus 32.9 in Q2. Good, considering the new products were supposed to crimp margins. Non-audio is growing. Now "others" is 20% of sales, doubled in one quarter. Speakers must have been very strong, about 30m+ revenue I would think. Graphics/video at 7% shows a lot of potential going forward. Audio lower because of clearing old inventory. SB PCI64 selling extremely well. OEM sales to HP/GTW in high volume. OEM design wins especially from Japanese PC makers. Probably some money was used to pay vendors to sell old inventory on the cheap, to faciliate switch to new products. Cash used to negotiate for discounts with Asian (read; cash strapped) suppliers. In exchange for early payment. Still US$375m there! may result in lower COGS later. Asia clearly bottoming out. Actually rose compared to Q2 (usually Q2 is so strong that Q3 will never even get close). Latin America recovering (that's why Americas up 18.2%) So what if 3Q & 4Q flat? Whole year still up 34%, before gains/charges. Guidance: 20-25% revenue growth with highish gross margins of 32% and OPEX 16% (lowish). Very bullish. Sim not given to such predictions unless they're very sure. Mgt has a good record on guidance (except the Q2 - asian crisis you know). Buybacks: yes, about 8-9 months away. But heck, at a huge discount to Diamond (around 30-40% I would think) that's the very thing to ram the stock up. Ex-founders have sold much of their shares. Inventory - small concern. About 10% higher than ideal. Actually Q4 may not be entirely flat if Asia continues to recover, Latin also, Voodoo2 chips become avail sooner (said to be May/June). Outlook: I think net profits should rise more than 20% in FY99. Now if only the chicken analysts would raise their forecasts for year FY2000!