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

To: Dennis G. who wrote (11593)	6/11/1998 7:56:00 AM
From: Fred Fahmy	Read Replies (2) \| Respond to of 13925

Dennis, Good questions and obviously there are no guarantees in the stock market. I think most remaining longs still see CREAF emerging as the premier total multimedia solution provider. <How does one determine how much of this crash is just due to Asia and how much is because of problems with the company?> Hard to say, but IMO the Asia factor is really hurting the stock. As for this quarter, the company already cautioned that it will be tough due to a slip in SBL. I'm guessing (and I think the market is guessing) that they will miss Q4 earnings estimates. I think this is being discounted now. The future, however, lies beyond this quarter. DVD should pick up in 1999 (starting this Christmas season) as more software titles become available. The video cards business is very competitive but CREAF seems to be getting their fair share, actually more demand than they could fill last quarter. <Why did the sound card king have to buy a PCI sound card product?> Why did the greatest semi chip company on earth (INTC) have to buy a small graphics chip company (CHPS)? Why does MSFT buy smaller software companies from time to time?? CSCO makes several acquisitions every year. There is no shame in making strategic acquisitions when they make sense. Filling out a product line is a common reason for acquiring other companies. <Why are they so late with SBLive when it's so important to them?> Why did Win 95 slip by several months?? Why is Intel's Merced chip slipping six months?? Both of these products were/are extremely significant to these powerhouse companies. In the tech industry, product delays are common, almost the rule rather than the exception. I know this from first and second hand experience. In this case, the slip is relatively minor time wise.....it's not really "so late", it just happens to mean the difference between getting the initial revenue jump (from filling the channels) next quarter instead of this quarter, which is unfortunate from a short term perspective. <How do you know it won't be a dead horse coming out of the gate?> I don't. The ultimate success of the product will depend on many factors including pricing, performance, marketing, etc. <Why can't they get any OEM deals?> Hopefully, they will get additional OEM deals. If not, I think they are in for a tough time. They already own the retail channel and up until now they have survived almost exclusively on this channel. In addition to expanding their product line, they need to expand their channels if they are going to have meaningful growth going forward. <What do they need with all that cash?> The don't "need" it but what would you suggest they do with it?? They can't buy back their shares and I think a dividend would be a supreme waste of resources. I'm sure they are continuing to look for STRATEGIC acquisitions. IMO, acquisitions for the sake of acquisitions alone is a recipe for disaster. I'm glad they are being prudent about growing the company externally with the use of cash. I would have thought that you would favor having as much cash as possible for the eventual stock buyback. <Why don't they show some concern for their shareholders?> Again, what suggestions do you have? I thought the formal approval of funds for a future buyback was specifically aimed at addressing concerns of the stockholders. Perhaps they will fail in their attempt to execute their strategy but the strategy has been outlined clearly and is on the table for everyone to evaluate. So far, WS is obviously not buying it. If they are going to fail then the stock will go down and you are better off selling sooner than later. If you believe that they can succeed in growing their product line and distribution channels than you'll have to wait for results. Good luck, FF