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

To: Marc who wrote (12554)	10/28/1998 10:44:00 AM
From: Marc	Read Replies (1) \| Respond to of 13925

Bloomberg News October 28, 1998, 2:28 a.m. PT Creative Soars on Outlook After 1st-Qtr Profit Drop (Update2) (Updates stock price, adds comment.) Singapore, Oct. 28 (Bloomberg) -- Creative Technology Ltd.'s shares soared 11 percent as investors ignored the 58 percent plunge in the company's fiscal first-quarter profit and focused instead on the traditionally strong Christmas sales for personal computers. Creative Technology's Singapore shares closed S$2.00 higher at S$20.80, its highest in about three months. Earlier, it rose as much as S$3.30, or 18 percent, to S$22.10. The newest product from the world's biggest maker of devices to enhances audio on PCs is likely help it offset the falling prices and rising inventory that hurt its business in the quarter ended September, analysts said. ''The outlook for the Christmas quarter seems very positive,'' said David Leow, associate director at HSBC Securities Singapore Pte., who rate the stock a ''hold.'' ''Creative's a top notch brand name and the take up of the product is expected to be very good.'' Creative Technology delayed the shipment of its new sound cards called ''SoundBlaster Live,'' which analysts blamed for the lower first-quarter profits. A year earlier, a new sound card product had been in the market for about seven months when it announced fiscal first-quarter results. ''It's a timing issue,'' said Russell Tan, an analyst at DBS Investment Research Pte. ''That first quarter last year had a full quarter of stock to sell.'' Numbers Creative Technology said last night its profit for the quarter ended Sept. 30 fell to $21.5 million, or 23 cents a share, from profit before a gain of $51.6 million, or 55 cents, a year ago. Earnings met the average estimate of seven analysts polled by First Call Corp. Chief Executive and Chairman Sim Wong Hoo was quick to point out that he met Wall Street's expectations. That's in spite of ''difficult economic conditions,'' he said in a statement. DBS Investment's Tan also said that given the tough economic conditions, ''it's a strong quarter.'' The profit was below his estimate of earnings of 29 cents a share. Long-term Concerns Still, analysts are concerned about that its product, which is priced higher than that of its rivals in the retail market, would face more pressure as global economy slows. ''The problem is it's a premium product and it does charge a premium for it,'' HSBC's Leow said. ''With a global slowdown, I would be concerned about the long-term outlook. For example, Diamond Multimedia Systems Inc.'s new sound card retails for US$90, while Creative Technology's Soundblaster Live sells for US$99. Creative Technology had to slash prices on its sound and graphics cards to try to reduce inventory levels and deal with increased competition, which led to a profit warning earlier this year. ''U.S. Christmas sales will help them, but it won't be enough,'' said Pranab Kumar Sarmah, an analyst at Daiwa Institute of Research (Singapore) Pte., who has a ''hold'' on the stock. ''The market is very competitive for sound cards and it's much more severe on the graphics side.'' Creative Technology's U.S. shares rose 3/4 to 12 1/8 Tuesday. It disclosed results after the close of U.S. trading. --Linus Chua in Singapore with reporting by Jeff Bliss in New More News: CREAF