Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: Fred Fahmy who wrote (12569)	10/28/1998 6:08:00 AM
From: Savoirman	Respond to of 13925

Singapore is up because people here are looking forward to Q2 and Q3. Q1 was in-line (although below what I had hoped) but given the very backend-loaded quarter, it was the sales momentum that mattered. If you assume sales of 20%, 30% and 50% in the July, Aug and Sept, you'll soon see that the next few months will be very strong, given the strong reviews and new products. There was a write-off in graphics inventory of about US$5-7m, which brought EPS down by about 4-6 cents. Otherwise the quarter would have beaten expectations. Without the write-off GMs would have been around 31%, instead of 28.6%. If you look at it, AWE64 gave Creative something like 4 good quarters, so SB Live (which has been shipping for just 2.5 months) still has a lot of cream left. And the whole gang of new products (4PS, SBL Value, Riva, Banshee, DT5.1 and DVD 5x) will help a lot in the Xmas quarter. I heard that management mentioned in the Singapore briefing that over 1m soundcards were made every month, and they expect to make more than 2m in December. Inventories are down substantially because of the run-down of old products, strong sales of PC-DVD and the shortage of Banshee/RivaTNT chips. In fact, sales of older soundcards were also said to be stronger than expected. So very unlikely to see a repeat of the write down. Management also gave a good evaluation of USB, and Intel's AMR and the Camino chipset. Essentially they think USB has a place in the after-thought business market and have a few working models to sell if it really takes off. Intel's AMR will help broaden Creative's OEM reach because it simplifies product offerings by OEMs (basic. upgrade, or deluxe AMR). It also opens up opportunities to gain market share in the modem business which is still very small for Creative. Creative sees the Camino serving basic audio, which may address the low-end of the market, but it will not be cost competitive compared with hardware solutions like SB Live (or whatever newer range Creative will have by that time). Some new products will be unveiled at Comdex, including I believe, a software DVD product, new speakers and a Firewire-based soundcard. Most importantly, the buybacks will help to stave off the kind of mad selling so rampant in the past. Any big sell down will have to be done by a large chunk of shareholders, not just one or two MMs.