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

To: Gopher Broke who wrote (13242)	1/5/1999 7:32:00 PM
From: Fred Fahmy	Read Replies (2) \| Respond to of 13925

I have to agree with Gohpher on the $400 PC argument. In fact, this silly notion could be used to write off just about every tech company in the world including giants like INTC. Sure some people will buy low end....but I think the cheap PC is incremental demand not cannibalizing the high end. There are many many people who still want or even need the latest and greatest. We have also been hearing about how modems and sound on the motherboards are going to kill peripheral makers. When?? I have been hearing this for about 5 years now!! I'm still waiting. Again I think this is a simplistic, bordering on ridiculous, notion. Demand for high end PC's is great. That's why companies who have avoided the low end, such as Dell, are kicking butt. Finally, PC are getting cheaper on the low end but so are costs. SB Live probably costs half as much if not less than the original SB did to manufacturer. Although I am really tired of Sim's incompetence with respect to WS, I think financially the company is doing great, especially relative to EVERY OTHER PERIPHERAL maker. For this he DOES deserve credit. Gambit....where in the hell did you get the notion that they are just "treading" water. CREAF has been and continues to be a cash making machine. So much so...that they don't know what to do with all the money they are generating. I still think CREAF's future has tremendous potential despite Sim's mismanagement of issues relating to WS and the mismanagement of the cash they are earning. DVD will be huge....the biggest electronic success since the advent of the calculator. It will eventually replace all CD, TAPE and VCR devices for music, video, and data. Their early entry into this field shows leadership and although it will become fiercely competitive, if they can just get their fair share (which they currently are getting more than), this will be a major contributor down the road. I think CREAF's overall vision is on track. I think one day we will see a seamless integration between TV, PC, entertainment center, etc. A well rounded mutlimedia company which can provide video, data, sound, speakers, etc. can be very very successful in this future world. I think, however, that CREAF could really find synergies by merging with a major consumer electronics company. I still think Sony could really leverage CREAF's products now and even more so down the road. As for financial performance per se...let's put things in perspective. Just about every peripheral maker including all the disk drive/component maker's, all other sound card companies, the video card/chip makers, the modem makers, etc. have been struggling to show any profit. Many haven't had positive earnings for several quarters. Even during the bottom of the last tech downturn, CREAF has solid earnings and generated lots of cash. I don't think CREAF's stock price has anything to do with its financial fundamentals or even it's future fundamental outlook. I continue to believe that CREAF has 0 respect on WS because Sim has 0 respect on WS. He may be a hero in Singapore, but here he is seen as a bumbling idiot when it comes to IR/PR, managing expectations, and utilizing cash on hand. The fact that CREAF is still associated with Asia and the Asian flu also continues to hurt the stock badly. If Asia's economies were just decent, I believe CREAF would be doing much much better. Having said all that about CREAF's fundamentals, I'm afraid that this has been a painful lesson that I always come back to. Management is the most important ingredient for success....both financial and shareholder value success. This management team has done half the job but the other half has been an utter disaster. IMO, earning estimate expectations (including this quarter) have been mismanaged, the buyback was/is being mismanaged, IR/PR is a complete and utter joke, the dividend was a terrible move, etc. These are the reasons why I think Sim should sell the company to someone who could make better use of CREAF's strong products and fundamentals. I honestly don't understand how people at CREAF from the directors to the people working in PR/IR can look in the mirror and say they are anything but incompetent when it comes to returning value to the shareholders. Bottom line and painful lesson learned....no matter how strong a companies fundamentals are.....if management is incompetent or even perceived as incompetent the stock can continue to underperform for a long long time. Make no mistake about it, I am looking to get out of CREAF because I think current management is completely clueless when it comes to getting us anywhere close to fair value. However, I do think there will be a better time to exit. FF