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  • Creative Technology Projects Boost from Year-End Sales
  • November 6, 1998 (SINGAPORE) -- Creative Technology Ltd. is bucking the global electronics downturn and expects to generate sales growth of about 5 percent-15 percent in the year through June 1999.
    In a conference call from the United States following the release of the company's first quarter results, company vice president Craig McHugh said Creative expects to register sales growth of 10 percent in the fourth quarter of 1998 due to traditional high demand for its products during the Christmas season.

    For the quarter, the company registered a 69 percent drop in net income to US$21.5 million on a 3.1 percent slip in sales to US$279 million, compared with the same quarter a year ago.

    McHugh said sales in the United States fell to 53 percent of the total, compared with 57 percent in the same quarter a year ago, while sales in Asia declined to 22 percent, down from 25 percent a year earlier. Europe accounted for 25 percent of sales, compared with 19 percent a year ago.

    In the conference call, chairman Sim Wong Hoo said that the company would have done better if not for the high inventory of graphics and video cards.

    As for the company's audio products, which generated 51 percent of sales, Sim said that sales were strong in Europe and Japan especially for its SB (Sound Blaster) Live! Value.

    Singapore-based electronics analysts said the company should be able to double its profit in the current quarter compared with its profit of US$21.5 million in the prior quarter. An analyst at Daiwa Securities Singapore said he expects Creative's net profit in the second quarter to be at least US$55 million.

    "Creative's new breakthrough product, called SB Live!, should help propel Christmas sales and be a hit product among the base of power gamers. We expect strong sales this Christmas with good responses to SB Live! among reviewers and customers," said electronics analyst Pearly Yap at SocGen Equities Singapore.

    Low Hung Huat, an electronics analyst at Fraser-AMMB Research, said that the many new products for the current and next quarters should boost the audio maker's short-term performance. These include the launch of graphics cards 3D Blaster Banshee and Graphics Blaster Riva TNT, and the PC-DVD Encore 5X DVD-ROM drive.

    "These products are priced quite competitively and should see good sales over the Christmas quarter," he said. "The PC industry showed surprising resilience during the third quarter of this year. We believe the relatively low channel inventory should continue to boost PC shipments in the fourth quarter," Low said. He added that this should lift sales of peripheral makers like Creative.

    Low also said, "retail sales in Japan are expected to be strong due to the Japanese penchant for new products."

    This is despite shrinking sales to OEMs in the country, Low added.

    Related story: [Windows 98 in Asia] Microsoft Singapore Launches Windows 98 with Big Promotion

    (Joseph Rajendran, Asia BizTech Correspondent)

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    Updated: Thu Nov 5 18:34:51 1998 PDT