RSSCreative Trims Loss, Sales Down 25%
By Ed Oswald | Published August 10, 2006, 3:14 PM
Creative's financial situation is improving as it reported a narrower net loss Thursday for the fiscal fourth quarter, however sales plummeted nearly a quarter over last year as the company continues to struggle against Apple in the digital music market.
Additionally, Creative reported a much wider loss for the year, but said it was positive about future quarters.
"Although we posted a loss for the period and for the year, we made progress towards our goals," Creative Labs president Craig McHugh said. "Based on our progress in the fourth quarter, our focus on reducing our operating expenses, and the market potential for our products, we are targeting our return to profitability by the end of this calendar year and continued profitability going forward."
For the quarter, Creative reported a net loss of $12.7 million, including a $10 million tax credit, on sales of $230.9 million. This compares to a loss of $31.9 million, which includes a $9.3 investment gain, on sales of $305.4 million a year ago.
For the year, the company lost $118.2 million, which includes investment gains of $18.9 million, and one time charges of $41.6, which primary included restructuring charges for its 3DLabs division, on sales of $1.1 billion. These numbers compare to a net gain of $600,000 last year on sales of $1.2 billion.
In order to return to profitability, Creative plans to slash operating expenses, begin moving out of less profitable market segments, and trim the number of products in the company's portfolio. In a conference call, McHugh said the company was seeing strong demand for their products due to their low prices.
Also, Creative plans to market more aggressively its higher-margin products, which include speakers and headphones. This may mean the company would trim its digital music player line, which currently consists of some 30 different players and is generally seen as a lower margin product, although McHugh did not offer specifics.
Creative's woes come in stark contrast to Apple's successes financially. The Cupertino, Calif. company posted a $427 million profit on stronger than expected sales of iPods. While many analysts expected Apple to sell 7.5 million units for the quarter, the company reported sales of 8.11 million.
"In order to return to profitability, Creative plans to [sue somebody]."
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|lol, this brings back memories of aureal vs creative. Think aureal won but went under due to expenses incurred defending itself. Similar was nvidia vs 3dfx. I still resent nvidia for that. voodoo 5, rest in peace.
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|nvidia vs 3dfx
It seemed to me 3dfx was starting to run out of ideas at the time anyway. Of course, they could've not been able to afford R&D with nVidia stealing all their business with unlicensed use of 3dfx technology; but that is speculation. What we know is that nVidia used unlicensed 3dfx technology to make a better product...and were so successful it was cheaper to buy 3dfx than to pay the fees.
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|Creative support is a shame. They don't provide full updated drivers for their products. Nowadays they even don't sell latest CD Drivers versions on their websites anymore.
Until Creative doesn't review their marketing department and respects customers more it will keep failing.
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|All of the downloadable Creative Labs X-Fi drivers are full versions. I've been able to install both the web update 2 and new web update 3 drivers before installing anything from the CD.
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|Heh, yet their x-fi products still suck.
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|I have to disagree. Ever since I bought my X-fi card, every other music source has been disappointing. Of course, you may need good speakers to hear the difference (I also have Klipsch THX certified speakers).
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|Mmm.... Klipsch.
Yeah, that's good stuff. Wife about killed me when I told her how much I spent on those.
(just over a grand for the home theater...speakers only. Cheap for some folks, a bit overboard, I must admit, for me.)
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|My x-fi system runs well as well once I figured out why the sound had distortions when my disk IO was high. On some mobos the secondary sata controller runs on the same channel as the pci bus. Moving drives to my Nvidia controller fixed that weird problem. It was an asus a8n btw. Sound is great on my logitech z-680's, though I admit the Klipsch are better. (also to add your audio would need a good bitrate to notice better quality)
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|M-Audio's stuff sounds better. Doesn't perform as well in games, but big deal.
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|It's about time that Creative got their come uppance. They've dominated the sound card business for years and their overall arrogance is disgusting! While I do not wish bankruptcy on them, I do hope they suffer a long consistent decline!
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|It might be too late for creative now that Microsoft is entering the picture with the Zune and it's creatives own fault while the ipod was presenting itself as the cool thing to have with comercials creative was just sitting back thinking they would win because they thought they where a brand name when in reality the average user couldn't tell you what sound card they got and just use the speakers that came with the computer.
If Creative wants any chance of making a comeback before it's to late start advertising or atleast team up with a major name like maybe yahoo with the yahoo logo on the box atleast it might get some attention on the shelf.
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|i had a zen.. which is why i have an ipod now. the market would seem to reflect my choice in that regard as well which is nice, non?
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|This is what happens when you don't seem to spend any money on advertising.
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|With competitor like apple they need to be more creatiive ;P.
and also guys can you pleeez help me i need a download manager like FDM for linux, have tried d4x but i just don't like it help mee pleeeeeeeez.
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|Google the following:
1. Aria
2. cURL
3. Downloader 4 X
4. GNOME Gwget
5. KDE KGet
One of those should work for ya. :)
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|Thanks a lot :)
I have already tried d4x aria gwget/kget, i will try cURL.
Thanks again. :)
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|I'll still take my Zen over an iPod. Personal preference. :)
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|agreed
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|I have been using and loving my Zen Xtra (40GB) daily for nearly two years, and even though I can't get a bajillion cutesy accessories to go with it, there is no other MP3 player that I would rather have. Ipod Schmipod. I wouldn't waste my hard-earned money on that over-hyped crap.
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|Anything is better then Apple. If you don't choose MSFT's product I don't care as long as you don't choose apple :)
Enjoy the product
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