Feeds

Creative income falls on iPod-minced margins

Sales up, though

  • alert
  • submit to reddit

Eight steps to building an HP BladeSystem

Strong sales failed to boost Creative Technology's first-quarter income, the MP3 player maker announced on Friday.

During the three months to 31 March, Creative recorded sales totalling $333.8m, up 65.4 per cent on the year-ago quarter's total, $201.8m.

However, net income fell 72.1 per cent year on year, from $57m to $15.9m. Excluding one-off items from both quarters, Creative's profit was still down, from $8.7m in Q1 FY2004 to $1.1m in Q1 FY2005.

During the quarter the company shipped 2m MP3 players, company president Craig McHugh said. That's the same number that it shipped in Q4 FY2004, the most recent Christmas quarter. Compare that to Apple's shipment of 4.5m iPods in Q4 2004 and 5.3m of the players in Q1. Creative is a very long way from achieving victory in its 'war' with Apple, declared in November 2004.

Indeed, it's competition from the likes of Apple that hit Creative's income so hard, the company said. January's launch of the Flash-based iPod Shuffle, updated iPod Minis and price-cuts on other models forced Creative to cut its prices too, reducing its profit margins, from 34 per cent a year ago to just 23 per cent. They will continue to fall, it warned, to around 20 per cent.

"During the quarter we reduced the selling price following sharp price drops by Apple on the Mini and the introduction of flash players at lower-than-expected prices," said McHugh. "These were the major factors in the decrease of gross margins."

The current quarter will see sales of $330-360m, Creative said. Income will fall or rise slightly, on the back of those declining margins. ®

Related stories

Apple financials rude with health
Apple revs iPod, cuts prices
Creative loses first battle in Apple 'war'
Creative declares 'war' on Apple's iPod

Related reviews

Apple iPod Mini 6GB
Creative MuVo V200
Creative MuVo Micro N200 MP3 player
Apple iPod Shuffle
Creative Zen Micro 5GB music player
Creative Zen Touch 20GB music player

Mobile application security vulnerability report

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
White? Male? You work in tech? Let us guess ... Twitter? We KNEW it!
Grim diversity numbers dumped alongside Facebook earnings
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
Amazon Reveals One Weird Trick: A Loss On Almost $20bn In Sales
Investors really hate it: Share price plunge as growth SLOWS in key AWS division
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Chips are down at Broadcom: Thousands of workers laid off
Cellphone baseband device biz shuttered
prev story

Whitepapers

Top three mobile application threats
Prevent sensitive data leakage over insecure channels or stolen mobile devices.
Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Boost IT visibility and business value
How building a great service catalog relieves pressure points and demonstrates the value of IT service management.
Designing a Defense for Mobile Applications
Learn about the various considerations for defending mobile applications - from the application architecture itself to the myriad testing technologies.
Build a business case: developing custom apps
Learn how to maximize the value of custom applications by accelerating and simplifying their development.