Feeds

Flash famine a threat, warns Creative

Investments not products produce Q1 profit

Boost IT visibility and business value

Creative saw its sales slide sequentially in its first quarter and was only able to declare a net income thanks to a big investment gain, the MP3 player maker and Apple rival said today.

Revenues for the three months to 30 September 2005 - Creative's first quarter of fiscal 2006 - came to $280.2m, up 33.4 per cent on the year ago quarter but 8.3 per cent down on the previous quarter's $305.4m.

Creative reported a net income of $700,000 (one cent a share), but subtract the effect of a $10m investment gain and the company lost $9.3m (11 cents a share). Q1 FY2006's profit compares with a Q1 FY2005 net income of $4.8m (six cents a share) and a $31.9m (38 cents a share) net loss in Q4 FY2005.

At least the company's gross margins improved significantly from the previous quarter's 10.1 per cent to 20.2 per cent. That, plus a 123 per cent year-on-year increase in MP3 player shipments and an eight per cent reduction in the firm's inventory stockpiles, bodes well for the future.

However, company president Craig McHugh admitted that the company is facing a shortage of 1GB solid-state memory chips. The Flash famine is "primarily a result of a special deal that Apple has secured from a key supplier for the holiday season", he said. That supplier is believed to be Samsung. "This will impact availability of our 1GB flash MP3 players for the holiday quarter," he added.

Still, the company wants to get fully into the black by the end of the calendar 2005, and McHugh believes Creative has made progress toward realising that goal.

In Q1 FY2006, 66 per cent of the company's revenues came from MP3 players, compared to 44 per cent in the year-ago quarter. However, in Q4 FY2005, it was 68 per cent. Plug those numbers into Creative's overall quarterly revenues, and it emerges portable music player revenue fell 10.7 per cent sequentially. Creative didn't say how many players it shipped last quarter, but it's likely to be a lot fewer than the 6.5m iPods Apple sold in the same period. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
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
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

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.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.