Apple deal drives Creative income, revenues skyward
Made more money licensing MP3 player patent than selling MP3 players
You can see now why Creative Technology's now so pro-iPod - last month it announced a range of 'Made for iPod'-branded accessories . Its latest financial results, posted last night, show a massive upswing in revenues thanks, we'd say, to Apple's move to license Creative's key MP3 player patent.
The effect: an additional $82m net income during Q2 FY2007 on top of the $9.9m Creative earned selling its own Zen MP3 players, its X-Fi sound enhancement hardware, speakers and so on. The year-ago quarter yielded comparable earnings of $6.9m once investment gains made in both quarters are excluded.
Revenues for the period were $424.4m, up from $390.8m in Q2 FY2006. Apple's licence contributed $100m in revenues, making for a gross margin of effectively 82 per cent.
Creative sold 2.5m MP3 players in the quarter, a figure dwarfed by the 21m iPods Apple shifted in the same period. So you can see why Creative wanted that licence signed. Apple agreed to the deal in August 2006 . Creative had been threatening Apple for some time, but finally placed the matter in the hands of the lawyers in May 2006 . A few days later, Apple counter-sued .