Creative results flat, warns of tough Q3

Audio and video card manufacturer Creative Technology Ltd. has announced first-half fiscal 1999 profits down by 3 percent to US$82.1 million from $84.7 million in 1998.

Audio and video card manufacturer Creative Technology Ltd. has announced first-half fiscal 1999 profits down by 3 percent to US$82.1 million from $84.7 million in 1998.

In addition, the 1998 profit figure took account of a one-time write-off of $60.3 million for corporate acquisitions. Revenues in the period, ended Jan. 31, were up 8.5 percent at $707.7 million from $682.8 million last year.

Creative Chairman and Chief Executive Officer Sim Wong Hoo said that earnings were in line with expectations, and were helped by rapid growth in sales to Europe. Creative executives said that they expect difficult market conditions in the company's third quarter, with flat or even negative sales growth. Executives cited the deteriorating economic environment in Latin America, continued poor sales in Asia, a shortage of DVD-ROM drives, and shrinking profit margins as contributing factors.

The shortage of DVD-ROM drives is preventing Creative from selling as many multimedia upgrade kits as being demanded, company officials said, with the shortage likely to last through the third quarter.

Creative, which made its name in the audio card market with the Sound Blaster range of products, now gains 25 percent of its revenues from graphics cards, the company said.

Singapore-based Creative can be contacted at +65-895-4000 or on the World Wide Web at http://www.ctlsg.creaf.com/.

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