90 new Creative products to hit shelves
By Bryan Lee
IN A bid to get a head start on a budding recovery in the global economy, Creative Technology is flooding the stores with a staggering 90 new products between now and the end of the year.
Most will be personal digital entertainment (PDE) devices, such as MP3 players and cameras.
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The aggressive product launch as the critical Christmas holiday season approaches is the computer sound card giant's latest attempt to boost flagging revenues. The company usually sees a surge in sales during this period.
Chairman and chief executive Sim Wong Hoo said yesterday: 'We are moving away from a heavy dependence on the sound card and personal computer markets.'
He explained that 70 per cent of the company's revenue now comes from computer peripherals and personal devices like MP3 players.
Creative has been aiming to broaden its revenue base to arrest a slide in sales over the last two years, since the bursting of the technology bubble.
The company's core sound card product has seen sales decline as computer makers increasingly use cheaper alternatives that provide basic computer audio functions.
Unveiling the company's new strategy yesterday at a briefing on its financial results, Mr Sim said it has successfully made inroads into the PDE market with its Nomad line of MP3 players.
Holding up one of its latest models - the Nomad Jukebox Zen - he proudly declared the slim, silver aluminium pocket-sized device was 'better looking' than rival Apple Computer's pert but pricier iPod.
For the three months ended June 30, Creative derived US$28.4 million (S$50.4 million) or 19 per cent of its revenue from PDE products, up from US$20 million the year before.
Kim Eng Ong Asia analyst Dharmo Soejanto said: 'Without PDEs, Creative would have seen a bigger drop in revenue.'
He added that the company would benefit from its strong standing among computer gamers as it faced off against consumer giants such as Sony and Samsung.
Apart from moving into the PDE market, Creative is also backing down from its once rigid insistence on putting its brand name on every product it produced.
In a move that has raised some eyebrows, the company is now willing to make and design products for other electronics companies under their brand names, despite lower profit margins.
Mr Sim said: 'In the past, we were more purist... we wanted to build the brand name.'
While coy about specific targets, Mr Sim said he expects a 'significant contribution' from products manufactured for other companies in the current financial year.
Creative yesterday announced a profit of US$23.4 million for the year ended June 30, reversing a loss of US$19.7 million the year before.
The company went into the red last year largely because of a one-off US$26 million charge related to the acquisition of computer graphics company 3Dlabs, as well as investment losses of US$45.4 million.
Revenue was US$701.8 million, down 12.9 per cent from US$805.9 million.
This was partly because of a 50 per cent drop in Asian sales from April to June this year, when the Sars outbreak was at its peak. The company said regional sales were US$20 million less than in the same period last year.
Creative yesterday also said that one of its associate companies - SigmaTel - is seeking a listing on Nasdaq soon, a move which analysts say may boost earnings if the company divests itself of its 29 per cent stake in the US-based semiconductor company.
