Creative second-quarter earnings jump by 55%
SINGAPORE: Computer audio equipment giant Creative Technology Ltd has posted a higher-than-expected second-quarter profit as sales of its MP3 player and digital cameras surged during the 2003 year-end holidays.
For the three months to Dec 31, 2003, the Singapore-based company known for its Sound Blaster sound cards and Nomad JukeBox digital music players unveiled a net profit of US$29.2mil, up 55% from US$18.9mil a year earlier. Including a tax write-back, its fiscal second-quarter net profit rose to US$41.5mil.
But while the net profit beat analysts' estimates, the company’s top line was seen as a concern.
Creative posted second-quarter revenues of US$250.4mil, up 8.4% on the year-earlier quarter. – Reuters
Singapore's Creative/Earnings: Strong Product Line
Corrected January 29, 2004 04:26 ET
Creative Technology Ltd. (C76.SG) - Singapore
2Q ended Dec. 31:
Figures in U.S. dollars
2003 2002
Sales US$250,422,000 US$230,940,000
Pretax Profit 31,216,000 20,824,000
Net Profit 41,484,000 18,879,000
Earnings Per Share
Fully Diluted 50 cents 23 cents
Existing Capital 52 cents 24 cents
Dividend -- --
(US$1=S$1.6974)
Earnings are unaudited, and based on U.S. GAAP.
SINGAPORE (Dow Jones)--Singapore-based Creative Technology Ltd. (C76.SG) Thursday reported a more than doubling of net profit to US$41.5 million, or 50 cents per diluted share, for the quarter ended Dec. 31, helped by a tax writeback and strong sales of digital entertainment products.
The Nasdaq- and Singapore-listed company said sales in its financial second quarter rose to US$250.4 million from US$230.9 million.
The maker of Sound Blaster audio cards for personal computers and Nomad digital entertainment products said a US$12.3 million tax writeback was one reason earnings rose so sharply on year.
For the current quarter, Creative said it sees revenue growth of 10% on year to between US$175-US$180 million, with gross margins of between 34%-35% and operating expenses of US$54 million.
Creative's sales during the second quarter were within the US$250 million to US$265 million guidance provided by the company at the end of its first quarter.
Its EPS - at 35 cents a share after stripping out the contribution from the tax writeback - was above the EPS target of 28 cents.
Creative rose 30 cents, or 1.6%, to close at S$19.70 Thursday before its earnings were announced.
At an analysts conference, Creative said the tax writeback was due to a reversal of prior periods' income taxes following the grant of a new "Pioneer Status" under the Singapore government's International Headquarters Award.
"Accordingly, the company will be recovering funds from the taxes previously paid on such profits," it said, adding that its effective tax rate for the current year is about 8%.
The company also said sales of digital entertainment products "outside the PC box" - such as digital audio players - grew to 66% of total sales from just over 50% in the previous quarter, reflecting its success in diversifying away from personal computers and into consumer electronics.
About 80% of Creative's sales during the quarter were through the retail channels, while OEM/ODM (original equipment manufacturer/original design manufacturer) sales accounted for just under 20%.
Creative expects to benefit from a slew of new products that have won positive reviews at trade shows and in the media. The rise in its inventory - to US$154.8 million as of Dec. 31 from US$80.4 million as at June 30 - and its increased marketing expenses were consistent with its preparation for new product launches, it added.
"We generated a huge buzz at the Consumer Electronics Show (in Las Vegas), starting with Microsoft's Chairman Bill Gates holding up a prototype of our Zen Portable Media Center in his opening keynote speech," Creative Chairman and Chief Executive Sim Wong Hoo said.
The Zen PMC is a compact, handheld device that can carry video, music and digital images. It will be more than half a year before the product starts hitting the market, Sim said.
Creative said it expects to increase its share of the fast-growing market for flash memory-based audio players but didn't give specific targets.
For the current quarter, Creative said it will begin shipping a device the size of a keychain that can play up to 16 hours of music called the Nomad MuVo TX.
The company is targeting to grow third-quarter EPS by 50% year-on-year to around 9 U.S. cents, and expects fourth-quarter revenue to rise above 10% on year.
