We use cookies, which are small text files, to improve your experience on our website and to show you personalized content. You can allow all or manage them individually.
Creative posted its fourth consecutive quarter of record year-over-year revenues, achieving sales for the first quarter of $304.4 million. This represents a 13% increase over the same quarter the previous year when sales were $269.1 million.
Based on the strong revenues, net income and earnings per share were higher than expected. Net income was $17.6 million and earnings per share were $0.21, compared to net income of $10.8 million and earnings per share of $0.13 for the same quarter last year. First quarter fiscal 2001 net income includes investment gains of $2.4 million or 3 cents per share compared to gains of $4.4 million or 5 cents per share for the same quarter of the previous year.
"Achieving a significant increase in operating income and breaking $300 million in fiscal Q1 revenue for the first time is a real turning point for us, as the growth came in the most strategic areas of the company - audio and personal digital entertainment appliances," said Craig McHugh, president of Creative Labs. "The growth in PDE and our strategic core businesses more than offset our deliberate reduction in graphics revenue. This was the lowest contribution from the graphics category in two years, and is the result of Creative's desire to reduce our exposure, given the ongoing volatility in the graphics sector."
"Audio systems revenues grew by 15% year-over-year, and revenues from PDE appliances grew by 400% year-over-year to $19.5 million in the quarter. The growth in these product segments reflects the adoption of the PC as a key platform for digital entertainment, providing a tremendous market opportunity for Creative's desktop products, as well as digital entertainment appliances like the NOMAD Jukebox which allow users to take entertainment beyond the confines of the PC box."
"We reached a major milestone this quarter with initial shipments of the NOMAD Jukebox," said Sim Wong Hoo, Chairman and CEO. "The press coverage and the excitement surrounding the launch of our NOMAD Jukebox have been phenomenal. According to PC Data, it achieved the #1 revenue position in the digital audio player category in the US Retail marketplace in the first two weeks of shipments. We believe that personal digital entertainment appliances will be the most exciting space in the internet appliance category, and the sensational reception of the Nomad jukebox positions Creative to lead this space."
During the quarter, Creative continued its share buy-back program, repurchasing approximately 1.8 million shares at a cost of $39 million. Subject to market price and conditions, shareholder approval, and securities law restrictions, the company plans to continue its buyback program during fiscal year 2001.
Strategic Investment Fund - Investee Companies
During the first quarter, Creative made additional investments in some of its existing investee companies, as well as new investments in several companies, including: Qala, SoundBuzz, NetBig.com, IP Communications and Frontline Technologies, as well as others that are not disclosed at this time due to competitive, strategic, or other reasons.
Sound Blaster and Blaster are registered trademarks and Environmental Audio, PC-DVD Encore, DeskTop Theater, 3D Blaster and Graphics Blaster are trademarks of Creative Technology Ltd. Cambridge SoundWorks is a registered trademark of Cambridge SoundWorks, Inc. All other products mentioned herein are trademarks of their respective owners and are hereby recognized as such.
Safe Harbor for Forward-Looking Statements Under The Private Securities Litigation Reform Act of 1995:
Except for the historical information contained herein and in the accompanying conference call, the matters set forth herein and in the call (including any references to future financial performance, products and marketing efforts) are forward-looking statements within the meaning of the "safe harbor" provisions of The Private Securities Litigation Reform Act of 1995. Readers of this press release and listeners to the conference call are cautioned not to place undue emphasis or reliance on these forward-looking statements which reflect management's analysis, judgement, belief or expectation only as of the date hereof. These forward-looking statements are subject to certain assumptions, risks and uncertainties that could cause actual results to differ materially from those set forth or implied in the forward looking statements. Such assumptions, risks and uncertainties include, among others: the timely development, ramp, shipment, delivery, and market acceptance of new products, including Creative's next generation audio, graphics accelerator, CD-ROM and DVD drives, communications and personal digital entertainment appliances, including the WebCam line of products and specifically, the NOMAD and NOMAD Jukebox line of products; potential fluctuations in the value and liquidity of Creative's investee companies, including any losses that may result from the recent trend of increased volatility for technology stocks and potential price reductions of carrying values of our investee companies; potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; the vulnerability of certain markets to current and future currency fluctuations, including the exchange rate of the Euro; labor shortages or work stoppages; credit shortages; effects of restricted fuel availability and rising costs of fuel; reductions in the market value of products sold by Creative, including increases in inventory or declines in demand or prices for optical storage devices, board and chip-level products, software, speakers, digital entertainment appliances, and other products; the short product cycles that characterize most of Creative's products; the increasing proliferation of sound functionality in new products from new and existing competitors and at the application software, chip and operating system levels; Creative's reliance on sole sources for many of its chips and other key components; component shortages which may impact Creative's ability to meet customer demand; Creative's ability to protect its proprietary rights; the timing or completion of a subsidiary IPO and/or the valuation that would apply in the event of a consummation of a subsidiary IPO; the volatility of share prices for companies in Creative's industry and the effect of those prices or other events beyond Creative's control; and other risk factors described in Creative's filings with the Securities and Exchange Commission over the past twelve months, including without limitation, Creative's Annual Report on Form 20-F. Creative urges you to consider all such factors. Creative undertakes no obligation to publicly release the results of any revisions to such forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.