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Financial & Corporate Releases

CREATIVE TECHNOLOGY POSTS BETTER THAN EXPECTED Q2 FY00 EARNINGS

Value-Added Venture Fund Generates Over $150 Million in Unrealized Gains

SINGAPORE - January 27, 2000 - Creative Technology Ltd. (NASDAQ: CREAF), the world's leading provider of multimedia products for personal computers, today announced financial results for the second quarter of fiscal year 2000, ended December 31, 1999.

Sales for the second quarter were a record US$436.8 million - the highest quarterly revenue ever reported by Creative. This compares to US$428.7 million for the same quarter last year. Net income was US$44.5 million dollars and earnings per share were US$0.52, including investment gains of US$9.2 million or US$0.11 per share. This compares to net income of US$60.6 million and earnings per share of US$0.64 for the same quarter last year.

Sales for the first six months of fiscal 2000 were US$705.9 million, compared to US$707.7 million for the same period last year. Net income for the first six months of fiscal 2000 was US$55.3 million or US$0.65 per share, including investment gains of US$13.6 million or US$0.16 per share. This compares to US$82.1 million or US$0.86 per share for the same period last year.

During the quarter, Creative continued its stock buy-back program, purchasing approximately 1.7 million shares at a cost of US$25.3 million.

"The second quarter was full of key accomplishments for Creative," said Craig McHugh, president of Creative Labs, Inc. "Our earnings exceeded expectations, and we significantly strengthened our balance sheet. It's important to note that in this quarter, we incurred about $16 million in operating expenses for our Internet initiatives -- bringing our total for the fisrt of fiscal 2000 six months to over $25 million invested in advertising, marketing, R&D and infrastructure to develop our Internet-related businesses. We continue to hit key milestones in our PDE and Internet strategies, highlighted by the successful launch of hifi.com in mid-October."

"The strong financial results we have delivered are just the beginning of the story," said Sim Wong Hoo, chairman and CEO. "Our value-added venture fund invested in more Internet, broadband and PDE companies during the quarter, bringing the total to over 20 companies and over $70 million invested since we set up the fund. The financial gains the fund has begun to produce can bring additional value to our shareholders - as reflected by this quarter's increase of $154 million in unrealized gains from quoted investments on our balance sheet."

"Since we defined and created the Personal Digital Entertainment category a year ago, we have moved at net speed to transform the entire company to a PDE and Internet company. Creative has become the leader in PDE, just as we did a decade ago with audio. Going forward, there will be five product and service areas which will allow us to focus on the opportunities we see: our PDE Desktop Solutions; PDE Internet Appliances; PDE Internet services and applications; E-Commerce; and, our Value-Added Fund.

Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Except for the historical information contained herein or in the accompanying conference call, the statements herein and in the call (including information on future products, future marketing efforts, and future revenues, margins, expenses and earnings) are forward looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. Such statements are subject to the attached cautionary statements which are provided pursuant to The Private Securities Litigation Reform Act of 1995.

Creative Technology Ltd. is the leading provider of advanced multimedia solutions for personal computers. It develops, manufactures and markets a wide array of solutions for the PC, entertainment, education, music and productivity tools markets. Creative's products are marketed through the OEM, systems integrator and retail channels under a variety of trademarks, including the "Blaster" family name. With the new Sound Blaster PCI standard, Creative has produced a solution that utilizes a combination of hardware and software for near-perfect compatibility with existing DOS and Windows titles. Creative's corporate headquarters and primary manufacturing are based in Singapore, with sales, distribution and research and development being carried out through an extensive, global network of subsidiaries located in North America, Europe, Asia and Africa. 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:
Except for the historical information contained herein and in the accompanying conference call on today's date, the matters set forth herein and in the accompanying conference call (including our guidance on future revenues, margins, expenses and earnings) are forward looking statements that are subject to certain risks and uncertainties that could cause actual results to differ materially from those set forth in the forward looking statements. Such risks and uncertainties include, among others: 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 currency fluctuations and credit shortages; reductions in the market value of products sold by Creative, including increases in supply or declines in demand or prices for CD-ROM or DVD drives, board and chip-level products, and software 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; the timely development, ramp, delivery and market acceptance of new products, including Creative's next generation audio, graphics accelerator, CD-ROM and DVD drives and communications products; 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. The company 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.

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