Creative falls after announcement of loss

Creative Technology Ltd., one of the largest manufacturers of MP3 players in the world announced yesterday that it is projecting an operating loss of approximately $55 million to $65 million on revenues of approximately $220 million to $230 million for the third quarter of its 2006 fiscal year, ended March 31, 2006. These poor set of results would add onto the previously announced non-cash impairment charge of $25 million and the restructuring charge of $9 million associated with the refocus of the Company's graphics business in the period. The company attributes the loss primarily to a drop in flash memory prices. As a result of the reduction in memory prices, there was a negative impact on sales in March and this have resulted in lower revenues and gross margins and inventory write-downs in the period.

Going forward, the company is not expected to make any profit for this fiscal year and FY2006 results could end with an overall net loss. This announcement have resulted in a fall of its share price by 9% to close at S$11.00 for 6th of April. Further drops could be seen as the support for the company seems to be weakening with increased sales competition in the MP3 business by Sony and Samsung.