Beleaguered Creative Technology reports largest operating loss in at least five years

“Shares of Creative Technology, which has been losing in a battle with Apple Computer’s iPod, fell the most in nine months after the company reported its largest operating loss in at least five years,” Andrea Tan reports for Bloomberg News. “Earnings at Creative, which gets two- thirds of sales from music players, are slumping as Apple’s iPods outsell the Singapore-based company’s Zen and MuVo devices five-to-one… The company had an operating loss of $55 million to $65 million in the third quarter ended March 31 because of a “drastic drop” in flash memory prices, Creative said in a preliminary earnings statement Wednesday. Creative expects sales of $220 million to $230 million, a fall of as much as 34 percent.”

“Creative’s chief executive, Sim Wong Hoo, is trying to trim Creative’s reliance on music players, introducing products such as new Sound Blaster cards, which enhance audio played through personal computers,” Tan reports.

Full article here.

[Thanks to MacDailyNews Reader “ds” for the heads up.]

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Related articles:
Joke of the Day: Red Herring headline: ‘Creative may be iPod threat’ – February 28, 2006
S&P Equity downgrades Creative Technology, cites ‘increased competition from Apple Computer’ – February 14, 2006
Apple unveils new 1GB iPod nano for $149; iPod shuffle now starting at just $69 – February 07, 2006
Beleaguered Creative reports 95-percent slump in quarterly profit – January 26, 2006
Don’t call them podcasts! Derivative, er, Creative introduces ZenCast app for ‘audio & video blogs’ – January 04, 2006
Creative’s Zen Vision:M green with Apple iPod envy – December 09, 2005
Apple faces prospect of bruising iPod patent dispute from Creative Technology – December 09, 2005
Creative Technology’s official press relase for Zen Vision:M Apple iPod knockoff – December 08, 2005
Creative’s Sim Wong Hoo vows to ‘aggressively pursue’ Apple over iPod patent – December 08, 2005
Creative announces 30GB Zen Vision:M video-enabled ‘iPod killer’ – December 07, 2005
Beleaguered Creative waves white flag, surrenders self-declared MP3 player war to Apple iPod – November 07, 2005
Beleaguered Creative shifts promotional efforts from music players to new sound card line – September 21, 2005
Apple debuts iPod nano, iTunes 5: how are Microsoft, Napster, Real, Creative, Sony feeling today? – September 08, 2005
Creative explores new way to beat Apple iPod: patent litigation – August 30, 2005
Creative plans ‘very vigorous defense’ of iPod navigation patent – August 31, 2005
Beleaguered Creative Technology’s ‘war’ on Apple iPod not faring well – August 15, 2005
Apple’s iPod shine dims beleaguered Creative Technology’s outlook – August 08, 2005
Microsoft not buying stake in Creative Technology – August 02, 2005
Creative CEO Sim Wong Hoo adds fronts to war against Apple iPod – August 01, 2005
Analyst: Microsoft could buy Creative Technlogy in bid to compete with Apple iPod – July 14, 2005
Beleaguered Creative CEO Sim Wong Hoo ‘optimistic’ the company will survive ‘MP3 war’ – July 01, 2005
Beleaguered Creative may have to write off unsold stock as losses loom – June 28, 2005
Creative Tech’s reduced outlook drags on Apple, PortalPlayer, SigmaTel – June 27, 2005
Creative Tech cuts sales outlook, drags Apple down in early trading – June 27, 2005
Apple passed 20 million iPods sold milestone in early June – June 24, 2005
Apple’s understanding of what really counts makes iPod+iTunes impossible to beat – June 22, 2005
Creative Technology shares slide to lowest mark in almost two years – May 18, 2005
Apple squeezes and Creative’s profit plunges 72-percent – April 23, 2005
Apple iPod pressure forces Creative to drop prices on music players – March 01, 2005
Creative’s self-declared ‘MP3 player war’ against Apple isn’t going very well – January 20, 2005
Creative CEO: Apple iPod shuffle ‘a big let-down, worse than the cheapest Chinese player’ – January 12, 2005
Creative declares ‘war’ on Apple iPod, shoots for 40% market share of MP3 players – December 21, 2004
Creative Technology declares ‘MP3 War’ against market-dominating Apple iPod – November 17, 2004
Mossberg: Dell, Rio, Creative ‘iPod mini killers’ lag badly behind Apple iPod mini – October 27, 2004
Creative pushes to become ‘Pepsi’ to Apple’s ‘Coke’ in digital music player market – August 07, 2004


  1. First! A little sad to be a Singaporean, when Mr Sim keeps on trying to be “creative”. In Singapore, the advertising for Creative products are almost everywhere…but I still support mac and ipods of course :p

  2. How does a drastic drop in supply prices hurt profitability?

    I’m confused. Maybe I took one accounting class too many in college, because that logic just don’t add up.

    The drop in supply prices doesn’t affect the huge inventory of players Creative has already made. So if you have a warehouse full of players made with memory that cost $X, you lose money when the cost of memory drops to $(X – Y). You can try to keep the players priced the same, but some competitor who decides to pass on his supplier cost savings to the consumer will eat your lunch. This doesn’t consider global accounting rules that may require you to show your inventory value as a loss when supplier costs drop.

    Is it any wonder that the most profitable companies try hard to limit their inventory? Dell is famous for it, and I think Apple does an amazing job as well. When you build products no one wants (Think GM or Creative) your balance sheet gets savaged.

  3. There was a time when I could remember everyone wanted a Soundblaster 16 card for their PCs. They were *THE* standard for gaming sound. They were always great cards, but as the top company, they got cocky, and complacent. Sim Wong Hoo made the company lose focus on it’s strengths, and blew money on an endeavor that was doomed to lose. I am afraid it is already too late for Creative, but I hope they can regain some of the awe and wonder of their greater Soundblaster days.

  4. The sad thing is, there’s no reason why Creative can’t survive. All they need to do is what some other iPod competitors have done: accept that you have a meager market share and build your business around it. SanDisk sells a fraction of what the iPod does, yet they’re doing dandy. And of course, Apple proved for years that you can be profitable with a small market share, so long as you treat those customers well and keep them loyal.

    But noooooooo! Creative had to declare war on Apple. They had to take iPod down, no matter what it took (never mind that they had neither the design skills nor the marketing savvy to pull it off). They just couldn’t let go of the fact that they were #1 before the iPod came out. They were obsessed with putting the Nomad brand back on top.

    And now they’re paying the price.

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