Apple suit seen hurting beleaguered Creative in long run

“MP3 music player maker Creative’s U.S. patent lawsuit against Apple has boosted the loss-making Singapore firm’s shares, but analysts fear it will disrupt management turnaround efforts. Creative Technology Ltd., the world’s number-two MP3 player maker, whose Nomad and Zen players compete with Apple Computer Inc.’s market-leading iPod, filed patent complaints against Apple in federal court and with a U.S. trade agency on Monday,” Jennifer Tan reports for Reuters. “The company is seeking an injunction and increased damages for alleged violation of its ‘Zen’ patent. It is also seeking an exclusion order and a cease-and-desist order against Apple that would prohibit the U.S. firm from selling, marketing or importing its popular iPod portable music players into the U.S.”

“Kim Eng Securities analyst Gregory Yap said Apple was unlikely to give up its lucrative iPod business without a long, expensive fight — time and money that loss-making Creative cannot afford to waste. ‘Creative’s suit against Apple may bring relief to the share price in the short term, but in the long term, it will distract and divert management attention and company resources when both are needed to turn around the ailing business,’ he said. Earlier this month, Creative swung to a larger-than-expected quarterly net loss of $114.3 million in its fiscal third quarter ended March, compared with a $15.9 million profit a year ago, after a plunge in music player prices squeezed margins and forced it to write down its inventory,” Tan reports. “While Creative struggles, market leader Apple last month posted a forecast-beating 41 percent jump in quarterly profit and said iPod sales topped 8.5 million. According to research firm International Data Corp., Creative was ranked second after Apple in the global flash memory-based MP3 player market in 2005, with a 4.7 percent share against Apple’s 16.9 percent, and number two in the hard-drive music player market with a 15.8 percent share against Apple’s 72.2 percent.”

Tan reports, “Creative is expected to post a net loss of $116.6 million for the full year ending June 30, according to the average forecast from 10 analysts polled by Reuters Estimates.”

Full article here.

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19 Comments

  1. More proof in the pudding that this move by Creative is last ditch. What I don’t understand is why won’t they sue the entire industry and make everyone pay if the expect to maximize their suit. The smaller companies would have more than likely settled which would have given them some cash to endure a long fight with Apple. Oh well. Bye-bye Creative. Glad I never invested in your company.

  2. The patent seems to claim that they invented hierarchical menus on music devices. Now I’m no patent attorney but hierarchical menus existed long before Creative did, and putting such menus on a music device just doesn’t seem like an invention to me.

  3. Super Tim: You’ve got it bad, man — you might want to seek professional help. I don’t set an alarm — I just wait ’till I’m up using the bathroom in the middle of the night to check the news — that’s the “normal” way to do it.

  4. Boycott Creative !!!
    Do not buy any Creative products, there being to desperate and greedy. Very unbusiness like and unprofessional.
    When Apple was almost gone back in 1996 they didnt go around suing companies.

  5. I think if they sued any of the WMA rugrats Darth Balmer would have set the storm troopers of war on them and offered all the best bits of the Dark side to their sued competitors (so dark infact they are near damn invisible but thats beside the point for they failed and to Microsoft they are all losers of Battlestar Gallactica proportions). Mind you arn’t they all facing the deadly light sabre already for their ongoing failures.

    This is Microsoft inspired machinations to try to slow down Apple while they work out yet another counter measure against someone else having a share of World domination.

  6. I can fix Creative. I’ve done it before and I’ll do it again. as a matter of fact I’ll fire every chair they’ve got acroos the room. I’ll drop 65 F-bombs a minute on their sorry products. I’ll show them.

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