CREATIVE TECHNOLOGY REVISES SECOND QUARTER EXPECTATIONSSINGAPORE - December 19, 2000 - Creative Technology Ltd. (Nasdaq: CREAF) today announced that it has revised its expectations for the second fiscal quarter ending December 31, 2000. This revision was primarily caused by lower than forecasted demand from some of its OEM customers and PC system integrators. However, Creative's overall revenues are expected to come in just 5 to 7 percent below the company's original guidance as other parts of the business are performing on or ahead of target. The company now expects to report second quarter revenues of approximately US$410 to US$420 million.
Creative Technology Revises Second Quarter Expectations
Although Creative expected to see some margin pressure in the storage segment of its business, the downturn in OEM and system integrator demand caused further margin pressure. The company expects this to impact gross margins by approximately two points. However, Creative expects to come close to its original guidance for net operating margin of approximately 10 percent before operating expenses related to its Internet initiatives.
"Although we were impacted by the downturn in system builder demand, our retail businesses, including Personal Digital Entertainment products, are performing solidly," said Craig McHugh, President of Creative Labs. "The drop in OEM and system integrator demand will slow our plan to reduce inventories, but I'd like to reiterate what I said in our last earnings conference call - the majority of our inventories are in those product segments with long lifecycles and low risk."
Final revenue, gross margin, and net operating margin will not be available until Creative reports its second quarter results.