Published April 4, 2009

Creative expects Q3 revenue to plummet to US$80m

The company says that it has continued its efforts to reduce operating costs

By ONG BOON KIAT

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CREATIVE Technology yesterday said it expects revenue for its FY2009 third quarter to come to about US$80 million - a sharp fall from the previous Q3's figure of US$150.3 million.

UNCLEAR FUTURE Creative blamed the impact of the global economic downturn, which dented demand for the company's products

If the projection holds, it would be the first time since FY1993 that revenue has dipped under US$100 million in a quarter.

In a statement yesterday, Creative said that gross margin for its Q3, which ended on March 31, is expected to come to about 10 per cent. This compares with 23.1 per cent for the corresponding quarter last year.

On its downbeat projections, Creative blamed the impact of the global economic downturn, which dented demand for the company's products.

It also mentioned its decision to close and consolidate certain businesses in order to focus on specific markets.

The 28-year-old local tech group is battling one of its toughest periods in recent years.

Creative said yesterday that it has continued its efforts to reduce operating costs. The 28-year-old local tech group is battling one of its toughest periods in recent years.

It posted net losses of US$32.4 million and US$32.2 million for the second and first quarters of its current fiscal year, respectively.

Revenues for both quarters were also lower compared to the previous year.

The company last month announced that it is cutting about 300 jobs worldwide, primarily in Europe and the US. It also said it will incur restructuring charges of about US$10 million for Q3.

Creative shares closed three cents higher yesterday at $3.45.