Creative Technology

[KopiKat]

Trying to complete with the Chinese in the hardware business is nuts and his idea about partnering the Chinese is naive.

What is the strategy here? I don't get it.

Creative is selling their platform which comprises (extracts from Press Release),

100-CORE ZMS-40 STEMCELL MEDIA PROCESSOR, THE LATEST ANDROID 4.X TABLET REFERENCE DESIGNS AND A POWERFUL CHINESE OPERATING SYSTEM

ie. Creative is not targetting to compete with Apple or Samsung. Rather, they are targetting Tablet PC makers with their Total Solution. They'll be competing with the Chipset Makers (eg. Intel, Motorola, ARM,...) and OS Companies (Microsoft).

You can view it as Creative providing a full ODM solution. Any set maker who wants to launch a Tablet PC fast can adopt this solution (Creative + partners earn a license fee and gets to sell them the chipsets). BUT, most likely, this will be a niche market of 3rd or 4th tier set makers ie. Not the 1st Tier like Apple or Samsung. Also not the 2nd Tier like HP, HTC, Acer,.... (too many to list the iPad wannabes). However, since they are targetting the vast China market, the 3rd/4th tier set makers may provide a healthy volume of biz, esp. if they do win over a good numbers of them.

BUt then again, if Creative is also launching their own Tablet PC using this solution, I wonder if any other respectable enough set maker would want to adopt their Reference Design as they may not be able to finally compete on price and features.

[Musicwhiz]

*For the full article, please visit the website.

The Straits Times
www.straitstimes.com
Published on Aug 09, 2012
Creative may land on SGX watch list
Tech firm posts third straight year of losses despite cost-cutting measures

By yasmine yahya

CREATIVE Technology, once a market darling considered a major competitor to Apple, is now at risk of being placed on the Singapore Exchange watch list.

The tech firm, founded in 1981 by technopreneur Sim Wong Hoo, has recorded its third straight year of losses, one of the factors that would cause a firm to be placed on the watch list.

Sales of Creative's products have struggled amid tough global competition, and its cost-cutting measures have not done enough to stem the flow of red ink.

In fact, Creative's losses deepened in the latest financial year ended June 30 to US$84 million (S$104 million), from US$47 million last year.

Sales slipped 17 per cent to US$191.8 million, which Creative said was due to the uncertain global economy and the ongoing euro zone debt crisis, which affected sales across all the geographic regions where it sells its products.

Creative, once known for making the world's best-selling sound platform for personal computers and maker of the world's first MP3 player, traded above $60 at the height of its popularity.

Its share price has waned along with its fortunes. It hit an all-time low of $2.50 last year and last closed at $3.39 yesterday.

Net asset value per share fell to US$2.12 at the end of June, from US$3.47 a year earlier.

Loss per share for the year was US$1.20, compared with 68 US cents last year.

A final dividend of five Singapore cents has been recommended.

Creative has been taking measures to get its business back into shape.

"The group undertook a restructuring exercise in the fourth quarter of financial year 2011, including worldwide headcount reductions as well as streamlining of certain businesses and product categories," the firm said in a statement.

The costs it saved from these measures did little to boost the firm's numbers, especially as it was also hit by foreign exchange losses and impairment losses on property, equipment and building facilities.
------------------------

[KopiKat]

Creative, once known for making the world's best-selling sound platform for personal computers and maker of the world's first MP3 player, traded above $60 at the height of its popularity.

Not true.. History lesson time, from wikipedia,


The MPMan music player, manufactured by the South Korean company SaeHan Information Systems, debuted in Asia in March 1998, and was the first mass-produced portable solid state digital audio player.

The MPMan was not well received by critics and consumers. The Rio PMP300, which was released soon afterward, was received better.


Back in those days, before Apple came in to make iPod synonymous with portable MP3 players for the masses, they were clunky geeks' toys. I have never heard of MPMan and always thought Rio was the first and they were the market leader for a while before Creative came in and took over the No.1 spot. That's why when Apple wanted to enter the market, they approached Creative and were rebuffed... the rest is history...this is probably what keeps Mr Sim awake at night...

[dzwm87]

Take a look insider any of Creative's stores and you realized their core competency lies only in audio products. But the products are too pricey! High end headsets appeal to gamers and I suspect only hardcore gamers will subscribe to such prices.

IMO, they should have remained in their circle of competency. Their Ziio tablets and upcoming HanZpad in China doesn't seem to have the edge to overcome Apple or even Samsung.

Though they do not have any debts, it is only a matter of time. They have sold their HQ on a sales-and-leaseback agreement, sold their mp3's touch navigation patent to Apple (they should have agreed for their shares instead!) and their business is burning off cash every year (-ve net operating CF)

[CY09]

After reading thru its 3Q report, i realise Creative currently has about US165 (approx s$200 M) of cash in its balance sheet. market cap is currently s$175M.

Just daydreaming here: IF Creative spins off its core business and be an investing company like MIIF or Global Investments, leaving it with s$150 M cash and US28M of finanical assets (after settling the liabilites in its B/S). I am sure creative will be able to generate s$75M of dividends (I assumed a 5% returns slightly higher than CPF special account)plus a little bit from its patents royalties. That translates to approx $1.07 per share. Creative will then be trading PE 2.333.

Any VB members interested in mounting a takeover for Creative that is bleeding cash and then transforming it into an investment firm?
Link: http://info.sgx.com/webcoranncatth.nsf/V...8003C64C6/$file/Q3FY2013EarningsReleaseSGX.pdf?openelement

[KopiKat]

After reading thru its 3Q report, i realise Creative currently has about US165 (approx s$200 M) of cash in its balance sheet. market cap is currently s$175M.

Just daydreaming here: IF Creative spins off its core business and be an investing company like MIIF or Global Investments, leaving it with s$150 M cash and US28M of finanical assets (after settling the liabilites in its B/S). I am sure creative will be able to generate s$75M of dividends (I assumed a 5% returns slightly higher than CPF special account)plus a little bit from its patents royalties. That translates to approx $1.07 per share. Creative will then be trading PE 2.333.

Any VB members interested in mounting a takeover for Creative that is bleeding cash and then transforming it into an investment firm?
Link: http://info.sgx.com/webcoranncatth.nsf/V...8003C64C6/$file/Q3FY2013EarningsReleaseSGX.pdf?openelement

Sorry to dash your day-dream...
5% of S$150M = S$7.5M, not S$75M

Perhaps you can kick out Mr Sim in your day-dream and perhaps that'll shake him out of his comfort zone (like Steve Jobs) and he'll make new history...

[CY09]

After reading thru its 3Q report, i realise Creative currently has about US165 (approx s$200 M) of cash in its balance sheet. market cap is currently s$175M.

Just daydreaming here: IF Creative spins off its core business and be an investing company like MIIF or Global Investments, leaving it with s$150 M cash and US28M of finanical assets (after settling the liabilites in its B/S). I am sure creative will be able to generate s$75M of dividends (I assumed a 5% returns slightly higher than CPF special account)plus a little bit from its patents royalties. That translates to approx $1.07 per share. Creative will then be trading PE 2.333.

Any VB members interested in mounting a takeover for Creative that is bleeding cash and then transforming it into an investment firm?
Link: http://info.sgx.com/webcoranncatth.nsf/V...8003C64C6/$file/Q3FY2013EarningsReleaseSGX.pdf?openelement

Sorry to dash your day-dream...
5% of S$150M = S$7.5M, not S$75M

Perhaps you can kick out Mr Sim in your day-dream and perhaps that'll shake him out of his comfort zone (like Steve Jobs) and he'll make new history...

Haha sorry about the mistake. PE wll be 23.333 then, but still better than where it is now

[desmondxyz]

I wonder who would want to buy creative core business.....

[mobo]

I know an acquaintance who used to work in Creative as a Senior Manager doing Marketing.

He left after a while and told me that from his interactions with Sim Wong Hoo, he felt that the guy no longer had fire in his belly and seems content to just coast along everday, occassionally embarking on some personal project that catches his fancy.

Senior executives who give good business advice especially those touching on the unfeasibility of his pet projects will just get ignored at the end of the day.

It is a dying company with an uninspired management team living off annuities bought in the past. Quite sad to see a once proud icon of Singapore entrepuenrship descend into the pits.

[cfa]

What is/are their core bizs ?