Creative Technology suffers further losses in Q2

UNCERTAIN and difficult market conditions dampened sales of Creative Technology's products for the three months ended Dec 31, 2014, further deepening the group's net loss to US$9.19 million for Q2 FY15, compared to a net loss of US$4.17 million the same period a year ago.

Revenue over the same period was US$31.3 million, compared to US$37.79 million in Q2 FY14.

While sales plunged, there was no reduction in selling, general and administrative expenses due to an increase in marketing expenses for new products, including the Sound Blaster Roar and the Sound Blaster X7, squeezing Creative's profit margins.

Research and development expenses in Q2 fell 22 per cent, due to cost cutting actions taken by the management.

Other losses in the same period were related to foreign exchange loss of US$4.4 million and impairment loss on investments of US$0.7 million, which was partially offset by a US$0.4 million gain on disposal of a property owned by a subsidiary in Ireland.

The overall market for Creative's products remains challenging and for this quarter, it expects no major improvement in the difficult and uncertain conditions. Revenue is expected to be lower in the quarter compared to the current level and Creative expects to report an operating loss.

For the three months ended Dec 31, 2014, loss per share was 0.13 US cent, while net asset value per share was US$1.69.

No dividends were declared for the quarter.

On Thursday, Creative's counter closed unchanged at S$1.80.