Creative Posts Profit On Lower Revenue

The company's net income was US$4.6 million (six cents per share), compared to a loss of $48.4 million last year (which included a one-time charge of $26 million to acquire 3Dlabs, and an investment loss of $29.8 million). Perhaps more revealing was that revenue fell 18 percent, to $149.6 million. The company chalked up the lower revenue to the SARS outbreak in Asia. Unfortunately, Creative forecast flat to lower sales for the current quarter, and analysts are concerned that the company's decision to diversify into consumer electronics may be risky. The company is launching more than 90 new products this year -- many in the personal digital entertainment space. And while that product segment is experiencing high growth, it pits Creative Technology against larger companies like Apple and Sony. Yet with slowing sales of its PC products, the move seems logical.