Creative profit drops on MP3 market competition

Creative, one of the world's largest makers of MP3 music players, said its revenue rose but net profit declined amid stiff competition.

Creative Technology, one of the world's largest makers of MP3 music players, on Thursday reported its revenue rose during the three months ended Dec. 31, but net profit declined amid stiff competition.

The company, which is based in Singapore, said sales grew to $US390.8 million (AU$519.96 million) in its fiscal second quarter, up from $US375.1 million during the same time a year earlier. Its net profit declined to $US8.2 million from $US11.8 million, but marked a return to profitability after the company was hit by tough competition from Apple Computer and a slew of new market entrants last year.

Sales of MP3 players, audio products, web cams, and PC and MP3 speakers all rose in the final three months of 2005 compared to the same time a year earlier, pushing revenue to a five-year high, the company said. Creative was also able to reduce inventory, and it plans to continue paring its stored items this year.

The company expects its Zen Vision:M to become a hot seller this year. The MP3, photo and video player can hold 30GB of data, enough for 15,000 songs, thousands of photos or 120 hours of video. It has a 2.5-inch screen.

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Dan Nystedt

IDG News Service
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