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Last Updated: Thursday, 28 October, 2004, 07:30 GMT 08:30 UK
Advertising costs hurt Creative
Creative Zen music player
Creative is chasing after Apple's iPod
Digital music player maker Creative has seen a sharp fall in profits as it continues to battle with Apple's iPod for the lion's share of the market.

While Apple recently thanked sky-high iPod sales for a 50% jump in profits, rival Creative has posted an 84% fall in its year-on-year quarterly earnings.

Creative blamed higher advertising expenses and an investment loss for profits declining to $4.8m (2.6m).

It said sales of its digital players were still "dramatically" rising.

The Singapore-based firm said sales across its MP3 digital music players, digital cameras and musical computer keyboards were up 164% in the three months to 30 September, although no figures were available for the MP3 players alone.

Festive boost

"We had dramatic sales increases for our MP3 players and our web cameras in the quarter," said Craig McHugh, president of Creative Labs, the company's US unit.

The firm saw quarterly revenues up 31% and said these would continue to increase into the key pre-Christmas trading period.

It also announced that it has suspended its plans to delist from the Nasdaq stock exchange in New York.

California-based Apple recently revealed that profits in the three months ending 25 September were $106m (59m), up from $44m a year ago, while sales totalled $2.4bn, their highest level for nine years.

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