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Last Updated: Wednesday, 3 May 2006, 05:43 GMT 06:43 UK
Creative Technology reports loss
Creative MP3 players
Creative has been struggling to keep up with market leader Apple
Digital music player maker Creative Technology has plunged into the red, as it continues to struggle behind market leader Apple.

Singapore-based Creative reported on Wednesday that it made a net loss of $114m (62m) for its third quarter to the end of March.

The figure exceeds analysts' forecasts of a $90m loss, and compares with a profit of $16m a year ago.

Creative said it had been hit by the falling price of digital music players.

It pledged to return to profit in the second half of 2006, saying it was renewing its focus on high-margin products, such as computer sound cards.

Savvy customers

Creative also said it had been hit by restructuring costs during its third quarter.

"We are examining each of our product categories to determine how we can improve revenues, return gross margins to 20% percent or higher, and reduce operating expenses as we target a return to profitability in the second half of the calendar year," said Craig McHugh, president of Creative Labs, the firm's US unit.

Analysts said the falling prices of the flash memory chips used in a growing number of digital music players meant customers were delaying purchases as they awaited better prices.

Yet while Creative struggles, market leader Apple last month posted a 41% jump in quarterly profit, and said sales of its best-selling iPod music player topped 8.5 million units during the period.


SEE ALSO:
Apple profits lead US tech icons
19 Apr 06 |  Business
Price pressure hurting Creative
26 Oct 05 |  Business
iPod helps Apple quadruple profit
12 Oct 05 |  Business
Apple unveils video-playing iPod
12 Oct 05 |  Technology
Creative wins MP3 player patent
30 Aug 05 |  Technology
Advertising costs hurt Creative
28 Oct 04 |  Business


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