iPod deal boosts rival's shares

Apple's iPods are the industry's best-selling digital music player

Shares of music player firm Creative have surged by as much as 38% after rival Apple agreed to pay $100m (£52m) to settle a long-running patent spat.

Creative shares rose as much as 3.6 Singapore dollars to S$13.20, before trimming gains to trade at S$11.50.

Regulators launched a probe into the dispute in June after Creative accused Apple of using its patented technology in the best-selling iPod music player.

Creative had called for Apple's iPods to be withdrawn from sale in the US.

'Larger market'

Instead, it agreed to accept $100m in return for licensing a software patent to Apple for use in all its products.

Creative also will be allowed to produce accessories for iPods, giving it access to a far larger number of consumers than it could have reached with only its Zen and Nomad digital music players.

"It gives Creative a dramatically larger market than what we have today," said Craig McHugh, Creative's president, adding that the deal provided "a huge revenue opportunity".

Creative will be able to access consumers of both its and Apple's players

Analysts said that while the deal would help Creative in the short-term, the company needed to look at how its business was structured.

"Competing with Apple remains an uphill task," said Don See, an analyst at DBS Vickers Securities. "Creative needs to move faster to make itself leaner."

The music-player firms had traded lawsuits after Creative accused Apple of infringing on its patented technology in its iPod music player. Apple duly retaliated with its own accusations of patent infringement.

Creative launched its own range of digital music players in 2000 and patented the software and technology it uses to organise music on its products such as the Nomad and Zen.

Apple said the deal ended all litigation between the firms, while Creative said it was amicable.