Creative MP3 Sales Jump 50%; Profits Off $53 Million

Creative Technology Ltd. said Wednesday that while its sales had soared by 50% last quarter, profits plunged US$53.4 million after acquistion charges. Despite the lackluster numbers, Creativeis CEO feels the company is on track to challenge Apple Computer and its dominance of the digital media device market.

Company chairman and chief executive officer Sim Wong Hoo said sales revenue was $375 million, up from $250 million in the same period a year before. Creative sold two million MP3 players in the quarter, coming close to doubling its cumulative sales of the devices, which had stood at about three million.

Mr. Hoo said the profit picture was not as bleak as it looks. Excluding one-time charges related to recent acquisitions, the companyis profits only fell slightly from $28.3 in the year-ago quarter to $25.5 million.

Creative has made it publicly known Apple and its iPod digital media device is the prime competitive target and that it will remain aggressive in products and pricing to gain market share. Creative is the number one selling flash-based MP3 player in the world with close to 15% of the market. As for hard-drive based players, it controls less than 3% of the market, while Apple dominates with 90% market share.