Wednesday, April 5,2006 @ 1:50pm
Creative warns of operating loss
Creative Technology today warned of an operating loss in its fiscal third quarter that ended in March, saying lower margins and inventory write-downs were responsible. The company's Zen and Nomad media players are in direct competition with Apple's iPod line, and while Creative's players work with Windows Media Player, the devices are incompatible with the iTunes Music Store. Creative warned in February that it would realize one-off charges of approximately $9 million due to graphic unit restructuring, and now the company expects an operating loss of $55-65 million on revenues of $220-230 million, according to Reuters. "The operating loss is primarily attributable to a drop in flash memory prices in the quarter," Creative said. "The sharp drop had a significant negative impact on sales in March and resulted in lower revenues and gross margins and inventory write-downs in the period."