Creative Technology Ltd, Singapore-based maker of multimedia hardware and drivers for PCs, has announced that its revenues and gross margins for the fourth quarter ending June 30 will fall short of analyst expectations. Creative said revenues are expected to be about 10% lower than revenues for the same quarter last year, meaning it will record about $252m. The company had previously been anticipating sales to come in flat with the $280m posted in the year-ago period. Gross margins are now expected to be in the mid 20s, down from earlier projections of about 30%. It is not clear what that means for the bottom line, as the company wouldn’t divulge any information on what it previously expected in terms of net income. The consensus estimate of analysts surveyed by First Call was for $0.38 per share this quarter. Creative blamed the poor showing on the recent oversupply and resulting collapse of prices in the low-end and mid-range 2D/3D graphics market. The pricing pressure for graphics cards reduced margins and sales for the stand-alone products as well as its systems integrator bundles. Other problems for the quarter, the company said, were the decision not to ship any of it’s new Sound Blaster Live! PC audio card product in the quarter, price reductions for older audio products, and further downturns in Asian markets. The delay in shipping Sound Blaster Live! Was due to quality control issues with the accompanying software drivers, although a spokesperson said it was more an issue of extended testing than any specific flaw. It is expected to begin volume shipments to distribution channels in July. The company also insisted that its high-end 3D Blaster Voodoo2 graphics products have seen encouragingly strong sales. Thus, aside from the Asian economic concerns, Creative feels that the quarter’s problems were transitory and it will not be changing its previous guidance for the next fiscal year. First Call is looking for $0.57 per share for the first quarter and $2.64 for the full year.
