Creative reported sales for the second quarter of $427 million, slightly above the company’s revised second quarter revenue expectation of $410 to $420 million. This compares to sales of $436.8 million for the same quarter of the previous year.
Net income was $26.5 million and earnings per share were $0.33, compared to net income of $44.5 million and earnings per share of $0.52 for the same quarter last year. Second quarter fiscal 2001 net income includes investment gains of $0.5 million or approximately a half-cent per share, compared to gains of $9.2 million or eleven cents per share for the same quarter of the previous year.
Sales for the first six months of fiscal year 2001 were $731.4 million, compared to $705.9 million for the same period last year. Net income for the first six months of fiscal 2001 was $44.1 million or $0.53 per share, compared to net income of $55.3 million or $0.65 per share for the same period last year. Net income for the first six months of fiscal 2001 includes investment gains of $2.9 million or $0.03 per share. Net income for the first six months of fiscal 2000 includes gains of $13.6 million or $0.16 per share.
During the quarter, we experienced a significant shortfall in demand and revenues from our system integration and OEM channels, which came in below our forecasts, said Craig McHugh, president of Creative Labs, Inc. This caused us to announce revised expectations in December, as the slowdown of our sales into these channels negatively affected audio revenues, which impacted our gross margins.
By contrast, we achieved strong results with our Personal Digital Entertainment (PDE) products, especially the NOMAD Jukebox. During the second quarter, revenues from PDE grew by 166% over the same quarter of the previous year, accounting for more than 10% of total sales. The PDE category is key to our strategic direction and has enjoyed success, independent of new PC system sales, as it targets the installed base of consumer PC users and the retail market, where we saw very strong performance during the quarter.
The NOMAD Jukebox was the hot product on a lot of holiday wish lists, said Sim Wong Hoo, Chairman and CEO. As we announced earlier this week, we have now shipped 100,000 units. The reception at the CES show in Las Vegas for both the current NOMAD Jukebox and the future direction of the product line was outstanding, and Creative has clearly positioned itself not only as the innovator, but as the leader in digital audio. We intend to focus our vast worldwide engineering and marketing resources on the digital jukebox market. Even with the downturn in the PC market, our PDE strategy and the NOMAD Jukebox have positioned the company for a bright future.
During the quarter, Creative continued its share buy-back program, repurchasing approximately 240,000 shares at a cost of $3.9 million. Subject to market price and conditions, and securities law restrictions, the company plans to continue its buyback program during fiscal year 2001.
