Creative survives with help from Apple payment

Creative survives with help from Apple payment

Struggling digital audio firm Creative Technology has reported that almost 90 percent of its profits for the past quarter came from rival Apple in the form of a one-off patent license payment.

This is not a very good news for the company as they have now vowed to cut costs to stay profitable.

Creative faces intense competition in markets they are present in. Apple already dominates the digital music and video player market and Microsoft itself has entered with their Zune player.

Creative has also already laid off some 300 staff, about six per cent of its global roster, from US and European units. And they have plans to cut more jobs in their operations.

Creative reported net income of just US$9.9m on sales of US$424.4m for the traditionally strong Christmas holiday season.

The company said: “Gross profit margin in the first quarter of fiscal 2007 were lower mainly due to lower average selling prices of digital audio players in the first quarter of fiscal 2007 compared to the same quarter of fiscal 2006 and inventory provisions resulting from the drop in selling prices of digital audio players.”