Creative Tech Closes US Ops, Cuts 10% Of Staff

Singapore-based multimedia company Creative Technology Ltd [NASDAQ:CREAF], best known for its SoundBlaster audio cards for PCs, said today it will cut 10 percent of its workforce and scale back new initiatives in a restructuring blamed on a difficult economic climate. During 1999 and 2000 Creative Technology had expanded into interests ranging from Internet access and physical stores in Singapore, music retail sites and search site partnerships, through its traditional PC sound card business, to the actual manufacturing of chips for audio applications. The year 2001 marks an end to this branching out. Today Creative Technology said it will sack 10 percent of its global workforce and cut back on "selected non-revenue generating Internet initiatives." The Singapore-based company will also close its manufacturing operations in Malvern, Pa., consolidating them into the company's Singapore operations. The financial result, according to the company, is a one-off restructuring charge of about $15 million to $20 million and a write-down of approximately $65 million against now-less-attractive investments, both in the current quarter. "Although we are still targeting our guidance of $260 million to $270 million for revenue and 27 percent to 28 percent gross margins for the current quarter, we believe that we need to take more aggressive actions than originally planned, given the severity of the economic climate and prolonged difficulties in the system builder space," said Craig McHugh, president of Creative Labs Inc.