Technology companies generally may not provide consistent growth in earnings. Their profitability depends very heavily on the sales and marketability of their products. It is very competitive in this industry with many players rolling out new products to compete in the market. Companies like these thrive on research and development to innovate and come out with better and newer products frequently to compete with their competition. They also need to spend on advertising, marketing and educating users on their new products when released. So, companies like these have to spend huge costs in R&D and marketing. Not to forget they have to price their new products competitively to their competition since their competition may come up with similar new products to rival for market share of customers.

So, huge costs that needs to be spent constantly to maintain the business, no matter whether there is sales or not. If the sales of their products is not doing well or if there is no more newer products rolled out to compete with competition, the company may go out of business soon. However, if there is newer products that is better than the competition, it can be very profitable for the company since customers will go for the technology products that are better and newer.

In conclusion, inherent recurring huge costs of operations coupled with fluctuating earnings depending on innovation and competition of products sales makes such companies very difficult to ensure a constant stream of earnings. It is therefore not surprising that Creative's shares once soared to sky (on sky high optimisim for their high earnings few years back) and now has already dropped significantly (since the business is making losses now).  

knightrider      ( Date: 07-Aug-2008 10:34) Posted: That is not truth ! In past years, market rumours that Samsung is always eyeing this brand, just that the founder did not want to let go ! This will definetly not become a penny stock ! It took Mr. Sim more than 20 years to build this brand. I still have faith in this counter just not the right time to get in yet. Read the reports from BT,  7 Aug 2008 ! Creative posts US$31.7m Q4 net loss By ONG BOON KIAT (SINGAPORE) An US$11.7 million restructuring charge has dragged Creative Technology to its biggest loss in nine quarters, as revenue fell 15.6 per cent from a year earlier. The homegrown tech giant posted a net loss of US$31.7 million for the fourth quarter ended June 30, compared with a loss of US$19.3 million for Q4 last year. On a per share basis, the net loss came to 40 US cents, compared with a net loss of 23 US cents previously. For the full year, the net loss totalled US$19.7 million. This compares with a net income of US$28.2 million last year - but that result was helped by US$100 million paid by Apple for its use of Creative's ZEN patent in its products. For the latest Q4, Creative's sales slumped 15.6 per cent to US$139.5 million, from US$165.2 million a year earlier. Full-year revenue came to US$736.8 million, 19.5 per cent less than US$914.9 million previously. Looking ahead, Creative said yesterday that operating expenses have been 'significantly reduced' through restructuring efforts in Q4. The company is aiming for a 10-15 per cent reduction in operating expenses in the current Q1 compared with the preceding Q4's US$61 million, said Creative Labs president and chief operating officer Craig McHugh. Q1 revenue is expected to be between US$130 and US$140 million, he said. Revenue for Q1 last year came to US$184.6 million. Mr McHugh said adverse 'macro-economic conditions' will continue through the company's coming Q2. Due to this, and the possibility that Creative may be 'de-emphasising' some of its 'underperforming businesses', revenue this quarter is expected to be lower than that last year, Mr McHugh said. In Q4, Creative sold US$69.8 million of personal digital entertainment products, equivalent to 50 per cent of its total Q4 revenue. In the year-ago period, revenue from this category was US$94.2 million, or 57 per cent of total sales. Europe accounted for 40 per cent of overall Q4 revenue. Then came the Americas, with 34 per cent. Asia and the rest of the world made up the remaining 26 per cent of sales. Creative completed the sale and leaseback of its headquarters building in Jurong for $246.8 million in Q4. It has leased back the building for five years, with an option for additional lease periods of three and two years. The sale gave Creative a gain of US$147.9 million. This amount will be treated as a deferred gain, to be amortised and recognised in the company's income statements over the lease term of five years. Creative also made a US$100 million loan repayment after the close of Q4, and this will be reflected in its balance sheet for the current Q1. Creative's share price closed unchanged at $5.80 yesterday.

By ONG BOON KIAT

The homegrown tech giant posted a net loss of US$31.7 million for the fourth quarter ended June 30, compared with a loss of US$19.3 million for Q4 last year. On a per share basis, the net loss came to 40 US cents, compared with a net loss of 23 US cents previously.

For the full year, the net loss totalled US$19.7 million. This compares with a net income of US$28.2 million last year - but that result was helped by US$100 million paid by Apple for its use of Creative's ZEN patent in its products.

For the latest Q4, Creative's sales slumped 15.6 per cent to US$139.5 million, from US$165.2 million a year earlier. Full-year revenue came to US$736.8 million, 19.5 per cent less than US$914.9 million previously.

Looking ahead, Creative said yesterday that operating expenses have been 'significantly reduced' through restructuring efforts in Q4.

The company is aiming for a 10-15 per cent reduction in operating expenses in the current Q1 compared with the preceding Q4's US$61 million, said Creative Labs president and chief operating officer Craig McHugh.

Q1 revenue is expected to be between US$130 and US$140 million, he said. Revenue for Q1 last year came to US$184.6 million.

Mr McHugh said adverse 'macro-economic conditions' will continue through the company's coming Q2.

Due to this, and the possibility that Creative may be 'de-emphasising' some of its 'underperforming businesses', revenue this quarter is expected to be lower than that last year, Mr McHugh said.

In Q4, Creative sold US$69.8 million of personal digital entertainment products, equivalent to 50 per cent of its total Q4 revenue. In the year-ago period, revenue from this category was US$94.2 million, or 57 per cent of total sales.

Europe accounted for 40 per cent of overall Q4 revenue. Then came the Americas, with 34 per cent. Asia and the rest of the world made up the remaining 26 per cent of sales.

Creative completed the sale and leaseback of its headquarters building in Jurong for $246.8 million in Q4. It has leased back the building for five years, with an option for additional lease periods of three and two years.

The sale gave Creative a gain of US$147.9 million. This amount will be treated as a deferred gain, to be amortised and recognised in the company's income statements over the lease term of five years.

Creative also made a US$100 million loan repayment after the close of Q4, and this will be reflected in its balance sheet for the current Q1.

Creative's share price closed unchanged at $5.80 yesterday.