Creative is a company that is known to thrive in adversity. The adversities we are now facing, both internally and externally, will serve to propel us forward, albeit more carefully.
I am very excited about this new vision, which we will unveil in the next quarter, and anxiously awaits to tell you about it.
Let me now give you a recap of the financial performance for the past fiscal year.
Fiscal 2008 continued to be another extremely difficult and challenging year for Creative.
We had planned to focus on returning to profitability by focusing on several key areas on both the product and operations fronts.
In July 2008, Creative repaid the entire $100 million outstanding balance of its syndicated term loan. With this repayment, Creative is now practically debt-free, with no outstanding bank borrowing. This has positioned us well to take advantage of the opportunities offered by the new product line and business model that I mentioned earlier.
Finally, I would like to thank all of you for your patience with Creative. We need this wide breathing space to prepare the company for the exciting opportunities ahead. I believe it will be something you will be very proud of.
To Believe in the Impossible.
Sim Wong Hoo
Chairman & Chief Executive Officer
Reading between the lines:
"Creative is a company that is known to thrive in adversity. The adversities we are now facing, both internally and externally, will serve to propel us forward, albeit more carefully."
Creative created a fantastic PC that had sound, graphics and a Chinese Operating System called the CUBIC CT in 1986 which failed badly because it was simply a product "5 years ahead of its time". In 1996, Creative lost some USD$56million when the CD-ROM market crashed. Apple robbed Creative off it's number 1 position in the MP3 market although Creative has a head start with the NOMAD. As I have said previously, "At the end of the day, the fact that we have the courage to still be standing is reason enough to celebrate." I'm very proud that Creative has never given up and look where it is today.
"a totally new Creative, with a new product line and a new business model,"
To recreate a totally new Creative, obviously you have to start from the bottom of the company hierarchy. I'm of course referring to the Sales and support staff. I have heard countless complains about rude sales staff at the Creative HQ in Singapore and mediocre after sales/ RMA service overseas. This point has been raised from time to time and it seems that nothing much is being done. Hopefully someone from up above (where the light comes from) sees this and do something to improve the situation. We have seen Creative moving away from the low-margin, throat cutting MP3 market into other areas like video capturing/conferencing. inPerson and Vado marks Creative's re-entry into the imaging capturing market. I see the Vado as another potential flagship product for Creative as it's highly affordable and there's an actual demand for it in the market. While with inPerson, it has already created a new business model by charging a monthly subscription fee. This seems to be a more lucrative and sustainable business model compared to one where a customer purchase a product, and no revenue is generated further. I see Creative heading towards this direction. Could a new product line be gaming consoles with subscription (like Xbox Live?) or maybe a ZEN Market place?
"Finally, I would like to thank all of you for your patience with Creative."
It's very comforting to hear something like this coming from a CEO. It's like saying: "I know we haven't been performing up to expectations but thanks for sticking with us. Rest assured things are changing for the better!"
"I believe it will be something you will be very proud of. To Believe in the Impossible."
"We are so going to kick Steve Jobs's ass and dethrone iPod! "
What do you think of Sim's message in the Annual Report? Tell us in the Comments Section below!