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   Technology StocksCreative Labs (CREAF)


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To: Justin Pressley who wrote (220)11/19/1996 10:04:00 AM
From: Jonathan Quick
   of 13925
 
Justin,

I'm don't see anything wrong with CREAF, but here are
a few additional observations:

1.) The company has already begun to offer rebates on
its uninspiring Cirrus Logic Graphics Blaster line of video
accelerators. The longer CREAF stays in bed with CRUS,
the worse things are going to become.

2.) The company hasn't made a single announcement
concerning its video accelerator line at Comdex.

3.) Where in the hell is the Graphics Blaster Falcon???

Jonathan

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To: Jonathan Quick who wrote (221)11/19/1996 8:12:00 PM
From: See Lo
   of 13925
 
Heard that they still solving some driver bugs in the Falcon. It will be out probably in another two weeks time.

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To: See Lo who wrote (222)11/20/1996 2:23:00 PM
From: Ross
   of 13925
 
the CEO was supposed to be on CNBC this morning. Anybody know what was said?

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To: Ross who wrote (223)11/20/1996 3:47:00 PM
From: Robert Chi
   of 13925
 
Someone told me that this stock will be at $11.00 in three weeks. Is that possible?

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To: Robert Chi who wrote (224)11/20/1996 4:35:00 PM
From: kent bailey
   of 13925
 
Yes, it is possible. It could go to $11.00 tormorrow.

k

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To: Robert Chi who wrote (224)11/20/1996 5:28:00 PM
From: Ross
   of 13925
 
Robert, Who told you it was going to 11 and what was this recomendation based on? I own the stock and would be happy to see more buyers but would caution anybody against buying on a tip. If you have information I would like to hear it if you care to share it.

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To: Ross who wrote (226)11/20/1996 5:42:00 PM
From: wayne
   of 13925
 
Robert: Is it because of the CEO interview today?

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To: wayne who wrote (227)11/21/1996 12:20:00 PM
From: WILLIAM BLACK
   of 13925
 
Did anyone on the thread catch the CEO interview? I wasn't able to hear it? Did he say anything of significance?

Thanks in advance.

Bill Black

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To: WILLIAM BLACK who wrote (228)11/22/1996 3:07:00 AM
From: Scott Moore
   of 13925
 
Missed interview. Here is a friday AM headline from:

topnews.com

Comdex crowds good to Creative, Aztech

<Picture>Business Times (Singapore)
Creative's 3D Blaster graphics card and Aztech's desktop photo developer are so popular that the companies are already running out of product

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To: WILLIAM BLACK who wrote (228)11/22/1996 9:42:00 AM
From: Renkluaf
   of 13925
 
To: ALL

Everyone long CREAF should be aware they are in posession of a stock long ago declared dead, but in the process of being brought back to life. Just as every high-flyer continues to appreciate even after the first signs of trouble (amazing what inertia can do), so too does the deceased stock continue to grovel after its reincarnation has first evidenced itself. CREAF as a stock is a forgotten entity. Of the 3 investment banks who took them public on NASDAQ: Alex. Brown officially dropped coverage; Robertson, Stephens and Goldman Sachs haven't actively covered it since '95. Of the Sing-based analysts, only the Merrill analyst has actually had any contact with management this year. But, fear not. This is fairly typical and, given the company's performance over the last 18 mos., it was not unexpected. So much for history.

CREAF has gone through a gut-wrenching restructuring and has refocussed itself on its core competency - audio. They have de-emphasized CD-ROMs and the Multi-Media Upgrade Kits (MMUKs) in which they are found. Consequently, when you look at their FQ4 (June) or FQ1 (Sept) you see what most analysts (the few remaining from Sing) saw - NO GROWTH. However, look below the surface and you'll see the intial results of the restructuring (and resurrection) taking place. In the FY ending 6/30 audio was $662M (51% of total revs), up 49% y-y (not bad for a maturing business). MMUKs were $538M (41% of total revs), and DOWN 21% y-y. In Q4, audio was 57% of total revs, up 42% y-y, and MMUKs were 33% of total revs, down 13% y-y. Why is this important you ask? Simple, GMs on audio are very high (35+%) and the MMUKs are the big bleeder. Despite the fact that they have ceased giving out the product breakdown in FQ1 (Sept), you can be fairly sure that audio jumped dramatically again (est. +55%-60% Y-Y) and MMUKs were down again.

Despite the growth, the popular refrain has been that, it's a mature business that will all wind up on the motherboard (either via MMX or a separate part). This scenario's been around for quite a while and has yet to come true (look at the growth). Nearly every PC sold today goes out with audio. But what gets put on the MB is pure vanilla, lowest common denominator audio. CREAF has its own silicon, competes well in this segment and, I expect, will do much better in the coming months. But here again, customers want (as evidenced by board growht) much more than plain vanilla. As for MMX, even INTC will tell you it is not, nor was it ever intended, to eliminate boards. What it's intended to do is reduce their cost by eliminating some of the silcon necessary; i.e. do some of the highly repetitive instructions that are unique to analog (audio/graphics/video) information forms.

While the emphasis is on audio, CREAF has not abandoned "other" products. They just become much more conservative about discussing them and in their planning for them. 3D Blaster has essentially sold out what's been put in stores already and there's more to come in January both in the Rendition-based and 3DLabs-based products.

For all you COMDEX fans - CREAF's booth was packed (and contrary to the reference in the Sing. Straits Times Aztech's was empty). Their new card - AWE 64 (and 64 Gold) sounds fantastic. They were running a COMDEX special on the product and, at least thru Tuesday, were selling one every 3 mins. Lines to test Quake on 3D Blaster were consistently long. Everything they sell is on allocation, but they're not going to divert from the plan of improving profitability just to gain sales. In short, FQ2 (Dec) should be extraordinary!

For those wondering what CREAF's worth. Good question. Take ESST for example. Their audio business (virtually 100% of the company with declining margins) is valued at 4.0X (not uncommon valuation) trailing revenues. CREAF on the otherhand sells for 0.5X trailing revenues. You can do the math.

As I told Mr. Black a few weeks ago, sit back and enjoy the ride, cause this one's gonna be good!

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