Apple Settlement Lifts Creative’s Q2 Profits

Creative Technology Wednesday reported net income of US$92.2 million for the second quarter of its fiscal year, largely due to a one-time licensing payment by Apple.

Creative, which makes MP3 players and PC audio components, said net income was sharply higher over the same period one year ago, when it reported net income of US$8.2 million. The company’s second-quarter revenue, at US$425 million, was also higher than the same quarter last year, when it generated sales of US$391 million.

The big jump in net income during the second quarter came largely from a US$100 million licensing payment received from Apple. That payment contributed $82 million in net income, Creative said. Excluding the Apple payment and investment gains, Creative’s net income for the second quarter was $9.9 million, it said.

The Apple licensing payment was made under the terms of a settlement reached last year, following a patent dispute between the two companies. Creative was initially expected to record the payment during the first quarter of its fiscal year, but instead recorded the payment during the second quarter.

-Sumner Lemon, IDG News Service (Singapore Bureau)

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