Kim Eng on the Faith of Creative -Sell, Sell, SEll!

SINGAPORE (XFN-ASIA) - Kim Eng Securities said it expects
Creative  Technology to report a first quarter to September net loss of 18.50 mln  usd on Thursday morning as the consumer electronics maker continues to suffer margin declines in the MP3 player market.


"Excluding about 20 mln usd in inventory write downs in the
Fourth quarter to June, losses would have widened from 12 mln usd (in the previous quarter) as margins continued to decline," Kim Eng Securities analyst Dharmo Soejanto said in a note


          
He estimated the gross margin to have narrowed by one percentage
point to 15.8 pct in the first quarter to September.

"Its MP3 players are likely to face further margin pressure with
stiffer competition (going forward) , especially as Apple has launched
new players like the iPod Nano."


"Moreover, the launch of the Nano would have led to tightness in
supply for flash memory chips, which are used in many of Creative's
MP3 players," he said.


Soejanto added that there is a risk Creative will continue to
Incur losses even in the usually seasonally strong second quarter to
December as MP3 margins will likely fall by another two percentage points in the current quarter


Kim Eng has a "sell" rating on Creative.

Creative closed yesterday up 0.10 sgd at 12.70 in Singapore. On
Nasdaq overnight, the stock fell 0.10 usd to 7.38.