Creative Technology AGM - 29 Oct 2009

The AGM was not very well-attended as there were a lot of empty seats in the auditorium. Considering the company having nearly 14,000 shareholders in the list (Based on the latest annual report), it was indeed a very poor turnout.

The focus of the AGM was on the Zii platform and how much the company is going to burn cash in supporting this new product line. Questions had been asked when the company can break-even and how they are going to execute their strategy going forward. Mr Sim gladly took most of the questions and explained in detail his strategy for Zii going forward. He also recalled the difficulty when he started to market Sound Blaster years back but succeeded in convincing the US market and became the authority for PC sound. He sounds confident that he can duplicate the success this time with Zii in China.

As for the question for the fear of the chip being copied, Mr Sim assured shareholders that the Zii chip will not be able to be duplicated by other manufacturers. Meanwhile, to sustain Zii, he is diverting the cash flow from the other businesses into it.

Shareholders are obviously concerned about the burn rate with one citing $10 Million burn-rate per quarter, but with US$250 Million cash in the balance sheet and bascially debt-free, Mr Sim was confident that he can make it through this time round. He also expect Zii to start contributing to the bottom-line in two years time. He said that Zii is not only a chip, it comes with a SDK (Software Development Kit), OS (Operating System) etc. Developers can choose to customize their own applications by using the SDK provided. Zii also support Android, a great news for Google fans.

The future of Creative is certainly with Zii. With cash from selling their headquarters building (Creative Resource) and from their other businesses, it remains to be seen how long the company can sustain with Zii yet to be profitable. Shareholders like me will be hoping Mr Sim can pull out the rabbit out of the hat from Zii this time round.