Creative Delisting from NASDAQ = Impending Doom?
I visited Creative's site this morning hoping to see if there were any new players announced. Instead, there's a Press release stating Creative's intentions to voluntarily delist
from NASDAQ. This means, Creative is removing their stock from the US Stock Exchange and will not be obligated to file any US financial reports. The reason for this move? To apparently save some money. With the release of the Zen Stone, and some knowledge of their upcoming players, I felt that Creative was making baby steps on their road back to success. This move says otherwise. Creative still sees this as a good thing however, since US Shareholders are allowed to trade on the SGX-ST
Rationale for the Delisting from NASDAQ
Creative listed its shares on NASDAQ following a public offering in 1992. The primary listing on SGX-ST was added in 1994.
The administrative overhead and cost of the evolving and increasingly burdensome U.S. reporting obligations has become significant, especially for Creative, a Singapore company with dual primary listings - particularly in relation to the limited benefit that Creative believes it presently derives from its NASDAQ listing. Over the past year, Creative's SGX-ST trading volume has significantly exceeded the Company's NASDAQ trading volume....Additionally, there has been a trend for Creative's shares to move from NASDAQ to SGX-ST, where the majority of its shares are currently registered. With the low trading volume and small number of Creative's shares on NASDAQ, and the accessibility of the SGX-ST to the U.S. shareholders, Creative believes the costs of maintaining its NASDAQ listing and continuing with its U.S. reporting obligations are no longer in the best interest of the Company and its shareholders.
I don't know a lot about the stock market, but I do know delisting from NASDAQ is a good indicator of a company going out of business. There's only so much a company can do after losing money in nearly every quarter over the last two years. I do wish Creative can turn things around, but that small glimmer of hope just got narrower. Press Release
After doing some more research, and reading some comments from our members here, I'm starting to see that this wasn't as big as I thought. I still think it's unfortunate that they had to delist, but if US reporting is a hassle and not worth the time and money for Creative then it was a good move. . I apologize for jumping the gun, but it was written based on the constant signs of decline over the past two years. I doubt I actually made any people run away from Creative and their products with this newspost. If anyone is hesitant about Creative's future, this newspost probably isn't the best example to use. I promote Creative as much as I can, so the last thing I want to do is hurt their sales or anything.
| Thursday, June 14 (2007) 05:19AM | Posted by: ssjmichael
Jun 14 (2007) 05:52AM
On the other hand, there are tonnes of advantages to being a privet company, which is what Creative Labs (Creative's US subsidiary, which is being delisted) is going to become.
I mean look at Stardock, they're privet and get along great, and can even do some things that a public company could never do.
Jun 14 (2007) 05:54AM
Do note that the Sarbarnes-Oxley (SOX) reporting requirements for companies listed anywhere in the US are horrendous. Other european companies have already delisted in the US for the same reasons. Do not underestimate the cost of these requirements. They can cost millions yearly to comply with.
This maybe a very sensible move.
Jun 14 (2007) 06:01AM
Creative looks like they made a good move here. You have to look past the present, and into the future. Like The Pieman said, "They can cost millions yearly to comply with." The companies have to waste so much money just to make up the US reports, its ridiculous. Sure, large companies like Apple can afford it, but Creative is trying to cut as many unnecessary costs as possible. They are still trading on the SGX-ST, and they still have a great player lineup. Hopefully all of their new players coming out this year will sell well, and Creative will show signs of getting back to where they were a couple of years ago.
[ edited Jun 14 (2007) 06:06AM ]
Jun 14 (2007) 06:01AM
Yes.. It did for me too. ..
That doesn't sound that good..
According to Wiki, It IS quite a bad sign.!
I do agree with you.
Maybe Creative aint taking the risk's by releasing high end new players or anything.
Maybe thats one of the reasons why it's releasing iPod products.
'baby steps on their road back to success'... Hopefully yeah !
what exactly happened that made Creative loose their cash ?
It did with the patent fight.
and got $100 million !
Jun 14 (2007) 06:03AM
lol....when i saw this i thought it was nascar and they were doing a sponsorship deal...i was very disapointed
Jun 14 (2007) 06:34AM
from how I read that it sounds like the stock volumes on the US NASDAQ are simply not justifying the expense of maintaining the listing. De-listing from NASDAQ typically spells doom for US companies, and companies abroad that generate the majority of their revenues by selling their products in the US.
Creative always gave me the impression that they do not regard the US market for their DAP's as highly as other DAP makers do, because they never put much competitive efforts in advertising their products to the US market like they do in Asian and European markets. Also, it seems that whenever a new Zen player comes out, it takes awhile for it to be released in the US, while it was released for the Asian and European markets first. Being an Asian country, it should be expected...
If they are seeing as much trade volume on the SGX-ST by US stockholders as they do on NASDAQ, and overall the volumes do not justify the cost of reporting, then I can understand their move here. Doesn't necessarily mean anything ominous for Creative......
[ edited Jun 14 (2007) 06:36AM ]
Jun 14 (2007) 06:34AM
Heh, at any rate, I read the whole press release, and I have come to the conclusion that this is not a bad thing. They are still trading locally and US citizens can trade on the Singapore market, where creative says they are doing much better
[ edited Jun 14 (2007) 06:34AM ]
Jun 14 (2007) 06:58AM
I have very little knowledge about Stock markets especially in the U.S., but i just hope that everything happening is for the good..
Jun 14 (2007) 07:16AM
I think you might be getting way ahead of yourself claiming doom. There are many companies that lose money over the course of a fiscal year or more.
A company the size of Creative is not going to go shut its doors after only a 2 year downturn or so.
GM lost over $1 billion in a single quarter and has had poor earnings for a long time. In 2005 GM lost over $8 Billion... No that is not a typo either. $8.46 BILLION but honestly who's counting? in 2006 they had huge losses too, but not as bad 05. Are they going to shut down too? Of course not. The Airelines in the US have had poor earnings since for even longer due to high fuel prices, terrorism, weather, and stiff competition. Are they going to shut down American Airlines, Delta, Continental, United? No. The airlines have been hammered for about 6 years.
No they've all restructured and refocused. Same with Creative. It takes a while and sometimes it takes a long time to go to profitability, but to proclaim the end is a little off base especially for a company that has their stocks mainly in foreign markets. There are a number of foreign companies that don't trade on any of the US markets, and now Creative just happens to join them.
Can they go Bankrupt? Sure they can, but I wouldn't count on it just yet.
Jun 14 (2007) 07:22AM
Sorry.. GM actually lost $10.4 Billion in 2005 and not $8.46... damn them and their silly accounting practices.
Jun 14 (2007) 07:46AM
Don't worry, the ZEN WAV will save them...
Jun 14 (2007) 08:23AM
Nasdaq is extremely expensive to be listed in, use their services, and then make up financial reports. As others have said Creative is trying to eliminate every single un-needed cost, this saves them money for developing new players and other products, building, advertising (yeah...right), and releasing to eventually get their money back.
[ edited Jun 14 (2007) 08:24AM ]
Jun 14 (2007) 08:37AM
Last i looked the Creative brand (CREAF) was trading at $5.20 a share. Still higher than Gateway ($1.70) but the stock has seen better days.
|The Big M
Jun 14 (2007) 09:32AM
Heres some advice: GET A FRIGGING MARKETING DEPARTMENT TO SELL YOUR PRODUCTS!!
Jun 14 (2007) 10:19AM
I would concur with most of Lacene's comments.
However,IMO Creative's management team problems.. and that is what this all stems from, hasn't had a firm grip on the direction of the Company for a long time. Haphazard fits and starts just emphasize the obvious lack of a coherent long-term plan... putting out fires.. is not.. a plan.
All-in-all this isn't especially good news from Creative.
[ edited Jun 14 (2007) 10:22AM ]
Jun 14 (2007) 10:57AM
Yeah. If I just looked at Creative's Press Release and took it for what it is, I'd say this was a good thing. But it's also in Creative's interest to frame it as a good move so that their stock doesn't sink more. I've been looking at their stock every day and it's steadily been going down. Just lately it's picked up a bit. Like I said, I didn't make any conclusions based on this, but it just seems like a good indicator of bad things to come.
Some companies can take losses every quarter for some time. I don't think Creative can though. They don't have billions like GM does. I feel the same way as Utew, and believe they have some management problems. They really would benefit from some inner re-workings
I could be way off here by saying this is an indicator of doom, so I do thank those more knowledgeable in the stock market for their input and I look forward to learning more.
[ edited Jun 14 (2007) 10:58AM ]
Jun 14 (2007) 12:25PM
I doubt creative will go out of business.. if anything it could be a possible sale target for a company with deeper pockets and technology. There are a number of possibilities: Hitachi, Sony, Sandisk, Philips, Archos/Cowon, Microsoft. There is yet room for consolidation to compete against Apple (Better to do it at +10% of marketshare than less than 5%). This probably needs to happen as Apple diversifies into wifi phones.
Jun 14 (2007) 01:08PM
If Creative goes out of business, what will happen to epizenter???
Jun 14 (2007) 01:15PM
We'll convert into a Buddhist site
Jun 14 (2007) 01:20PM
Jai guru deva om!
Jun 14 (2007) 07:44PM
Ommmmm Mani Padmi Hummmmm...
, I kind of like that idea.. however the celibacy rules might cut the Member base back a bit.... (no pun intended)
Are those new prayer wheels tactile or touch control?
Jun 14 (2007) 08:39PM
haha.. lol !
Still... Keep the way it is !!
But .. That day WONT COME!
Creative got a long way to go (hopefully :S )
Jun 14 (2007) 08:50PM
Volvo did the same thing today!
I think that you Chicken Littled this news post Michael. Creative is trying to trim the fat and we can see that their internal changes are paying off with the release of the Stone and accessories so close together. What Creative player has released with accessories available immediately after launch?
I think this site is great at promoting education and understanding of Creative's products yet anyone looking at the last paragraph on the main page today would probably run the other way instead of buying a Creative MP3 player!
Jun 14 (2007) 09:15PM
Oh.. pretty cool !
Jun 14 (2007) 11:07PM
Who_ME I wasn't really trying to blow this out of proportion. I merely have been seeing signs of decline for a while, and I'm sure others have as well and this just stood out to me as an "ut oh" indicator.. I never said this move is definitely going to lead them out of business, but it's unfortunate that they had to delist to save money.
I've been pretty optimistic for Creative's success over the last two years so I think I'm allowed to have one day or so when I lose a little hope
I'm still a big fan of Creative though, and I'm still hopeful overall that they'll get back in shape. It won't be easy though. You know what I want? I want Creative's future to be a total 180 from the feeling I had when I wrote this. They have the ability to do it, but something has to change.
I had this idea for a while so I think it's a good time to write something up: I'll be making a multi-part article on things Creative can do to help turn it around. That is, things I'd do if I ran the company
..They aren't huge moves, and some have been stated already. Just some things I think they can do to rework their image and make some money.
[ edited Jun 14 (2007) 11:21PM ]
Jun 15 (2007) 12:57AM
the one question i have about all this. Will Creative Labs still be shipping creative brand mp3 players in the US or are they only going with speakers, mice, webcams and the such.
this article really has me worried for american creative whores like myself who are being stifled by the increasing number of apple and microsoft mp3 users. i really hope this doesnt mean i will have to import new players from singapore just to get good stuff.
Jun 15 (2007) 01:11AM
I don't think it will affect them selling the products here. I was actually thinking the same thing initially which is why I was really concerned. This just relates to their stock, and not their product line as far as I know.
One trend that has been happening is Creative selling morre and more players in Europe compared to N. America. N. America used to be their biggest area of sales. They really need to regain some interest over here before Apple and Sandisk (and now Microsoft) gain greater recognition.
Jun 15 (2007) 05:00AM
Michael - If you want to help Creative, think about this -- this post may actually SCARE people away from buying a Creative player.
After all, who wants to buy a product from a company with impeding doom?
I see this as a non-event. More than 90% of the shares are traded overseas, and USA investors can access that market through online trading on the web. It's more efficient for the company and investors.
Also, Creative had proposed this idea a few years back when the Sarbanes-Oxley rules first went into effect, then decided to hold off to see how much of a burden it would be. Check the older SEC filings if you'd like to find it. So this predates the recent string of losses.
Jun 15 (2007) 05:35AM
Well, that's just frickin scary! So much for an updated Zen M. I find it hard to believe they will release an update for it.
Jun 15 (2007) 08:58AM
As long as it doesnt affect users who trade there shares. how would this really be a bad thing. Perhaps if the company was US based you would be worried.
Profitability might have gone down but the competition is saturated with new players. You can only spread yourself so far before cracks begin to appear.
Creative need a wii-controller moment
x-fi aint bad this is just round 2 for the long term.
Jun 15 (2007) 10:47AM
I think there will absolutely be a ZEN Vision:M replacement. It will be 2 years in December that the ZVM was announced and released so they are overdue for a re-vamp.
Hopefully it will be a screen that is comprable in a slimmer form factor with the docking connector, all the hardware and software goodness of the ZVM and possibly flash-based. I don't know about the interface though as I think the touch screen would be over-the-top and too much like the new iphone.
I think that all these features are within Creative's capability and the fact they released the Stone accessories along with the player may mean they will do the same with the ZVM replacement.
I'm looking forward to it although my nearly 18 month-old ZVM is going strong with no problems EVER!
Jun 15 (2007) 12:06PM
Here is a newspaper clipping from MyCreative FanSite[Linky]
Jun 15 (2007) 12:44PM
I did a little more reading up on it, and I understand why you guys say this is a good thing. I've updated my post to write this. I don't think my newspost is actually going to make people run away from Creative, we aren't that popular yet.
I didn't see this delisting as being a deciding factor in Creative's future. I felt like it was just one more blow to a company that has taken a few already.
Jun 15 (2007) 01:22PM
You do an excellent job on keeping this community informed on Creative news.
I have to agree with Ron that you may scare off someone looking for information on Creative with the tone of your post.
Keep up the great work!
Jun 15 (2007) 03:40PM
Delisting, in general, has a negative connotation because you are forced to delist if the value of your stock drops too low (below $1 I think). Obviously it is a bad sign if you are delisting for that reason. Creative was delisting for other reasons, so I don't think one should leap to the conclusion that it must be bad.
Jun 18 (2007) 04:44AM
Very nice update but it does make one speculate Creative future in the mp3 market. I'm beginning to predict if they don't succeed in the mp3 market soon with a new Zen they probably just gonna cut the whole Zen and just make iPod accessories.
Jun 18 (2007) 07:48AM
Thanks for adding the "update" to the post. This site continues to be an excellent resource for the company's news and products, and I appreciate all the time you put into it.
The title of the post -- "Creative Delisting from NASDAQ = Impending Doom?" still hits me the wrong way. What does the community here think of "Creative returning to Singapore Stock Listing -- citing the cost of Sarbanes-Oxley compliance?
Just wondering if the title is reflective of the thoughts of the community or the situation.
Jun 18 (2007) 12:24PM
The title to me was a summation of the downward spiral that Creative seems to be going through. The delisting itself isn't a killer blow, but I felt it was just one more thing to add to an already shaky ground.
-Reporting losses every quarter (except the one where Apple's settlement was factored in)
-Their sales in N. America are decreasing as of late
-Sales of products like the Xmod aren't where they should be.
-Their stocks have been decreasing nearly every day over the last few months and brokers are putting the sell sign on their stock.
The delisting adds to this. I feel the combination of the delisting and the decreasing sales in N. America is taking away from their presence in this area. I believe this region is extremely important to their success. We don't know how popular the Zen Stone will be, but the buzz it initially had doesn't seem to have done anything different than previously released players.
I also don't think enough has changed for them to start making money. I really can't pinpoint the problem either. We can just blame it on marketing, but there's a bit more to it too. Creative is getting their memory cheap now, maybe not as cheap as Sandisk, but that's not the reason one company is doing better than the other. It takes money to make money, but if they keep losing some every quarter there won't be tons left to do anything. If they stop selling players in certain regions, or stop making accessories, or do something drastically (and negatively) different, then that is the impending doom I wrote.
I'm still hoping for a turn-around but I'm also seeing certain indicators happen before my eyes. I've done my best to get people to support Creative, both onlne and in person, and I will continue to do so.
[ edited Jun 18 (2007) 12:26PM ]
Jun 18 (2007) 01:56PM
Reading what you wrote recently ssjmichael has caused me to worry about Creative's dap and pmp future along with the comments from other members and personally reading some of their financial reports online. I will continue to do my part by supporting Creative whenever I can. I have two mp3 players and one optical mouse from them and they are all of great quality.
Jun 18 (2007) 06:04PM
I don't think you "chicken littled" this at all Michael. You can slant this story however you wish and of course Creative is going to put a positive spin on it. The bottom line is that a company who delists in order to save a few million dollars is not a company that's in good shape. They would be better off using redundancies instead of the delist they have chosen to employ. Cutting costs is good and being efficient is good, the thing is that a company that is in good financial shape sees the few million dollars they have to spend as far as being on the Nasdaq is concerned, as the cost of doing business. As for the comments on here about airlines being in bad shape and still going, that's because the government has given them huge(billions) in subsidies, that's the only reason they're still operating because it's in the country's best interest to have air transportation, I don't see a government helping out Creative. I wish more people would look at Creative's financial statement, it was eye opening. The sales figures are miniscule when compared with even a modestly sized company and the profits, well, there haven't been any in quite a while.
Jun 18 (2007) 06:56PM
Would you say Volvo, which is owned by Ford, is in bad shape? They announced their delisting the same day as Creative? See my link above.
Jun 18 (2007) 11:43PM
I would say Ford is trying to sell them off as well as Jaguar and Land Rover which Ford also owns. I just think that a company that is financially sound isn't worried about a few million dollars it has to shell out for being listed in a stock exchange. They can't be bothered to complete the paperwork and follow protocol, sounds fishy is all I was implying.
Jun 19 (2007) 12:05AM
Just because both companies delisted does not mean both are suffering. Typically delisting is an indicator of a sinking ship, but not always. I don't think you can just compare the two based on that. Is Volvo reporting losses every single quarter? Are they losing marketshare quarter by quarter? Are there multiple signs of decline? If not then the two situations shouldn't be compared. Creative on the other hand is experiencing all of the above.
If you can honestly say this delisting is unrelated to their financial woes then I commend you. I can't separate them fully though. Yes, both companies have similar goals of cutting costs, but Creative's need to cut cost are more vital than Volvo. I wouldn't even be surprised if Creative just had a meeting and brainstormed various ways to save some money, and delisting was brought up. It almost feels like a desperation move on Creative's part. Why didn't the company delist before? Volvo has been delisting from various stock markets over the last 6+ years. NASDAQ is just the latest for them.
Again I stress, I in no way said this and only this is the reason I wrote "Impending Doom?". It is a combination of things I've observed over the last two years+ that is making me say this.
[ edited Jun 19 (2007) 12:47AM ]
Jun 19 (2007) 12:18PM
Michael, no apologies needed, all signs point to it being a desperation move. Where there is smoke, there is fire. My only hope is that in the worst case scenario someone would buy Creative, a company who could afford to lose money for a few quarters while they get things back on track.
Jun 19 (2007) 08:31PM
The news on creative delisting from nasdaq is only creative's move not to be listed in nasdaq. But creative is still in singapore stock exchange. I think creative was considerate to have reported this news to us so soon rather then keeping the news and reporting it only when the time comes. I do not think that this will affect creative introducing new players. I am still hoping to see new products from creative.
[ edited Jun 19 (2007) 08:36PM ]
Jun 19 (2007) 09:23PM
I believe it was required for them to make a press release to say they were delisting. It's not the type of thing you can just pull on your shareholders. Advanced timing and notification is pretty much mandatory.
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