Stock Downgraded: Creative "underperform" by Macquarie

Creative Technology Ltd may slide again after Macquarie cut its rating to "underperform" from "neutral" and lowered its target price to 9.00 sgd from 12.20, citing the company's falling operating margins. Creative said it expects an operating loss of about 55-65 mln usd in its third quarter to March due to margin pressures. Creative said the operating loss is due to a sharp drop in flash memory prices over the quarter which resulted in lower revenues, gross margins and inventory writedowns. "Taking these new inputs together with the 34 mln usd in restructuring charges leads to a loss of nearly 100 mln usd at the net line for the third quarter. This will reduce shareholders' funds by nearly 17 pct for the quarter," Macquarie said. Creative closed 0.10 sgd lower at 10.90 on Friday.