CEOs Discuss Consumer Electronics: Creative Technology, Dolby Labs, SanDisk, SigmaTel, Cirrus Logic

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 |  Includes: CREAF, CRUS, DLB, SGTL, WDC
by: SA Editors

Quotes from CEOs and CFOs on recent earnings conference calls, discussing their companies and markets:

Creative Technology Ltd. (OTCPK:CREAF)

Craig McHugh - President of Creative Labs

Sales for our personal digital entertainment, or PDE category, which includes our MP3 players and web cameras, contributed 68% of total sales in the period. This compares to 70% of revenues last quarter and 67% of revenues for PDE in the same quarter of last year.

During the second quarter, we sold a total of 2.5 million of our MP3 players. During the quarter, we were able to take advantage of a lower market price for Flash memory, reducing the cost of our Flash-based players and contributing to our higher gross margins of 22% in the period.

Our team has been focused over the past few quarters on improving our procurement processes and supply chain management. The improvements we have made thus far helped us to take advantage of the lower market prices for memory in the second quarter.

In addition to helping us to increase our gross margins for our Flash-based players, improvements we have made to our supply chain, combined with the large volume of Flash memory we are consuming, has helped us to strengthen our relationships with our key memory suppliers.

We believe we are now better positioned to be able to secure the supply of Flash memory we need at very competitive prices.

SanDisk Corporation (SNDK)

Sanjay Mehrotra - President and COO

Our MP3 business performed extremely well in the fourth quarter, the revenue growing 74% and unit sales doubling, both on a year-over-year basis. We maintained a clear number two shared market share in the US while growing both our 2006 unit and revenue market share by a couple of percentage points from 2005 according to NPD...

I am pleased with the progress we are making in creating and driving new demand through innovation. At the 2007 Consumer Electronics Show, we introduced our first 32 Gigabyte solid state drive, three new media players and three new USB products, which we believe will fuel new demand later this year. These announcements along with several others we have in the pipeline reflect a greater diversification of our product portfolio and we expect this trend to continue to propel us on a path towards becoming a consumer electronics powerhouse.

Dolby Labs (NYSE:DLB)

Bill Jasper - Dolby Laboratories President and CEO

Today I would like to discuss some of the key trends observed at CES and how we are positioning Dolby for each; and then, cover new innovations from Dolby.

First, at CES the high definition roll out, including HD television and the next generation DVD, was a strong theme at CES. In the HDTV market, manufacturers continued to introduce new LCD and plasma models at lower price points for consumers. According to industry research, prices of flat panel displays have been trending down by 25% per year, which has increased the demand for these products. Many of these flat panel displays contain Dolby Digital in accordance with the ATSC digital turner standard mandated by the FCC.

On the content side, HD programming and content continues to grow, benefiting Dolby in several areas:

First, through our professional division we deliver the products and services to encode programming in Dolby Digital.

Second, an increased supply of HD programming in North America positively affects the television upgrade cycle, from which we are well positioned to benefit through the inclusion of Dolby Digital and the ATSC digital tuner standard.

Third, similar increase in HD programming in Europe is helping to drive the adoption of HD set top boxes across Europe, in which we believe Dolby Digital is becoming a de facto standard.

SigmaTel Inc (SGTL)

Phil Pompa, Interim Chief Executive Officer

...we have begun immediate restructuring actions to address our operating expenses and to improve the financial stability of the company. We intend to put SigmaTel on a more focused path...

During the last quarter, we had top tier OEMs and products in each of our three primary product lines. First, portable media players. SanDisk will introduce a new product based on our 3600 chip and we're happy to have collaborated with SanDisk on this product and look forward to working with them on future products. In addition, the 3600 based Zen V Plus from Creative is a product that continues to receive strong reception in the market place. Xena[?] and Engadget both have given the Zen V Plus strong reviews.

Second, our TV audio line. Samsung Electronics adopted our TV audio solution. We're excited about the growth in the digital TV market and believe our audio solution will be included as a key component in new products with Samsung and other customers.

Third, printers. This month, we'll be announcing our first major OEM design win since the acquisition of our printer controller line of products. [inaudible] design is already ramping in production and more details will be available after the customer announcement. Collectively, these tier one customer successes demonstrate the continued recognition of the competitiveness of our products in each market.

Cirrus Logic, Inc. (NASDAQ:CRUS)

Dave French - President & CEO

As you know we have invested heavily in recent years in new product and technology development and we've introduced a variety of integrated circuits that I believe position us well to address the fast growing portable media player market and the DTV market.

During the December quarter we announced the latest in our growing family of products for portable audio devices. This product extends our previous innovation of capless headphone amplifiers, with the integration of class D speaker drivers on a high-quality audio codec. This integrated circuit expands our reach into the low-power portable consumer electronics market, by targeting applications that offer the flexibility of headphone or loud speaker listening experience, such as portable media players, digital cameras and camcorder devices.

In addition, during this past quarter we introduced the first fully-integrated class D codec optimized for digital television application. Because of its high level of feature integration, this integrated circuit offers digital TV manufacturers an easy to use and very cost effective solution for managing the entire audio signal chain. The portable media player market and DTV and game console markets each represent significant revenue growth opportunity during fiscal year 2008 for our mixed signal audio product line.

I am particularly encouraged by our opportunity to gain market share in portable applications, driven by our proprietary technology of capless headphone amplifiers that enables best-in-class audio quality while reducing cost and the number of external components.