Prince McLeanDigital music player maker Creative Technology on Tuesday said profits rose a record 11 times thanks to a lump sum payment from one-time rival Apple over a patent litigation.
The Singapore-based firm said revenues rose 8.6 percent to $424.4 million from $390.8 million.
The more-than-tenfold increase in profits stemmed primarily from a one-time licensing payment of $100 million from Apple, which in August ended a tempestuous legal dispute between the two companies over a software patent covering the majority of today's digital media player interfaces.
Apple's paid-up license allows it to use Creative's patented software interface technology in all of its products. In return, Creative, a once fierce rival of the Cupertino-based iPod maker, said it would turn ally and begin designing accessories for Apple's ubiquitous players.
As part of the settlement between the two firms, Apple retained the right to recoup a portion of its payment if Creative is successful in licensing its interface patent to other companies.
The one-time license payment from Apple contributed about $82 million, or 98 cents per share, to Creative's second-quarter net income. Excluding the payment and its investment effects, net income would have been $9.9 million.
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33 Comments
I still think that kinda sucked, but understand that it may have worked out cheaper than dragging a case on for years. Does anyone know if "Creative" is planning a lawsuit against anyone else? Or were they just gunnin' for Apple?
It would have to be economically viable for Creative. See as Apple has the vast majority of market share I would guess the answer is no, Creative will not sue anyone else.
I'm still baffled as to why Apple settled. Either way, Creative better put that money into R&D because that 8 million profit average they were getting before isn't going to cut it.
i can't help but feel a little bad for creative, and i think thats why apple went easy on them. historically, they've been a rather important company for consumer pee-cee audio, and lately, microsoft has been screwing them hardcore, both with the release of the zune (playsforsure, anyone?), and by discontinuing support for hardware audio rendering in windows vista. those two actions have pretty much depricated creative's product line, so i think apple was more interested in forming an ally than squashing the little guy, in this case. if you remember, when news of this settlement first broke, both parties made statements about a desire to work together in the future, and creative joined the "made for ipod" program.
I never realized how pathetic a profit Creative was driving in... under normal circumstances that is