Creative's profits soar on Apple payment

By Prince McLean

Digital 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.Creative posted a net income of $92.1 million, or $1.10 a share, for its second fiscal quarter ended December 31, up from $8.2 million, or 10 cents, during the year-ago quarter.

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.