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Creative Technology Targets The Internet

Singapore-based global PC sound card maker Creative Technology Ltd. has invested US$3 million so far and plans to spend another US$10 million in the current quarter to exploit the Internet market.

In its first major move to take advantage of the Internet, Creative, best known worldwide for its Sound Blaster cards, said it will commit a further US$50 million as venture capital money for Internet related start-ups.

Following the release of its fourth quarter results for the period to end June, the company said it will restructure into five business units and that most of the divisions should be operational under their new roles within six months.

The five units, which includes the two main arms comprising Singapore-based Creative Technology and its US-based Creative Labs, will be restructured under the creative.com name. The third unit will operate a mega on-line hi-fi store to be called HiFi.com, it said.

Creative officials said in a press briefing that HiFi.com, which will be launched in mid October, will sell the company's products and a range of professional and hi-fi products, including offerings from JBL, Marantz and Harmon Kardon.

This division now generates about US$10 million in sales a year now. Like its sales strategy to date, HiFI.com will initially focus on the US market and will later turn to Europe and Asia.

There will also be a venture capital division to focus on Internet related startups as Creative has to date invested in eight such companies, including companies doing broadband research.

There will also be the fifth arm specializing in application service providers operating under the label of inside.com, said Creative.

The company believes each of these five divisions have the potential of becoming as big as what the existing parent group is. But it didn't want to forecast sales arising from the Internet because it can be a "dangerous game," said the company's HiFi.com chief Michael Sullivan.

After announcing it took a US$11 million charge for its low-end graphics products in the newly released results, the company said it will refocus on selling these cards via the Internet.

The company said that this sales channel will help lower selling costs compared with retail outlets as well as making good products that have already been manufactured.