3Dlabs to Refocus Its 3D Graphics Business on Portable Handheld Device Market

3Dlabs to Refocus Its 3D Graphics Business on Portable Handheld Device Market

MILPITAS, Calif., Feb. 24 /PRNewswire-FirstCall/ -- Creative Technology Ltd. (NASDAQ:CREAF), a worldwide leader in digital entertainment products, today announced that its subsidiary, 3Dlabs Inc., Ltd. will refocus its 3D graphics business on the portable handheld device market and de-emphasize its professional workstation graphics business.

3Dlabs will transition from the shrinking professional workstation graphics market to focus on portable handheld devices which require intensive media processing for video, audio and increasingly powerful 3D graphics. This will result in a workforce reduction of approximately 100 3Dlabs employees.

As a result of the 3Dlabs refocus, Creative expects to take a one-time restructuring charge of approximately $9 million in the current fiscal quarter and a non-cash impairment charge of approximately $25 million for goodwill and intangible assets relating to 3Dlabs.

About 3Dlabs

3Dlabs, an innovator in professional visual processing, supplies a broad range of graphics accelerators to Computer Aided Design (CAD), Digital Content Creation (DCC), and visual simulation professionals. 3Dlabs is a wholly owned subsidiary of Creative Technology Ltd.

About Creative

Creative is a worldwide leader in digital entertainment products for PC users. Famous for its Sound Blaster(R) sound cards and for launching the multimedia revolution, Creative is now driving digital entertainment on the PC platform with products like its highly acclaimed MuVo(R) and Zen(TM) portable audio players. Creative's innovative hardware, proprietary technology, applications and services leverage the Internet, enabling consumers to experience high-quality digital entertainment -- anytime, anywhere.

Safe Harbor for Forward-Looking Statements:

This press release contains forward-looking statements including statements relating to Creative's refocus of its 3D graphics business. These forward-looking statements involve risks and uncertainties that could cause Creative's actual results to differ materially. Such risks and uncertainties include: Creative's ability to timely develop new products that gain market acceptance and to manage frequent product transitions; competitive pressures in the marketplace; exposure to excess and obsolete inventory; accelerated declines in the average selling prices of Creative's products; Creative's ability to successfully integrate acquisitions; potential fluctuations in quarterly results due to the seasonality of Creative's business and the difficulty of projecting such fluctuations; possible disruption in commercial activities caused by factors outside of Creative's control, such as terrorism, armed conflict and labor disputes; a reduction in demand for computer systems, peripherals, personal digital entertainment products and related consumer products as a result of poor economic conditions, social and political turmoil or major health concerns; the proliferation of sound functionality in new products from competitors at the application software, chip and operating system levels; the deterioration of global equity markets; Creative's reliance on sole sources for many of its chips and other key components; component shortages which may impact Creative's ability to meet customer demand; fluctuation in component prices; Creative's ability to protect its proprietary rights; a reduction or cancellation of sales orders for Creative products; Creative's ability to successfully manage its expanding operations; the vulnerability of certain markets to current and future currency fluctuations; the effects of restricted fuel availability and rising costs of fuel; fluctuations in the value and liquidity of Creative's investee companies; and the potential decrease in trading volume and value of Creative's Ordinary Shares as a result of the Flow Back Restriction that commenced on June 1, 2003 and Creative's previous plan and any future plans to delist from NASDAQ and to eliminate its U.S. reporting obligations. For further information regarding the risks and uncertainties associated with Creative's business, please refer to its filings with the U.S. Securities and Exchange Commission ("SEC"), including its annual report for fiscal 2005 filed on Form 20-F. Creative undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in Creative's expectations.

Source: Creative Labs, Inc.

CONTACT: Phil O'Shaughnessy of Creative Technology Ltd.,
+1-408-546-6773, or poshaughnessy@creative.com

Web site: http://www.creative.com/

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