Earnings: Creative Looks for More Royalties from Zen Patent After Apple Deal

Creative Technology, which recently won a $100 million licensing deal from Apple for the Zen patent for the user interface that scrolls through screens on devices, is eager for more like it. “We intend to aggressively pursue licensing agreements with each of the companies that currently use the ZEN patent in their products in the US or wish to use it in the future,” said Craig McHugh, president, during the company’s first fiscal quarter earnings call this week(via SeekingAlpha) “We believe that our licensing business can be an integral part of our overall strategy moving forward. While we are not in a position to discuss any specific customers at this time, we have begun discussions with potential licensees.”
He didn’t name names of course, but you can bet that the Apple agreement is no doubt causing many companies to wake up and smell the coffee. Patent litigation is extremely expensive, complicated and time consuming. Steve Jobs said it best when he pointed out that Creative was “very fortunate to have been granted an early patent.” McHugh concurred with Jobs, pointing out that other companies tried to seek similar patents but the company’s interface was superior to anyone else’s.
Even with its Apple victory, Creative had a tough fiscal first quarter. It lost $21 million while its sales plunged 14 percent. The company solid an 80.1 percent interest of its CUBIC manufacturing operations in Malaysia to a group lead by the plant’s manager. Nonetheless, McHugh remains upbeat, predicting that 2007 be a big year in areas such as the Xmod products. In addition, the company’s focus going forward will be on consumer electronics as the gaming and audio markets have contracted.
— Sales from personal digital entertainment (PDE) devices — MP3 players, etc. — accounted for 70 percent of total sales compared to 65 percent sequentially and 66 percent in the same quarter last year.
— Introduced in Creative’s fiscal Q1, the Zen Vision W with widescreen video has enhanced access to video from Amazon Unbox.

Earnings Release
| Conference Call (Replay)
Related: Apple Will Pay Creative $100 Million To Settle Patent Disputes

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