Craig McHugh Players Quotations

One of the key challenges we face in our MP3 business is an industry-wide shortage of 1GB flash memory. Industry demand for high-capacity flash memory currently outstrips supply and this will impact availability of our 1G-byte flash MP3 players for the holiday quarter. The shortage of flash memory, according to industry analyst speculation, is primarily a result of a special deal that Apple has secured from a key supplier for the holiday season.

Even though we increased overall revenues 50 percent year-over-year, the lower-than-expected selling prices for MP3 players and the inventory write-down negatively impacted gross margins.

We had set our targets higher for unit volume and average selling prices for our MP3 players than we achieved in the period.