May 2 (Bloomberg) -- Creative Technology Ltd., whose music players compete with Apple Inc.'s iPods, reported its fourth loss in five quarters after sales in the U.S. and Asia were lower than the company expected.

The net loss narrowed to $23.6 million in the fiscal third quarter ended March 31, from $114.3 million a year earlier, the Singapore-based maker of Zen and MuVo music players said today. The loss a year earlier was widened by a $41.6 million one-time restructuring charge for a unit.

Creative said today that job cuts will help operating expenses fall 20 percent by the end of September. The company is seeking to boost sales and profit by supplying Cupertino, California-based Apple with iPod accessories and providing outsourced production.

Sales declined ``due to the lack of new models and price erosion,'' Credit Suisse Group analyst Keng Hock Lim wrote in a report today. He maintained an ``underperform'' rating on Creative's shares, with a 12-month target price of S$9.00.

Sales fell 19 percent to $183.8 million in the quarter and were ``below expectations'' in the U.S. and Asia, Craig McHugh, president of the U.S. unit Creative Labs Inc., said on a conference call. The company will release new music player models in the current quarter, McHugh said.

Revenue from personal digital entertainment products, including music players, fell 38 percent as unit sales declined and the company cut prices, said McHugh.

The share of sales from the Americas fell to 32 percent from 41 percent a year earlier, while the portion from Europe increased to 49 percent from 38 percent. The share from Asia and other regions slipped to 19 percent from 21 percent.

Lower Costs

The operating loss, or sales minus the cost of goods sold and administrative expenses, narrowed to $24.6 million from $118.3 million a year earlier.

Creative aims to cut operating expenses to about $50 million by the first quarter ending September, from $62.6 million in the three months ended March 31, McHugh said.

The Singapore company is seeking to return to profit in the six months to Dec. 31, its fiscal first-half, McHugh said.

The third-quarter expenses included $3 million to reduce employee numbers, and the company would book a further $3 million in staff-related costs in the current quarter, McHugh said.

Job Cuts

Creative cut its workforce by about 10 percent in the third quarter to bring labor costs ``in line'' with revenue, McHugh said.

``The company could be making some more cuts in the future, as it becomes more focused on product design, and moves away from manufacturing,'' said Carey Wong, an analyst at OCBC Investment Research in Singapore.

Shares of Creative closed unchanged at S$9.10 in Singapore today, after rising as much as 2.2 percent earlier. The benchmark Straits Times Index gained 1.1 percent. Creative's stock has dropped 13 percent in the past six months, the third-worst performer on the index.

The company said in January it is firing 200 assembly and distribution workers in Dublin, transferring some jobs to Asia, and outsourcing operations. Another 100 jobs would go in the U.S. following the closure of some retail stores. Creative currently employs more than 4,500 people, according to its Web site.

Creative received $100 million from Apple in October after the two companies settled a patent dispute over content- navigation technology used in iPods. The payout helped Creative post a record $92 million net income in the three months to Dec. 31, the first profit in four quarters. As part of the resolution, Creative would become a supplier of accessories for Apple's iPod, the two companies said.

The iPod had about 72.7 percent share of the digital music player market in the U.S. in January, according to research company NPD Group Inc. Sandisk Corp. had 8.9 percent, while Creative's share was 2.9 percent.

To contact the reporter on this story: Mark Lee in Hong Kong at wlee37@bloomberg.net.

Last Updated: May 2, 2007 06:28 EDT