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Achieves 35 Cents EPS Including Gains from Investments

Sales for the first quarter exceeded the top end of the company's guidance of $140 to $160 million, coming in at $160.8 million. This sales result compares to sales of $160.6 million for the same quarter of last year.

First quarter net income was $29.1 million, and earnings per share were $0.35. Excluding investment gains, Creative reported first quarter net income of $5.5 million or $0.07 per share, exceeding its original target of $0.05 per share.

Results for the first quarter of the current year include investment gains of $23.6 million or $0.28 per share. Of this, $23.1 million is attributable to a "deemed disposal" of interests in an associated company, SigmaTel, Inc. (Nasdaq: SGTL). In September 2003, SigmaTel, Inc. raised new capital through its initial public offering of its common stock in the U.S. As a result of the IPO, in which SigmaTel issued approximately 7.4 million new shares, Creative's ownership percentage in SigmaTel was reduced from 28.7% to 22.5%. In accordance with U.S. GAAP, even though Creative did not dispose of any of its shareholdings, this reduction in Creative's ownership percentage following the offering is treated as a "deemed disposal," and Creative recognized a non- cash gain from this deemed disposal. The amount of the gain represents the net increase in Creative's share of the net assets of SigmaTel, as a result of the IPO.

The results for the first quarter of FY04 compare to a net loss of $5.0 million and a loss of $0.06 per share in the first quarter of the previous fiscal year. Results for the first quarter of the previous year include investment losses of $6.3 million or $0.08 per share.

"We met the high end of our revenue expectations, and we surpassed our income target, reporting $0.07 per share before our large investment gains," said Craig McHugh, president of Creative Labs, Inc. "Strong sales of our high end audio, PDE and speaker products were key contributors to our revenue performance. Our Asian region recovered after a weak June quarter, contributing 17% of total revenues. In August, we had shared our expectation of returning to revenue growth in the first half calendar year 2004. Based on our strong revenue performance in Q1 and outlook for the current quarter, we have moved up our timeframe for growth and we are now targeting 10% to 15% year-over-year revenue growth in the current second fiscal quarter. We are also targeting to grow Q2 earnings per share by 20% to around $0.28. For the balance of the fiscal year, we are targeting continued revenue growth of at least 10 percent."

"This quarter we continued our shift to products outside the PC box, with over 50% of quarterly revenues coming from sales of external products," continued McHugh. "As part of our plan to introduce 90 new products during our first two fiscal quarters, this quarter's product launches included the Nomad® Jukebox Zen NX, the Nomad MuVo2 family, and Sound Blaster® Wireless Music. There is now a compelling high-quality Creative digital entertainment solution for every room of the home, whether you listen to music on your Sound Blaster-equipped PC, stream wireless MP3 music throughout your house with Sound Blaster Wireless Music, combine a NOMAD Jukebox Zen NX with Creative I-Trigue speakers in a bedroom, or enjoy our Cambridge SoundWorks Radio or Radio CD in the kitchen."

"With the successful listing of SigmaTel, our long-term strategy of investing in strategic partners has been re-affirmed," said Sim Wong Hoo, Chairman and CEO of Creative Technology Ltd. "The 7.6 million SigmaTel shares we own, with a current market value of approximately $170 million, are a clear validation of this strategy. With these shares, in addition to our already-strong balance sheet, we are in a position to invest aggressively in partner companies, R&D or strategic marketing that can help secure our long term future."

Outlook

For the second quarter of fiscal year 2004, ending December 31, 2003, Creative announced that it is planning to grow revenues by 10% to 15% over the previous year, with revenues targeted between $250 and $265 million. Gross margins are expected in the range of 33% to 35%, and operating expenses about the same as the second quarter of last year, between $60 and $62 million. The Company is targeting to grow Q2 earnings per share by 20% to around $0.28.

Based on the Company's current outlook, for the balance of the fiscal year Creative announced that it is targeting continued revenue growth of at least 10 percent.

Share Buyback Program

During the quarter, Creative did not repurchase any shares under its share buyback program.

    Recent Announcements

    -- Creative reshaped digital audio with the new NOMAD MuVo2 line of
       ultra-compact, lightweight MP3 players featuring removable batteries
       and in either a 1.5GB hard-drive model or in rugged 512MB and 1GB
       flash-memory based NOMAD MuVo2 X Trainer models
    -- Creative advanced the PC audio standard to 7.1 surround sound with the
       introduction of the Sound Blaster Audigy(R) 2 ZS sound card and the
       Creative GigaWorks S750 speaker system.  This powerhouse duo provides
       gamers with unprecedented power and precision, plus DTS-ES(TM) decoding
       and 108dB SNR across eight channels for unsurpassed PC audio quality
       from DVD movies
    -- Creative further fueled the shift to 7.1 surround sound with the
       value-priced Creative Inspire(R) 7.1 7700 speaker system, priced at
       only US $149.99
    -- Creative introduced the first 7.1 surround sound solution for notebook
       PCs with the external Sound Blaster Audigy 2 NX, providing a new
       dimension in audio for movies, games and music for notebook PC users
    -- Legendary Sound Blaster audio quality went wireless with the
       introduction of the Sound Blaster(R) Wireless Music , designed to play
       entire MP3 and WMA music collections stored on your PC, anywhere in the
       home
    -- Creative launched the super compact, ultra-stylish Rhomba brand of
       feature-rich 128MB and 256MB MP3 players with a large split screen LCD,
       FM tuner and built-in microphone
    -- Creative announced publication of a U.S. patent application for its
       innovative, award-winning NOMAD MuVo(TM) Portable Audio Player
    -- Creative introduced the NOMAD(R) Jukebox Zen Xtra -- 30GB, 40GB and
       60GB MP3 players featuring a large backlit LCD for easy navigation plus
       capacity for up to 2,000 hours of digital music

    Awards & Accolades

    -- The NOMAD MuVo(TM) NX won an "Editor's Choice" award from PC Magazine
    -- The NOMAD MuVo won:

       -- A 5 out of 5 rating and the "Stuff Approved Pick of the Litter
          Award" from Stuff magazine
       -- The 2004 "Skier's Choice" Award from Powder magazine

    -- The NOMAD Jukebox Zen NX was honored as a TechTV "Lab Pick"
    -- The NOMAD Jukebox Zen was included in the "Best Buys of 2003" in Money
       magazine
    -- Sound Blaster Wireless Music was featured as "Gadget of the Week" on
       Time.com
    -- The Creative I-Trigue(TM) L3500 speaker system won the "Editor's
       Choice" award from TechEdge magazine
    -- The Sound Blaster Audigy 2 Platinum eX was named "Best Sound Card" in
       Computer Shopper magazine
    -- The Creative Prodikeys was included in the Top 100 Products of 2003 in
       PC World Latin America

            Listen to Creative's Q1 FY04 Analyst Conference Call:

 Link to the Q1 earnings conference call live on October 27th at 7:00 PM U.S.
           Eastern time via Creative's Investor Relations Web site:
                  http://us.creative.com/corporate/investor/
                        or by calling 1-800-374-2493.
 A replay will be available from shortly after the end of the conference call
   until November 3rd via the same link from the IR web site or by calling
                    1-800-642-1687, reservation # 3310974.

About Creative

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

This announcement refers to products and pricing sold in the United States of America. Pricing and product availability are subject to change without notice. Sound Blaster, I-Trigue, Creative TravelSound, MegaWorks, Creative Inspire, Audigy, MuVo and Creative CardCam are trademarks or registered trademarks of Creative Technology Ltd. in the United States and/or other countries. 3Dlabs and Wildcat are registered trademarks of 3Dlabs, Inc. Ltd. NOMAD is a registered trademark of Aonix and is used by Creative Technology Ltd. and/or its affiliates under license. All other brand and product names are trademarks of their respective holder and are hereby recognized as such.

Safe Harbor for Forward-Looking Statements:

This press release contains forward-looking statements. These forward-looking statements represent Creative's expectations or beliefs concerning future events and include statements, among others, regarding Creative's expected revenue, gross margin, operating expenses, and earnings per share for the quarter ending December 31, 2003 and revenue for the balance of the fiscal year. 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; 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 and related consumer products as a result of poor economic conditions, social and political turmoil and major health concerns, such as the spread of Severe Acute Respiratory Syndrome, or SARS; the proliferation of sound functionality in new products from competitors at the application software, chip and operating system levels; the failure of cost-cutting measures to achieve anticipated cost reduction benefits; the deterioration of global equity markets; exposure to excess and obsolete inventory; 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; Creative's ability to protect its proprietary rights; a reduction or cancellation of sales orders for Creative products; accelerated declines in the average selling prices of Creative's products; 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 the trading volume and value of Creative's Ordinary Shares as a result of Creative's intended delisting from NASDAQ and elimination of its U.S. public reporting obligations. For further information regarding the risks and uncertainties associated with Creative's business, please refer to its filings with the SEC, including its Form 20-F for fiscal 2002 filed with the SEC. Creative undertakes no obligation to update any forward-looking statement to conform the statement to actual results or changes in Creative's expectations.

                           CREATIVE TECHNOLOGY LTD.
                         CONSOLIDATED BALANCE SHEETS
                                (In US$' 000)

                                                  (Unaudited)
                                                  September 30,    June 30,
                                                      2003           2003
    ASSETS

    Current Assets:
    Cash and cash equivalents                       $210,113       $232,053
    Accounts receivable, net                          85,609         61,225
    Inventory                                        115,674         80,367
    Other assets and prepaids                         13,007         11,269

    Total current assets                             424,403        384,914

    Property and equipment, net                      103,242        104,404
    Investments                                       67,808         49,168
    Other non-current assets                         132,904        108,357

    Total Assets                                    $728,357       $646,843

    LIABILITIES AND SHAREHOLDERS' EQUITY

    Current Liabilities:
    Accounts payable                                 $88,649        $52,869
    Accrued liabilities                               83,697         79,573
    Income taxes payable                              38,201         37,564
    Current portion of long term obligations and
     others                                            5,495          5,519

    Total current liabilities                        216,042        175,525

    Long term obligations                             38,667         39,027
    Minority interest in subsidiaries                  3,449          3,454
    Shareholders' equity                             470,199        428,837

    Total Liabilities and Shareholders' Equity      $728,357       $646,843


                           CREATIVE TECHNOLOGY LTD.
                    CONSOLIDATED STATEMENTS OF OPERATIONS
                     (In US$' 000, except per share data)
                                 (Unaudited)

                                                      Three months ended
                                                         September 30,
                                                      2003           2002

    Sales, net                                      $160,816       $160,623

    Cost of goods sold                               104,348        102,630

    Gross profit                                      56,468         57,993

    Operating expenses:

      Selling, general and administrative             37,317         42,155

      Research and development                        14,838         15,267

    Total operating expenses                          52,155         57,422

    Operating income                                   4,313            571

    Gain (loss) from investments, net                 23,570         (6,316)

    Interest income and other, net                     1,714            807


    Income (loss) before income taxes and minority
     interest                                         29,597         (4,938)

    Provision for income taxes                          (517)           (57)

    Minority interest in loss                              5             18

    Net income (loss)                                $29,085        $(4,977)

    Basic earnings (loss) per share:                   $0.36         $(0.06)

    Weighted average ordinary shares outstanding
     ('000)                                           79,902         78,877

    Diluted earnings (loss) per share:                 $0.35         $(0.06)

    Weighted average ordinary shares
     and equivalents outstanding ('000)               82,638         78,877