Creative Technology shares staged a remarkable rally yesterday on the back of glowing reports about its "3D audio" product.
The stock went into the midday break up 44.1 per cent to $7.39 - a level not seen since mid-2007, but that was just the start.
Afternoon trade was almost as frenzied and left the counter up $3.62 to $8.75 at the close - an increase on the day of 70.6 per cent, although only around 10 million shares changed hands.
The spark came after a showcase last week of the firm's new Super X-Fi, which can plug into devices to deliver a listening experience that mimics how people hear in real life.
DBS analyst Sachin Mittal wrote in a March 1 report that the Super X-Fi technology "could be a much-needed lifeline for the company".
Creative posted a second-quarter net loss of US$4.2 million (S$5.5 million) for the three months to Dec 31 on a 6 per cent year-on-year dip in revenue to US$20.9 million.
"New product lines would further offset losses in existing products," said Mr Mittal, who noted that Creative's sound products, which make up the bulk of its turnover, have come under pressure from cheaper China-made alternatives.
A Super X-Fi dongle is expected to be released in the middle of the year at a price of US$150. Creative also plans to launch a free application with limited functionality and to license the technology to other industry players.
CGS-CIMB analysts Yeo Zhi Bin and William Tng noted on March 1: "We believe Creative's strategy in rolling out its latest technology is a reflection of its previous painful lessons. By possessively keeping the Sound Blaster technology in-house, Creative invited competition to fill the gap. Hence, Creative has learnt that it is not able to do everything on its own."
Creative initially made its mark with its Sound Blaster audio processing card, which was a staple of personal computers in the 1990s.
Yesterday's price rally really began on Feb 23, when the stock more than doubled in value, prompting a Singapore Exchange query.
This was on the heels of a media report on how US$100 million in research spending had yielded the Super X-Fi technology.
Mr Yeo said yesterday: "If a competitor suddenly announced a competing technology, this whole euphoria could evaporate just as rapidly as it was built up. On the other hand, if Creative manages to execute it, then the sky is the limit, as we have seen from the other tech giants."