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Creative 2Q on target with record sales

Creative Computers, Inc. (Nasdaq: MALL), which sells computer and consumer electronics over the Internet, announced second quarter earnings of 4 cents a share, in line with First Call's estimate.

Shares were down 11/32 to 6 27/32, well below the company's 52-week high of 63.

Earnings exclude Creative's investment in eCOST.com and uBid.com on record second quarter sales of $161.5 million, up 13 percent from last year.

Including the Company's investment in uBid.com the company lost 37 cents a share for the quarter. This compares with earnings of 2 cents a share in the year-ago period. The company's share losses attributed to uBid, was 34 cents a share. The market had a strange reaction to Creative's spin off of uBid in May. The company's investment in eCOST.com reduced the quarter's earnings by 6 cents a share.

Internet sales grew to $25.8 million, up 223 percent from the prior year and 23 percent from first quarter of 1999. Creative Computers was one of the first companies in its industry to begin selling products over the Internet. Internet retailing is now the fastest growing sales channel for Creative Computers with sales growing from $0.1 million or 0.7 percent of Creative's sales for the fourth quarter of 1996 to $25.8 million or 16 percent of sales for the second quarter of 1999.

Business-to-business sales also grew, increasing 58 percent over the same period last year. Creative also made headway reducing its inventory risk and improving warehouse productivity, the company said.

One of two analysts covering the stock rates it a "moderate buy" accroding to Zacks Investment Research. The other rates it a "strong sell."