Creative has been struggling to keep up with market leader Apple

Singapore-based Creative reported on Wednesday that it made a net loss of $114m (�62m) for its third quarter to the end of March.

The figure exceeds analysts' forecasts of a $90m loss, and compares with a profit of $16m a year ago.

Creative said it had been hit by the falling price of digital music players.

It pledged to return to profit in the second half of 2006, saying it was renewing its focus on high-margin products, such as computer sound cards.

Savvy customers

Creative also said it had been hit by restructuring costs during its third quarter.

"We are examining each of our product categories to determine how we can improve revenues, return gross margins to 20% percent or higher, and reduce operating expenses as we target a return to profitability in the second half of the calendar year," said Craig McHugh, president of Creative Labs, the firm's US unit.

Analysts said the falling prices of the flash memory chips used in a growing number of digital music players meant customers were delaying purchases as they awaited better prices.