PortalPlayer chip still destined for new video iPod?
Katie MarsalDespite the loss of Apple's iPod nano business, system-on-a-chip maker PortalPlayer remains the frontrunner to supply its chips for the company's upcoming video iPod revision, analysts for Wedbush Morgan Securities said this week.
The analyst said Apple would face an "execution risk" should it change its video iPod SoC suppliers at this point in the music player's development cycle.
"With respect to any forthcoming Video iPod, we believe Broadcom’s video processing chip does not appear well suited to drive both the video processing and applications processing within the Video iPod," he wrote. "Also, a new operating system would have to be written and debugged very quickly."
According to Berger, PortalPlayer also believes that its current SoC will be used in other members of Apple's iPod family. "This is one of the uber-bear case scenarios that investors have feared and has a disastrous impact on PortalPlayer’s profitability in light of the fact that iPod nano chip shipments once comprised 70 percent of our 2007 revenue," the analyst wrote.
In the meantime, Berger said PortalPlayer’s current quarter guidance implies some continued softness in the iPod nano and Video devices, implying Apple’s shipments could decline by 15-20 percent during its June quarter.
"We believe that Apple’s iPod orders have slowed in recent weeks," the analyst told clients. "One result of slowing orders can clearly be seen in the NAND flash market as spot pricing returns to the low end of the contract pricing range, a sign of oversupply in the market."
Based on Apple’s reported sale of 8.5 million iPods during the company's first calendar quarter of 2006, Berger estimates that PortalPlayer shipped about 9 million units of its current SoC during the same time period. Of the 8.5 million players Apple shipped, he estimates that 1 - 1.5 million were iPod shuffles that pack an SoC from SigmaTel. However, PortalPlayer is believed to have "refilled" Apple and non-Apple retail channels with about as many chips, in addition to shipping 300,000 to 500,000 units to non-Apple customers.
Wedbush Morgan Securities is maintaining a Hold rating on shares of PortalPlayer with a 12-month price target of $10 a share.
Comments made by Samsung executives last week suggest the electronics company won the iPod nano business lost by PortalPlayer.
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1 Comment
I doubt portalplayer is going to win back Apple... they can try but all their talk is just that... Apple with design schedule contraints and debugging a new operating system for the video pod?? Maybe, but remember how quick apple was in preparing for the Intel transition, macs had already been outfitted with Intel processors for many many many years before the decision was publicly announced.engadget article:
Does PortalPlayer -- which lost to Samsung in the contest to provide chips for the next-gen iPod nano -- have a chance of winning back Apple's business as Cupertino gets ready to roll out the next video iPod? And what exactly does Apple have in store for that long-rumored product? Those were the big questions on the lips of analysts at PortalPlayer's first-quarter conference call this week, and CEO Gary Johnson did his best to answer the first question -- and not answer the second one. Any queries about Apple were met with McClellan-esque non-answers, as Johnson insisted that the company couldn't say anything that might reveal information about the plans of its "largest customer" (Johnson wouldn't even mention the company's name). Johnson did, however, tout his latest chip, which he said could do "full high-end video playback" -- something that's not possible with PortalPlayer's 5021 chip, used in the current video-capable iPod. So, is Apple, er, sorry, PortalPlayer's largest customer, going to buy the chip? "We're working to win back that business," Johnson said. Needless to say, Johnson refused to shed any light on Apple's plans, or lack thereof, for the next-gen video iPod, though he did say that his company's video-capable chip is "a product that's available." So, if PortalPlayer's largest customer is in the market for a solution for a new portable media player, now they know where they can find one.