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iPod chip maker to cut workforce

After being beat out by Samsung as a supplier of chips for Apple\'s next-generation iPods, PortalPlayer is throwing employees from the boat in an order to right itself, reports The Street.com.

The specialty chipmaker, whose audio decoder chips have found their way into the nerve center of Apple\'s most popular iPods —including the iPod nano and fifth-generation video player —has laid off 45 employees. That\'s about 14 percent of its total staff.

As a result of the move, PortalPlayer expects to incur a restructuring charge of $850,000 to $950,000 in its current quarter, according to the report. But in the long run, the company figures the lay offs will save it $6 million to $7 million in expenses.

\"That\'s not an insignificant amount for a company with net earnings of $48 million last year and just $10 million the year before,\" wrote The Street.com\'s Troy Wolverton.

Word of the cuts comes on the heels of reports that Apple has decided not to include the next version of PortalPlayer\'s multimedia chip in its upcoming iPods, expected this fall.

The decision was a huge blow to PortalPlayer, which generates about 95 percent of its sales from Apple.

Samsung is believed to have picked up the iPod business lost by PortalPlayer.