PortalPlayer thrives in Apple iPod Economy

“By year’s end a five-year-old company called PortalPlayer will begin selling its shares to the public. What’s notable is that this company owes its success–even its existence–to the popularity of Apple Computer’s iPod,” Lisa DiCarlo writes for Forbes. “PortalPlayer makes chips that power the digital music player. It plans to raise about $67 million by selling 6.25 million shares priced between $14 and $16 per share. It is just one of many companies, both large and small, that have benefited from their association with Apple’s groundbreaking iPod.”

DiCarlo writes, “PortalPlayer has certainly been a major beneficiary. Its revenue for the first nine months of this year totaled $47.8 million, quadruple from the year-ago period, while its loss narrowed to $131,000 for the nine months compared to a year-ago loss of more than $7 million. More than 90% of its sales are made to the Asian company Inventec, which manufactures the iPod.”

Full article (and slideshow) here.

5 Comments

  1. Man, I sure wouldn’t invest in PortalPlayer!

    90% of PortalPlayer’s $48M in Q1-3 sales depended on its inclusion in the iPod. That means Apple is (indirectly) paying them $44M. If this increases enough to make PortalPlayer profitable, don’t you think Apple would be seriously considering producing its own chips?

    So basically you’ve got a company that’s not profitable, has low barrier to entry, and may very likely have only about $1M/quarter sales soon.

    No wonder they want to do an IPO fast; they want to bring in a pile of cash for issuing a bunch of worthless shares, because they’re not bringing in any profits through their operations!

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