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iPod chip maker to cut workforce

post #1 of 4
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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.
post #2 of 4
I hope they didn't have any delusion that their success with Apple wouldn't go on forever. It's unfortunate, but I would assume that given the iPod's success, a lot of competitors would seek to have their product in the player.
post #3 of 4
Wow. They've got to find sales to replace that 95% lost. \
post #4 of 4
Hmmm interesting article. I wonder did Samsung give Apple better pricing? Or Provide Apple with better technology? Seams it would have to be a significant level of each to drop your initial vendor that helped you backbone your product line like they did.

Does this mean PortalPlayer will start selling thier chips to competitors of Apple now? I wonder what that means to Apple or if an NDA has been restrictive to their business? If that's the case... that 95% is gonna be a hard sell. What other products do they even make?
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