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NVIDIA to acquire iPod chipmaker PortalPlayer

post #1 of 18
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NVIDIA Corporation said Monday it has signed a definitive agreement to acquire iPod chipmaker PortalPlayer, Inc. in a cash for stock transaction.

Under terms of the agreement, which have been approved by the Board of Directors of each company, the Santa Clara, Calif.-based graphics technologies developer will pay $13.50 in cash for each outstanding share of PortalPlayer common stock.

The deal represents a total purchase price of approximately $357 million, or approximately $161 million net of cash on PortalPlayer's balance sheet as of September 30, 2006.

PortalPlayer, which was founded in 1999, is widely recognized for its high-performance system-on-chip (SoC) technology that power some of the world's most recognizable portable digital music players, including Apple Computer's iPods.

Although PortalPlayer recently lost its socket in Apple's flash memory-based iPod nano line to Samsung Electronics Co., the San Jose, Calif.-based company maintained its seat in updated fifth-generation video iPod players that were introduced at the same time.

Interestingly, it has been reported that NVIDIA will succeed Broadcom as the graphics chip supplier for Apple's next-generation video iPod players, which are widely rumored to sport improved video capabilities, larger display screens and a new touch interface.

"Based on our analysis, we believe Nvidia is designed into the next-generation video iPod socket at the expense of Broadcom," American Technology Research analyst Satya Chillara told clients in a research note released this July.

"We believe the Nvidia chip adds 3D graphics functionality in addition to all of the existing features that Broadcom supported with the existing video iPod," Chillara added.

In its announcement on Monday, NVIDIA said it expects the acquisition of PortalPlayer to accelerate its ongoing investment in its handheld product strategy.

"Modern mobile devices are miniaturized yet powerful multimedia computers. At the core of their architectures are complex Application Processors integrating microprocessors, system logic, networking, and multimedia processors," said NVIDIA chief executive Jen-Hsun Huang. "With the products created through this combination, we intend to drive the next digital revolution, where the mobile device becomes our most personal computer."

NVIDIA's $357 million purchase price represents approximately a 19 percent premium to the 20-day average closing price of PortalPlayer through Friday, November 3, 2006. The deal is still subject to regulatory approvals and other customary closing conditions.
post #2 of 18
All we need now is for Intel to buy nVidia - and the union will be complete.
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post #3 of 18
The companies are an interesting combination.
post #4 of 18
i'm sure there's a good reason why apple wasn't the logical buyer of Portal Player. Can someone layout the business or legal reasons?
thanks.
post #5 of 18
It think either way it would be a good thing! Apple or Intel need to snap up NVidia, before someone else does.
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post #6 of 18
I'm pretty certain Apple doesn't want to get into that end of the business. They are primarily software+hardware integration (although they say they are "systems designers").

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post #7 of 18
Years ago, after Jobs came back to the company, Apple bought a small GPU design firm. It was thought, at the time, that Apple would design their own gpu's, but nothing that I'm aware of came from it.
post #8 of 18
Quote:
Originally Posted by rtdunham

i'm sure there's a good reason why apple wasn't the logical buyer of Portal Player. Can someone layout the business or legal reasons?
thanks.

Just a guess here but maybe something to do with turning into a monopoly?
post #9 of 18
What was the name of that company?

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post #10 of 18
Quote:
Originally Posted by SpamSandwich

I'm pretty certain Apple doesn't want to get into that end of the business. They are primarily software+hardware integration (although they say they are "systems designers").

You don't buy a company like PortalPlayer for its intellectual property, you buy it for its chip business.

Apple probably reviewed their patent portfolio and concluded that they didn't have anything so unique or valuable that it warranted a buyout. Apple's IP is more focused in software and UI as opposed to chip designs.

NVIDIA on the other hand is looking to grow it's chip business and would love to get it's foot in the door with the iPod as well as expand its offerings to potential customers.
post #11 of 18
Quote:
Originally Posted by SpamSandwich

What was the name of that company?

Raycer Graphics

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post #12 of 18
Quote:
Originally Posted by Bacillus

All we need now is for Intel to buy nVidia - and the union will be complete.

Why do people want stuff like this? CPU companies aquiring gpu companies is only going to hurt consumers in the long term. Everyone suddenly wants 1-2 companies to own everything, how is that good? I thought the USA was against monopolies?
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post #13 of 18
Quote:
Originally Posted by ecking

Why do people want stuff like this? CPU companies aquiring gpu companies is only going to hurt consumers in the long term. Everyone suddenly wants 1-2 companies to own everything, how is that good? I thought the USA was against monopolies?

I agree. There shouldn't be only 2 companies running the whole show because then it becomes solely a numbers game. I wan't diversity and choices in the market place. Not just A or B.
post #14 of 18
Quote:
Originally Posted by ecking

Why do people want stuff like this? CPU companies aquiring gpu companies is only going to hurt consumers in the long term. Everyone suddenly wants 1-2 companies to own everything, how is that good? I thought the USA was against monopolies?

Many, if not most, people are only interested in what is good for themselves, screw everyone else.

Some here will feel that if this benefits Apple, then it is good.

I wasn't happy when AMD bought ATI, and I wasn't happy when Creative closed down 3D Labs.

But, as the news release said, the professional graphics market is now the "shrinking professional workstation graphics market".

This is all very true, and is why the leading monitor manufacturer for critical color applications, Barco, discontinued all of its prepress and workstation lines.

The highest profit segments ARE shrinking, and that's causing problems in the indusrty.
post #15 of 18
Quote:
Originally Posted by Caribou Killa

I agree. There shouldn't be only 2 companies running the whole show because then it becomes solely a numbers game. I wan't diversity and choices in the market place. Not just A or B.

It's a matter of sales. R&D is expensive, as is starting production lines.
post #16 of 18
Quote:
Originally Posted by melgross

Many, if not most, people are only interested in what is good for themselves, screw everyone else.

Some here will feel that if this benefits Apple, then it is good.

I wasn't happy when AMD bought ATI, and I wasn't happy when Creative closed down 3D Labs.

But, as the news release said, the professional graphics market is now the "shrinking professional workstation graphics market".

This is all very true, and is why the leading monitor manufacturer for critical color applications, Barco, discontinued all of its prepress and workstation lines.

The highest profit segments ARE shrinking, and that's causing problems in the indusrty.

It's unfortunate but I see what you mean, NVidia probably can't rely on just making gpus for much longer, they've got to branch out to compete. Still I wish it didn't have to boil down to everything becoming mega corporations.
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post #17 of 18
Quote:
Originally Posted by Caribou Killa

... I wan't diversity and choices in the market place. Not just A or B.

Costs will come down and the real growth and innovation will be in all-in-one devices which, incidentally, have no expansion, so there is less need for this type of competition. This is what Apple has been doing all along. Apple knows how to manage thier inventory, company growth and business well enough in a post-pc era.
For better or worse, Microsoft is doing this also with XBox and Zune, so it will soon be Apple vs Microsoft and the other system builders will lack purpose and growth. Microsoft will soon cannibalize all the their system builders to death, as they are now doing with Zune and XBox. Building boxes for someone else's OS is a bad, bad strategy... poor PC OEM's...
Steve Jobs killed the Mac clones. How long before Microsoft copies that move, as well?
post #18 of 18
Quote:
Originally Posted by ecking

It's unfortunate but I see what you mean, NVidia probably can't rely on just making gpus for much longer, they've got to branch out to compete. Still I wish it didn't have to boil down to everything becoming mega corporations.

Nvidia also makes chipsets for Intel and AMD cpu's (as does ATI). So it isn't just a gpu company, but the AMD market has just shrunk.
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