PortalPlayer acquisition to yield wireless iPods?
PortalPlayer Inc. shares jumped in trading on Thursday after an analyst upgraded the stock, and speculated that the company may be involved in the release of wireless iPods in 2006," reports Reuters.
In a research note released to clients this week, Citigroup analyst Glen Yeung raised his price target on PortalPlayer -- maker's of audio controller chips for Apple's video and nano iPods -- to $36 from $29, saying the company could see customer growth rise in the second half of 2006, driven by the popularity of iPods, which he believes accounted for 90 percent of PortalPlayer's revenue in the third quarter of 2005.
"We have raised our estimates for PortalPlayer based on an increased shipment assumption for iPods, and the expectation for a lower than normal seasonal decline in the first half of 2006," Yeung wrote.
Yeung also added that PortalPlayer is looking to acquire a small private company specializing in wireless technology. He believes such an acquisition to cost between $1 million and $30 million. And because PortalPlayer has said it is dedicating 2006 to building out wireless capabilities, the analyst believes Apple is considering building wireless capabilities into its iPod.
Reading into PortalPlayer's future product plans has proven to be a good indicator of what to expect in future versions of the iPod. In December of 2003, PortalPlayer announced that it would soon release a "Photo Edition" of its controller chip with photo handling code. Less than a year later, Apple announced the iPod photo.
Hints that PortalPlayer was working on further additions to its portfolio began last month when it withdrew a proposed offering of 4,500,000 shares of common stock, saying management and the Board of Directors believed the stock price did not reflect the company's market opportunity and future growth.
"Our relationships with our leading customers remain strong, as evidenced by the announcement of two dynamic market expanding products that have just begun to roll out to the market," said Gary Johnson, president and chief executive officer of PortalPlayer. "We believe we are well positioned for the year ahead with these customers."
"Our organic growth and diversification strategy is on track, and we expect an additional major market segment for our products to be introduced in the first quarter of 2006," Johnson added.
Apple, which has also been experimenting with wireless iPods in its R&D labs, is PortalPlayer's largest customer.
Third parties also foresee iPods benefiting from wireless technologies and have recently come knocking on Apple's door, eager to get a piece of the lucrative digital music player market. In September, Cambridge Silicon Radio approached Apple with the idea of installing its Bluetooth wireless microchips into future generations of the iPod music player, which would pave the way for iPods with wireless headsets.
Along with the price target increase, Citigroup raised its rating on PortalPlayer to "Buy" from "Hold." For the quarter, the firm expects the company to earn 48 cents per share on $74.8 million in revenue.
In a research note released to clients this week, Citigroup analyst Glen Yeung raised his price target on PortalPlayer -- maker's of audio controller chips for Apple's video and nano iPods -- to $36 from $29, saying the company could see customer growth rise in the second half of 2006, driven by the popularity of iPods, which he believes accounted for 90 percent of PortalPlayer's revenue in the third quarter of 2005.
"We have raised our estimates for PortalPlayer based on an increased shipment assumption for iPods, and the expectation for a lower than normal seasonal decline in the first half of 2006," Yeung wrote.
Yeung also added that PortalPlayer is looking to acquire a small private company specializing in wireless technology. He believes such an acquisition to cost between $1 million and $30 million. And because PortalPlayer has said it is dedicating 2006 to building out wireless capabilities, the analyst believes Apple is considering building wireless capabilities into its iPod.
Reading into PortalPlayer's future product plans has proven to be a good indicator of what to expect in future versions of the iPod. In December of 2003, PortalPlayer announced that it would soon release a "Photo Edition" of its controller chip with photo handling code. Less than a year later, Apple announced the iPod photo.
Hints that PortalPlayer was working on further additions to its portfolio began last month when it withdrew a proposed offering of 4,500,000 shares of common stock, saying management and the Board of Directors believed the stock price did not reflect the company's market opportunity and future growth.
"Our relationships with our leading customers remain strong, as evidenced by the announcement of two dynamic market expanding products that have just begun to roll out to the market," said Gary Johnson, president and chief executive officer of PortalPlayer. "We believe we are well positioned for the year ahead with these customers."
"Our organic growth and diversification strategy is on track, and we expect an additional major market segment for our products to be introduced in the first quarter of 2006," Johnson added.
Apple, which has also been experimenting with wireless iPods in its R&D labs, is PortalPlayer's largest customer.
Third parties also foresee iPods benefiting from wireless technologies and have recently come knocking on Apple's door, eager to get a piece of the lucrative digital music player market. In September, Cambridge Silicon Radio approached Apple with the idea of installing its Bluetooth wireless microchips into future generations of the iPod music player, which would pave the way for iPods with wireless headsets.
Along with the price target increase, Citigroup raised its rating on PortalPlayer to "Buy" from "Hold." For the quarter, the firm expects the company to earn 48 cents per share on $74.8 million in revenue.
Comments
Booting Mac OS X.
With Firewire.
1 - Make your presentation.
2 - Save it to the wireless iPod.
3 - Give your presentation from the iPod. Wireless. Computerless. PDAless.
The halo efffect of it could be tremendous in the educational, domestic and corporate markets.
Apple: go, go, go for it !!!!!!!!!!!!!!!!
So there IS no way for me to reduce my use of wires with my iPod.
However, there's always the chance of totally new uses for iPods--or for non-iPod Apple devices.
When it comes to technologies that are central to a companies growth and profits, most firms will buy the supplier, if they are small enough, and sometimes even when they are not.
Apple certainly could have afforded to either buy them outright, or at least took a large enough stake so that a rival couldn't end up controlling them.
But then, I'l never understand Apple's odd strategy when it comes to control over their fate.
Originally posted by melgross
It's been bothering me, ever since before PortalPlayer went public, why Apple just didn't buy the company, and be done with it.
When it comes to technologies that are central to a companies growth and profits, most firms will buy the supplier, if they are small enough, and sometimes even when they are not.
Apple certainly could have afforded to either buy them outright, or at least took a large enough stake so that a rival couldn't end up controlling them.
But then, I'l never understand Apple's odd strategy when it comes to control over their fate.
With 90% market share Apple have control over PortalPlayer already.
Originally posted by MacCrazy
With 90% market share Apple have control over PortalPlayer already.
No, they don't. They have no control.
If some other company were to control PP, and by control, I mean own a large portion of their shares, and one or more seats on the BD, then Apple would have to deal with that, if they were hostile.
Being the largest customer, even by far, doesn't actually mean the the company has acceded control.
What if MS went to them to design or buy some of their technology for the X Box (just as an example)? That could knock Apples' share of sales to below 50%.
There is no telling what could happen in an open market. PP might decide that Apple is too dangerous to deal with, as Synaptic has found out. They might then develop other technologies that they could sell to reduce Apple's share.
Quite a few things could happen. I've seen it many times before.
The only control is investment.
Originally posted by melgross
The only control is investment.
Companies have legal obligations to make money for their shareholders. If one company has 90% of your output they are very important to you and would have pulling power within. I'm sure Apple influence the way PortalPlayer is moving. I understand a take-over is possible but until that happens PortalPlayer want Apple.
If Apple did try and buy PortalPlayer surely they could be had up for anti-monopoly laws, especially when all players would be tied to the iTMS. Of course I could be wrong here, not knowing the laws on monopolies.
Originally posted by MacCrazy
Companies have legal obligations to make money for their shareholders. If one company has 90% of your output they are very important to you and would have pulling power within. I'm sure Apple influence the way PortalPlayer is moving. I understand a take-over is possible but until that happens PortalPlayer want Apple.
If Apple did try and buy PortalPlayer surely they could be had up for anti-monopoly laws, especially when all players would be tied to the iTMS. Of course I could be wrong here, not knowing the laws on monopolies.
Like most other things, it isn't that simple. As I've said, I've seen it happen before. It isn't all that far out a notion. Symantec just bought out a publicly owned company, and discontinued their product line, just so that they couldn't compete with them any more. They did the same thing years ago when they bought Central Point tools, their biggest competitor at the time.
If I bought a company, I could do whatever I wanted with it. As long as the shareholders got what they thought was a fair deal in the purchase, they have no right to complain.
Apple could buy their supplier with which they've been working without breaking any laws. There is no monopoly interest at stake here at all. If Apple attempted to buy Real and Napster, it would be different. If they attempted to buy Creative, it MIGHT be different.
Originally posted by melgross
If they attempted to buy Creative
that would be funny
stu
Originally posted by stustanley
that would be funny
stu
especially as it would be completely pointless
although it would solve the patent issue!
Originally posted by MacCrazy
especially as it would be completely pointless
although it would solve the patent issue!
Worse than pointless. There is so much hate across the boards for Creative, it might have a negative impact on Apple!
ultimately, i think the deceision not to acquire them had to do with the bottom line. it's more cost effective for them not to acquire. ie taking on the infrastructure, salary etc...
the company might be in huge debt as well. ultimately, in the worst case scenerio if pp get's bought out by someone else, goes bankrupt or just disappears all apple has to do is buy the ip or patent and find someone else to manufacture what they need or do it in house. they don't need to buy the whole company.
...hey why is your widget so expensive. why don't you buy half my company and you can have the widgets at half price. that sounds great. ok all you have to do is pay for half the equipment, r&d, insurance, salary, warehouse, shipping etc...
chung lee
If I bought a company, I could do whatever I wanted with it. As long as the shareholders got what they thought was a fair deal in the purchase, they have no right to complain.
It's not the company nor the shareholders that would care what you did with the company they just sold; it's the Government that would care if you choked the market and hampered choice with that acquisition.
Originally posted by action
there are more reason for apple not to buy portaplayer then to buy them.
ultimately, i think the deceision not to acquire them had to do with the bottom line. it's more cost effective for them not to acquire. ie taking on the infrastructure, salary etc...
the company might be in huge debt as well. ultimately, in the worst case scenerio if pp get's bought out by someone else, goes bankrupt or just disappears all apple has to do is buy the ip or patent and find someone else to manufacture what they need or do it in house. they don't need to buy the whole company.
...hey why is your widget so expensive. why don't you buy half my company and you can have the widgets at half price. that sounds great. ok all you have to do is pay for half the equipment, r&d, insurance, salary, warehouse, shipping etc...
chung lee
Well, Apple is known to shy away from anything more than small purchases, though they were ready to pay for half of the $3.8 billion it is going to cost Samsung for the new NAND memory plant.
PortalPlayer is a small company; not many employees or plant. Not in significant debt either (I owned their stock when they first went public last year. I did due diligence).
Many companies will buy another to protect important technology, as I said before. It's not unusual at all.
Originally posted by Gene Clean
It's not the company nor the shareholders that would care what you did with the company they just sold; it's the Government that would care if you choked the market and hampered choice with that acquisition.
Not really. The government doesn't care unless it can be shown that they are both major players and competition will be ended. Apple would have to buy a major rival. Right now, PP doesn't make these devices for anyone else, so compatition would enter into it if Apple bought them.
Other companies buying it to hamper Apple would have to be sued by Apple, which then have to prove that it was the case. That can be difficult, and would take years. The worst that would happen to the acquiring firm would be for them to spin off the company acquired. Of course, if it didn't exist then, something else would likely have to be done. But it really wouldn't matter as the damage would have already been done. Apple's woes wouldn't enter into a verdict, only the act of acquisition.
With the present administration, the government wouldn't want to enter into this. It isn't important enough. Like I said, Symantec has done that twice with no interference.
Originally posted by Gene Clean
So, what major competitor did Microsoft buy out, when they were accused and convicted of being a monopolstic company by the Government?
That's good!
But MS wasn't convicted of anything. Is anyone doing time? You can't convict a corporation. Only the people working in it who have committed criminal or civil offenses. Look at ENRON, or TYCO, or MCI, or, well, you get the point.
What happened there was that MS was taken to court by Netscape. MS was declared a monopoly. Before you can be accused successfully of committing monopolistic practices, you have to be legally declared to be a monopoly.
There were two parts to that trial, which, by they way, was a civil trial, not a criminal trial.
The first was whether MS should be declared a monopoly.
The second was whether they used the power of being one to strongarm other companies to keep Netscape off their machines.
The case took several twists and turns.
The outcome was that they were declared a monopoly, but this administration, after Bush declared that they would keep hands off, dropped much of the rest of the case, even though it looked as though they were winning. There was outcry against that move.
The judge made several indiscreet remarks in public forums about the case so his ruling that MS should be broken up was discarded upon appeal, and that part of the case (the Remedy), was sent back down, but not back to him.
The result is how you see it.
Not much has changed.
Is that what you meant?
Perhaps larger capacity batteries? We all know where THAT goes though...
BUt it makes no sense to me that apple just made Bluetooth and wifi standard in all portables and desktops except the mini (i think, been a while since i checked), yet dont have any specific use for the technology there. iPod as PDA is remote, however cool it would be. But ill just go back to my REAL PDA for now...
Maybe, like most of these rumors, is nothing at all.
Originally posted by tron12
My predicition is that this will lead into a mobile video conferencing device using the ICHAT protocol. Now that would AWESOME!!! Connect to a wireless network and initiate a video conference anywhere, I would buy that ipod in a heart beat!!
yep, figures... i just get a razr last night, and it'll be kicked to the curb in 8 months by a roaming video ipod communications device.
if anyone would like an apple pda, just let me know and i'll go out and pick up that blackberry i've been eyeing. that should do the trick.