SAN FRANCISCO Beleaguered PortalPlayer Inc., the once high-flying media processor vendor that was decimated by the loss of a key slot in Apple Computer Inc.'s iPod earlier this year, is bidding to reinvent itself with a new licensing model geared toward the sub-$100 MP3 player market and a technology enabling a second LCD screen on notebook PCs.
On Thursday (Oct. 26), PortalPlayer (San Jose, Calif.), announced its third quarter earnings, coming up short of consensus analyst revenue expectations. The company posted third quarter revenue of $34.8 million, up slightly from $34.6 million in the second quarter but down 40 percent from $57.9 million in the third quarter of 2005. PortalPlayer's $1.5 million net income was up 7 percent sequentially but down 85 percent year-to-year.
PortalPlayer said it expects fourth quarter revenue to be in the range of $31 million to $38 million, below consensus analyst expectations of $39 million.
Also Thursday, PortalPlayer announced a key design winthe company's media player platform has been incorporated into the forthcoming Sansa c200 family of flash-based MP3 players from SanDisk Corp. (Milpitas, Calif.), which said last month it plans to offer two new Sansa c200 series models with 1- and 2-gigabyte flash capacity, priced at $79.99 and $99.99, respectively. PortalPlayer is also included in SanDisk's Sansa 280, which offers 8 GB of flash capacity.
The Sansa deal is part of a new licensing/royalty model that PortalPlayer has adopted in order to target the sub-$100 MP3 player market, company executives explained during a conference call detailing third quarter financials Thursday. Gary Johnson, PortalPlayer president and CEO, said PortalPlayer would continue limited licensing of the silicon software of its mature technology to cost-effectively migrate its technologies into the sub-$100 market.
"This is a new approach for us," Johnson said. "It has enabled us to win additional business for mid-range personal media players that address customer demand for feature rich functionality at lower price points."
Johnson and other PortalPlayer executives declined to provide more details of the new business model, beyond saying that the company would "selectively" use this business model "to win additional business where we can use our mature technology or address markets that are typically controlled by our competitors." The Sansa c200 deal, Johnson said, would likely have gone to a competitor had the company not used the licensing/royalty model.