PortalPlayer cuts 45 jobs after iPod loss

Mark LaPedus

EE Times

(06/08/2006 5:55 PM EDT)

SAN JOSE, Calif. — The other shoe has dropped. After recently losing its key chip design win at Apple Computer Inc., PortalPlayer Inc. Thursday (June 8) announced plans to reduce its worldwide workforce by about 45 jobs, or approximately 14 percent of its employees.

The staff cuts were made mainly in its U.S. locations. The fabless chip maker estimates that the annualized cost savings related to these actions are expected to be $6-to-$7 million, and will result in special charges in the range of $850,000-to-$950,000 in the second quarter, ending June 30.

``In light of the product transition setback we announced on April 19th, we conducted an in-depth internal review of the company`s strategy and engineering investments,`` said Gary Johnson, president and chief executive of PortalPlayer, in a statement.

``As a result, we have re-organized our operations to focus on our key initiatives: continuing to compete for new design wins with our largest customer and supporting them with current designs; marketing our existing products and super-integrated, single-chip product roadmap to a broader customer base; successfully launching our Preface technology platform targeting secondary displays on notebook computers; and developing highly integrated wireless solutions,`` he said.

In April PortalPlayer (San Jose) announced that it had not won the media processor design slot for Apple`s next iPod nano. PortalPlayer is the media processor chip supplier for the current iPod nano.

Then, Samsung Electronics Co. Ltd. (Seoul, South Korea) claimed that the company grabbed a major MP3 chip design win at Apple (Cupertino, Calif.), at the expense of PortalPlayer.

Then, after an apparent “gaffe” by the executive from Samsung to disclose the design win, Apple reportedly “punished” the South Korean semiconductor giant by maintaining its MP3 chip alliance with SigmaTel Inc., according to an analyst.

Despite signs that Samsung was taking over the iPod chip business, struggling SigmaTel has managed to hold on to its key chip design within Apple’s current — and new — iPod Shuffle MP3 line, an analyst said. Samsung has apparently won the new iPod nano business.

The iPod Shuffle product is an entry-level, flash-based MP3 player. The iPod Nano line is a mid-range, flash-based MP3 player.