PortalPlayer Gains Ground on Upgrade
Thursday December 8, 12:24 pm ET
PortalPlayer Shares Rise After Analyst Upgrade, and Rumored Release of Wireless IPod
NEW YORK (AP) -- 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.
Shares of the San Jose, Calif.-based company, which makes system-on-chip semiconductors used in portable media-playing devices, were up $1.55, or 6.1 percent, to $27.10 in midday trading on Nasdaq, after Citigroup analyst upgraded the stock to "Buy" from "Hold."
Analyst Glen Yeung raised his price target on PortalPlayer to $36 from $29, and predicted the company could see customer growth rise in the second half of 2006, driven by the popularity of Apple Computer Inc.'s iPods, which Yeung calculates 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.
Further, Yeung added since PortalPlayer has said it wants to acquire a small private company with a wireless technology portfolio -- he expects 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, he believes Apple is considering adding wireless capabilities to its iPod in 2006.
Yeung raised his fiscal-year 2006 revenue estimate to $322 million, from $257 million, and earnings estimates to $1.74 per share, from $1.40 per share. For the quarter, Yeung expects the company to earn 48 cents per share, up from a previous estimate of 45 cents, on $74.8 million in revenue, up from a previous estimate of $70.9 million.
Analysts polled by Thomson Financial expect the company to earn, on average, 46 cents per share on $71.68 million in revenue for the fourth quarter, and $1.54 per share on $275.3 million revenue for 2006.
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