iPod chipmaker edges toward stock market

In a new filing, PortalPlayer says it expects to sell its stock for between $11 and $13 per share.

PortalPlayer, the company whose chip powers Apple Computer's iPod, has moved a step closer to becoming publicly traded.

Santa Clara, Calif.-based PortalPlayer expects to sell 6.25 million common shares for between $11 and $13 per share, according to documents filed Wednesday with the U.S. Securities and Exchange Commission.

If the company gets $12 per share, it said, its net proceeds from the stock offering will be about $67.6 million, or as much as $78 million if the company's underwriters exercise an option to buy more shares. Wednesday's filing is an update to the initial registration statement the company filed in August.

The company's filings with the SEC, in addition to being a good place to learn about PortalPlayer, have also provided hints as to the future of the iPod. PortalPlayer's initial filing suggested that the company had the ability to power a device with a color screen that could display photos and slide shows, as well as output sound and video on a TV--all capabilities of the iPod Photo that Apple introduced Tuesday.

Details in the new filing include the fact that PortalPlayer had 156 employees as of Sept. 30, up from the 132 mentioned in its August filing.

"We expect that our head count will increase further to support our expected growth," the company said in the document filed Wednesday. The hirings follow a period of layoffs at the company, as well as the departure of its CEO, John Mallard.

PortalPlayer also said it has narrowed its losses, though the company remains unprofitable. For the nine months ended Sept. 30, the company lost $131,000, far less than the $7.3 million loss the company posted for the same period in 2003.

With $47.8 million in revenue for the first nine months of 2004, the company has seen its revenue increase nearly threefold from the $12.9 million taken in during same period a year ago.

Although the iPod has been a runaway hit for Apple, there are concerns that PortalPlayer's future is less secure. More than 90 percent of the company's sales come from the iPod, and it operates on only a purchase-order basis with Inventec, the company that builds the iPod for Apple. Additionally, brokerage firm Thomas Weisel Partners said in a report that it expects Apple to introduce a flash memory-based iPod at some point using chips from PortalPlayer rival SigmaTel.

PortalPlayer has sold its chips for use by other companies, including Philips Electronics, RCA, Digital Networks North America, Samsung and Virgin Electronics.

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