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PortalPlayer shut out of next iPod Nano

Tom Krazit Former Staff writer, CNET News
Tom Krazit writes about the ever-expanding world of Google, as the most prominent company on the Internet defends its search juggernaut while expanding into nearly anything it thinks possible. He has previously written about Apple, the traditional PC industry, and chip companies. E-mail Tom.
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Tom Krazit

PortalPlayer, the chipmaker behind the iPod, has received word that Apple Computer plans to go in a different direction later this year with its midrange and high-end flash players, the PortalPlayer announced Wednesday.

PortalPlayer plans to release a new chip in the second half of the year that it thought would accompany new iPod nanos, but Apple has passed on that chip. The new chip should still wind up in other iPods, PortalPlayer said, but the decision is a blow to the company. One analyst estimated that 95 percent of PortalPlayer's fourth-quarter revenue came from iPod sales, and Wedbush Morgan Securities had based 70 percent of its 2007 revenue forecast for the company on shipments of new iPod Nanos.

It's likely that Samsung edged out PortalPlayer for the new Nanos, Wedbush analysts Craig Berger and James Schneider said in a research note distributed Thursday. PortalPlayer's stock plunged almost 42 percent, or $9.48, to $13.11 just ahead of the close of trading on the Nasdaq on Thursday.