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iPod chipmaker plans stock sale

PortalPlayer posts third-quarter earnings that beat estimates, announces plan to sell up to 4.5 million shares.

PortalPlayer, whose chip is inside many of Apple Computer's iPod players, on Monday reported third-quarter earnings that topped expectations and announced plans for a follow-on stock sale.

The company, which went public last year, filed a registration statement with the Securities and Exchange Commission on Monday to sell up to 4.5 million additional shares.

Shares of PortalPlayer, which had risen more than 8 percent ahead of the earnings report and stock offering plans were announced, dropped precipitously in after-hours trading, changing hands recently at $23.90, down $3.96, or more than 14 percent.

In its earnings report, PortalPlayer said it earned $10.3 million, or 40 cents per share, on revenue of $57.9 million for the three months ended Sept. 30. The company earned $3.2 million, or 18 cents per share, on revenue of $25.6 million in the same quarter a year earlier.

In July, PortalPlayer had forecast sales would fall between $50 million and $60 million. Analysts polled by First Call had predicted earnings of 35 cents per share on revenue of $56.3 million.

"We are very pleased with our financial performance in the third quarter," PortalPlayer CEO Gary Johnson said in a statement. "We are very excited about additional customer designs that have already been introduced in the fourth quarter."

Analysts have noted the presence of PortalPlayer's chips in both the iPod Nano and the recently released video-capable iPod, though financial analysts at Jefferies in the coming year from Broadcom, SigmaTel and others.

For the current quarter, PortalPlayer said it is now expecting revenue in the range of $65 million to $75 million, as compared with the average analyst expectation, which had been at $67.1 million. The company said to expect earnings in the range of 34 cents to 43 cents per share. However, that figure includes an estimate of 2.3 million additional shares as a result of the company's stock sale plans.

Before the company had announced the planned stock offering, analysts had estimated fourth-quarter earnings of 43 cents per share.