PortalPlayer guidance indicative of iPod trends?

iPod component maker PortalPlayer yesterday reported earnings of $0.33 per share on $44.5 million, compared to Street estimates of $0.20 on $38.3 million. PortalPlayer supplies the MP3 decoder and controller chip for Apple's hard drive-based iPods. For the June quarter, the company guided $0.21 to $0.27 on $41.6 million to $47.6 million. Street estimates are $0.17 on $37.3 million. In the March quarter, more than 85 percent of PortalPlayer revenue was from sales to Apple. Investor research firm Piper Jaffary is currently modeling for hard drive iPod units of 3.3m in Q2, down from 3.5m in Q1.

"We believe that PortalPlayer's Q2 guidance is positive for Apple's HD based iPods and may be consistent with a trend that we have been picking up on in the channel related to iPod shuffle to 4GB iPod mini up-selling. Specifically, we have been hearing from Apple retail stores and independent Apple VARs that customers are consistently being up-sold to 4GB iPod minis ($200) when intending to buy the 1GB iPod shuffle ($149), given the minimal ($50) difference in ASP."

Late last week, Synaptics, maker of iPod, iPod Photo, and iPod mini scroll wheels, provided guidance slightly below Street estimates for the June
quarter based on expectations for softness in its portable music player business. This outlook is clearly contrary to PortalPlayer's bullish Q2 outlook. "Given that more than 85 percent of PortalPlayer revenue is from iPod, while approximately 35 percent of Synaptics' revenue is from iPod, we believe PortalPlayer is a more relevant benchmark for potential changes in iPod unit shipments."

Piper Jaffary reiterated its outperform rating on AAPL, and said it has confidence in the iPod "halo effect" leading to increased Mac sales.

Filed under: iPod