Jilted PortalPlayer: We Haven't Given Up on Apple (PLAY, AAPL)

 |  Includes: AAPL, PLAY

On April 20 PortalPlayer (NASDAQ:PLAY) dropped a bombshell, acknowledging that its chips will no longer be used in Apple (NASDAQ:AAPL) iPods -- the source of 95+% of the company's revenue. In the conference call following its earnings report, PortalPlayer President and CEO Gary Johnson said:

We certainly haven’t given up on winning back the business we have lost from our largest customer, and plan to aggressively pursue future product models with them. We will also continue to support them and plan to ship the 5021 device to them for some iPod models...

and in the Q&A session with analysts:

Glen Yeung - Citigroup

Next question I have is when you think about the business that was lost, is there a way to get a sense as to how quickly that was lost — i.e., are we largely done with that business now, and as you move beyond the second quarter, it’s basically no longer present?

Gary Johnson

I’m not quite sure how to answer that question. There’s a fairly complex side to that.

If we step back and look at it, it essentially — as you know, Glen, in the semiconductor business, there are design slots that you can compete for and there are clearly then follow-on design slots and new models that emerge typically in the consumer market probably twice a year — typically refreshes in those types of cycles. So you should rest assured that we’re working to win back that business at our largest customer, and as was from the previous question, integration, low power performance and reducing the overall build-up material aspects, costs, are areas that we’ll be focusing on.