PortalPlayer to Ax 14% of Workforce
PortalPlayer (PLAY) is throwing employees from the boat in an order to right itself.
The specialty chipmaker, which has been a key component maker for Apple's (AAPL) iPod digital music players, has laid off 45 employees, or about 14% of its total staff. The company expects to take a charge of $850,000 to $950,000 in its current quarter as a result of the restructuring.
But PortalPlayer expects the move to save it about $6 million to $7 million in expenses. That's not an insignificant amount for a company with net earnings of $48 million last year and just $10 million the year before.
The company's move is in response to Apple's decision not to include the next version of PortalPlayer's multimedia chip in its updated iPods, which Apple is expected to release later this year. Apple's decision was a huge blow to PortalPlayer, since the company gets about 95% of its sales from Apple.Shares of PortalPlayer were up just a penny, or less than 1%, in after-hours trading following the announcement. The company's stock closed regular trading up 37 cents, or nearly 4%, to $10.06 after it announced that several computer makers plan to incorporate its Preface technology in their upcoming laptop computers. The Preface technology uses a small LCD screen on a notebook computers' outside case to display information such as stock quotes, news headlines and sports scores.
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