Net income fell 78% at PortalPlayer (PLAY) in the second quarter, and would have been worse if not for a sizable tax credit and swelling interest income.
Additionally on Thursday, the company, which makes multimedia chips used in some of Apple Computer's (AAPL - Get Report) iPods, announced that CEO Gary Johnson plans to resign by the end of the year. Johnson intends to pursue opportunities with private start-up companies.
Still, the news wasn't all bad. PortalPlayer's bottom line in the second quarter exceeded the Street's expectations, and the company said that it would again post better-than-expected results in the third quarter.
Investors appeared to focus on that upbeat news. In recent after-hours trading, the company's shares were up 61 cents, or 6.3%, to $10.35.In the just-completed quarter, PortalPlayer earned $1.4 million, or 5 cents a share. That was down from the year-ago period, when the company earned $6.3 million, or 25 cents a share. But the most recent results are a bit misleading. The company actually posted an operating loss of $1.7 million in the just-completed quarter. PortalPlayer only showed a bottom-line profit in the period thanks to $2.1 million in interest income and a $1 million tax credit. Sales fell 22% year over year to $34.6 million from $44.6 million. Also factoring into the company's profit drop were increased costs. Marketing and administrative costs jumped 38% from the second quarter last year, while research and development expenses rose 31%. PortalPlayer has been struggling since April, when the company