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PortalPlayer Rides iPod Coattails

Quarterly profit more than doubles.


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Apple Computer's

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iPod train to surging sales and profits in the fourth quarter.

And despite what Apple might say about slowing iPod sales in the current quarter, its key partner is predicting that the train will keep on rolling.

Investors apparently liked what they heard, sending PortalPlayer shares up $3.54, or 13%, in after-hours exchanges to $30.81.

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PortalPlayer, which has more than 90% of its business related to the iPod, earned $23.8 million, or 92 cents a share, on $78.2 million in sales in the just-completed period. That was up from a profit of $10.5 million, or 50 cents a share, on $44.7 million in the year-prior period.

In the fourth quarter of last year, the company's bottom line benefited from a $8.6 million gain related to a tax credit. Excluding that gain and $664,000 in stock options charges, the company would have earned $15.9 million, or 62 cents a share.

On this basis, analysts polled by Thomson First Call were expecting the company to earn 48 cents a share on sales of $73.7 million. The company itself had previously predicted profits of about 45 cents a share on this basis on sales ranging from $65 million to $75 million.

Looking forward, PortalPlayer was notably more bullish than Apple, which last week

predicted a seasonal decline in iPod sales after selling 14 million of the music players in the holiday quarter. Some analysts have estimated that Apple's current quarter guidance implies a nearly 40% decline in iPod sales.

If its own sales guidance is any indication, PortalPlayer is predicting nothing of the sort.

Instead, the company projected that it would earn 28 cents to 38 cents a share, 35 cents to 45 cents a share excluding options costs, on sales ranging from $70 million to $80 million.

Excluding options costs, the Street had predicted that the company would earn 36 cents a share on $63.6 million in the current quarter. In the same period last year, PortalPlayer earned $7.8 million, or 31 cents a share, on sales of $44.5 million.

Shares of PortalPlayer closed regular trading on Thursday off 95 cents, or 3%, to $27.27.