Adam wrote the following about PLAY:
What about PLAY – Portal Player – Seems to be stuck – Apple is going through the roof and it would seem like PLAY would mirror Apple’s movement since PLAY makes many of the parts for the iPod.
Any help would be great!
I feel your pain man. I had this stock in my IRA for a few days a couple of weeks ago but sold it because it wasn’t “acting right”. It has definitely decoupled from trading in sympathy with AAPL. That’s something I knew but I still (foolishly) chose it over AAPL today for a day trade. I think that the secondary they announced and pulled a few weeks back has spooked some investors. But there’s also some somewhat troubling commentary out there (all from Briefing.com):
17-Nov-05 07:46 ET– PortalPlayer’s Q4 likely tracking above mid-point of guidance — TWP (PLAY) 23.50 : Thomas Weisel hosted PLAY’s CFO on a non-deal roadshow. Firm says that recent market data points and spot retail checks suggest that Q4 is likely tracking above the midpoint of guidance, although ongoing NAND flash tightness could gate Q4 upside. Firm believes its 20% sequentially down revenue forecast for Q1 could prove conservative given 1) overall market strength 2) Q4 supply shortages and 3) anticipated robust holiday gift card sales. The company is expected to launch a product in a major new market segment at CES (Jan 4-8). While mgmt did not provide any detail, the firm believes it will be an entirely new product not related to the traditional portable audio/video space, with a new set of customers. Mgmt did suggest that this segment could potentially contribute significant revenue next year.
11-Nov-05 08:08 ET PortalPlayer: Withdraws Secondary – Whats Next? – Kaufman Bros (PLAY) : Kaufman Bros notes Portal Player announced after the close last night that it is withdrawing its S-1 filing for a secondary share offering. Kaufman notes they have consistently argued that PLAY deserved a discounted multiple given its vulnerable position with Apple as its nearly singular customer. At this point, the firm believes most investors have come to recognize this vulnerability in the outlook for 2006, and to some extent they are hearing from management the need to diversify away from this risk sooner rather than later. The problem is, what does PLAY have to leverage in new markets other than a cash rich balance sheet? In the firm’s opinion, its success with Apple is predicated on a lot of software development rather than best in class mixed-signal IC development. In addition, the company outsources its supply operations to LSI rather than interfacing directly with foundry partners. This affords the company a lot of flexibility in its supply chain but likely limits manufacturing leverage. Until the firm sees a plan from the company that they deem viable for successfully entering a new market, they will remain skeptical. The firm maintain its HOLD rating, an its price target of $24 which represents a 16x multiple to its 2006 EPS estimate of $1.50.
11-Nov-05 07:17 ETPortalPlayer upgrade details (PLAY) 21.24 : Jefferies upgrades PLAY to Hold from underperform raising their tgt to $22 from $19. Firm cites the withdrawal of the follow on offering yesterday. Firm notes that given the high short interest (23% of float), they expect to see a significant squeeze in the short-term that should cause the stock to move appreciably higher. Jefferies says that checks suggest the NAND flash market remains extremely tight with most customers on allocation. The firms believes top tier customers are currently unable to receive 30% or more of their forecasts. In addition to the NAND flash tightness, Jefferies believes Apple (AAPL) has experienced several other component related supply issues, and given these factors, they believe the risk that Apple disappoints in Q4 has increased.
Short squeeze, Q4 tracking better, blah, blah, blah… The stock trades like sh!t. 
The director selling shares yesterday doesn’t help my confidence either (from Briefing.com):
30-Nov-05 16:30 ETPortalPlayer Director sells 110K shares priced between $23.95-25.00 per share (PLAY) 24.09 +0.20:
I guess if I really believed in the company I’d hang on to it as long as it was above the 200-day moving average — but I just don’t like the way it’s acting. Here’s the chart:
