iLounge

Piper Jaffray analyst Gene Munster says that PortalPlayer’s upbeat second quarter guidance is a positive sign for sales of hard drive-based iPods. He also notes a new trend that he calls iPod mini up-selling.

PortalPlayer, which supplies the chips that power the iPod, iPod mini and iPod photo, yesterday reported first quarter earnings of $7.8 million, or 33 cents a share, on revenue of $44.5 million. The company forecast second quarter earnings of 21-27 cents a share on $41.6 million to $47.6 million versus street estimates of 17 cents on $37.3 million in revenue.

“We believe that PortalPlayer’s Q2 guidance is positive for Apple’s HD based iPods and may be consistent with a trend that we have been picking up on in the channel related to iPod shuffle to 4GB iPod mini up-selling,” Munster said in a research note obtained by iLounge. “Specifically, we have been hearing from Apple retail stores and independent Apple VARs that customers are consistently being up-sold to 4GB iPod minis ($200) when intending to buy the 1GB iPod shuffle ($149), given the minimal ($50) difference in price.”

Munster said that more than 85 percent of PortalPlayer’s first quarter revenue was from sales to Apple.