Is PortalPlayer in Play?

Businessweek has an article about Apple dumping PortalPlayer as th e supplier for the next generation of iPod nano. PortalPlayer's stock price promptly dropped 42%, or $220 million market cap. This is huge. Supposedly the current iPod nano constitutes 60% of PortalPlayer's current revenue. I guess when an industry segment is dominated by one vendor, getting picked by the giant as a supplier is a two-edged sword, in that your existing business can vanish overnight based on the decision of that single player.