Susquehanna notes ACTS reported solid Q3 results. Firm believes some investors may be disappointed at the relatively conservative guidance for 4Q06. Although the patent-related disputes with SGTL will drag along, firm believes the potential negative impact is limited at this point. Firm believes any upside to 4Q06 EPS guidance of $0.23-$0.26 per share will likely be driven by margin improvement. Incorporating 3Q06 results and firm's generally unchanged expectations for 4Q06 and Y07, firm raises their Y06 EPS est by $0.01 to $0.87, and their Y07 EPS est by $0.04 to $1.01. Firm views ACTS as a small-cap value play, with potential for further market share gains in the value segment of the personal media player market. Firm expects the co will continue to leverage its scale and competitive positioning in the MP3 market, and adjust its product mix accordingly to help control ASP erosion.