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TMO Reports - Analyst: 'Slight Downside' to iPod Sales Without a Refresh

by , 2:40 PM EDT, August 29th, 2006

Piper Jaffray analyst Gene Munster on Tuesday issued a new research report in which he looked at the first month of iPod sales data from NPD for the current quarter, concluding that it points to sales of 8 million units, below his estimate of 8.6 million. "When the data is released [for August]," he wrote, "our analysis will likely lead to a slightly different iPod unit figure than what our analysis suggests based on the first month of data."

However, he noted: "We believe that Apple can still meet our and Street estimates if a new iPod ships by quarter end. We currently expect Apple will ship a new or updated iPod nano by the end of the September quarter. Without a new iPod this quarter, we expect slight downside to our estimate, as suggested by NPD data."

Mr. Munster also pointed out: "The 8.0m unit number is based on various assumptions and is an extrapolation of one month of data, so we believe investors should supplement this data point with other information."

The analyst retained his "Outperform" rating on Apple's stock, with a US$99 price target. At 2:39 PM EST on Tuesday, the company's shares were selling for $65.94, down 1.55% for the day.


If you are interested in Apple's stock, join our forum members in the Apple Finance Boards, a moderated forum for Apple Investors and people who are interested in Apple's financial dealings. For other stories regarding Apple's stock activity, visit our updated Apple Stock Watch Special Report.

Observer Comments

Show: Subjects Only | Full Comments
Close Name:Bosco Posts: 999 Joined: 03 Jun 2002
Subject: What, no Nike+ halo effect?

My biggest frustration with Munster's stream of 5th grade book reports is that he hasn't ever shown any ability to think outside the box. For example, could the Nike + iPod Sport Kit be driving iPod Nano sales?

Your humble TMO curmudgeon Bosco makes a little gadget called "Bosco's Sensor Pouch" (Google it). This little device lets people use the Nike + iPod Sport Kit with the shoes of their choice. Now, lest you think Bosco is just shamelessly promoting in the discussion forum, there is a relevant point to be made here. On the "buy" page for Bosco's Sensor Pouch, there are Amazon links for the Nike + iPod Sport Kit and 1GB Black and White iPod Nanos. Here's the surprise you've been waiting for... We have actually had some visitors to our "buy" page click through to Amazon and buy sport kits and iPod Nanos. It's not a high percentage, but it does register, and we'll probably actually get a check from Amazon this quarter because of it.

This tells me that the Sport Kit may actually be driving Nano sales, as current iPod owners are willing to purchase another iPod if it improves their workout and works with their iTunes library. I suspect this will show up in Munster's August numbers, and if he ever uses the phrase "Nike+ Halo Effect", you'll know he got it from Bosco. BTW, the Sport Kit is already hugely popular. Expect it (accompanied by a Nano) to be the huge tech gift this Christmas season.

Now, does the Nike + Halo Effect justify a 50% margin on AAPL to Munster's target price? My crack pipe isn't that warm.

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