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Analyst: iPod Q1 Growth "Surprisingly Light"
by , 11:25 AM EST, January 23rd, 2008
Apple's first quarter of 2008 was the best in the company's history, but iPod sales growth fell well below analyst expectations. The 5 percent year-over-year growth rate, according to American Technology Research analyst Shaw Wu, was "surprisingly light."
"iPods came in surprisingly light at 22 million units, up only 5 percent year over year versus consensus expectations of 24 to 25 million due to flat U.S. sales and a tough year over year comparison against low-cost iPod shuffles," he said.
While iPod unit sales growth held low at 5 percent, iPod revenue growth climbed 17 percent -- the fastest in four quarters -- thanks to a buying shift in favor of the more expensive iPod touch.
"Slow unit growth may be a cause for concern in light of a fairly recent major product refresh (new iPod nano and iPod touch)," he added. "In our view, Apple faces a transition in moving its iPod upstream, much like digital cameras have, in order to minimize cannibalization from cell phones."
Mr. Wu is maintaining his "Buy" rating for Apple's stock, but is lowering his target price from $210 to $175 citing macroeconomic concerns. Apple is currently trading at $135.91, down 19.73 (12.68%).
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
QuoteGuest wrote:
Note that the iPhones are iPods. Adding new product lines should be expected to shuffle people around a bit.
Good point, but you don't even have to do that much! iPod unit growth has slowed, but the profit growth is steady! They're selling more high-end iPods now like the touch, and less shuffles. So even though they're selling fewer iPods, their profits are still growing at the same rate.
And really, that's what SHOULD matter to Wall Street. And yeah, add in the iPhone numbers like you said and it's even better.
Wed Jan 23, 2008 1:31 pm Subject: I recently bought a new iPod
My old iPod "Click Wheel" finally gave up the ghost. I had resuscitated it several times, the hard drive, but finally nothing worked. I guess I could buy a new hard drive, and maybe a battery too, and get some more miles out of it, but I may recycle it into something creative such as a carrying case for my new Nano.
Anyway, how many more owners will soon be replacing their old iPods.
My wife has lost the shuffle I gave her and I am planning to give her an "upgrade" for her birthday in April - at least a nano, if not a Touch.
As for Wall Street, it seems like they are a bit myopic when it comes to Apple. They think Apple = iPod. So, the iPod is not selling explosively, combined with the threat of an overall recession in the US and they panic.
No wonder Apple has decided not to care so much for that part of its business and instead going on with what is their business; making stunning products.
I sit in fron of my latest purchase which arrived yesterday; a 20" iMac Core2 Duo and I think that you who have shares, should stay with the.
Wed Jan 23, 2008 4:09 pm Subject: how the iPod is selling.
Wilf53,
I love your term explosively. Wall Street is reacting negatively to realistic numbers, versus their expectations of explosive growth. Sounds like they actually are driving the price down so more fund managers can get in on the next run up of Apple stock in fact.
I just put in a request to purchase a new tower, my first in five years. The old Dual Processor G4s are getting a bit long in the tooth now, so I think you'll see a spike in purchasing of towers this year. And considering how good they are for the bottom line, Q2 growth should be way better than the Apple "guidance."
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