Charlie Wolf of Needham & Co. said in a research note sent to clients today that he expects Apple to sell 23.6 million iPods by 2006. Details of the note, which include interesting breakdowns of Appleis valuation, were disclosed by Macworld UK.
Wolf believes that flash-based MP3 players will dominate sales in 2006, and said that Appleis likely entry into that segment will help cement its hold on the market as a whole. Wolf estimates Appleis iPod business alone is worth $25 a share, and that the rest of Apple is worth about $37 per share, leading him to raise his target price on the stock to $62.
Most interestingly, the $37 figure includes Appleis cash hoard, valued at about $13 per share. Excluding Appleis cash, the rest of Apple--Mac business and all--is worth $24 per share, less than the iPod. Given that iPod related sales today account for far less than half of Appleis total revenue, the estimates are a testament to the growth and viability of the iPod looking ahead compared to that of the Mac market.
Wolf expects, and takes into account with his estimates, that Apple will lose market share in both the digital audio devices market and online music. By 2010, for example, he expects that Appleis iTunes Music Store will hold just 2 percent of the market for online music, but predicts that by that point 2 percent will account for about $800 million in revenue. Wolf apparently doesnit provide any specific reasons as to why Appleis share will fall from 70+ percent to just 2 percent over the next 6 years, beyond increased competition.
For 2005, Wolf expects Apple will sell 13.5 million iPods, up from the 9.5 million he previously predicted. All those iPods will help Apple achieve sales of $11.7 billion, he expects.