Merrill Lynch has raised its estimates for how many iPods it thinks Apple will sell in the March quarter, along with profit estimates for Apple Computer. In a research note to clients obtained by The Mac Observer, Analyst Steven Milunovich is now estimating that Apple will sell 4.5 million iPod units this quarter, up from 4 million, and 15 million for the full year. He raised profit estimates by a penny to US$.022 for the March quarter, and five cents for the full year, or $1.05 per share.
Mr. Milunovich addressed the recent news that Napster has seen growth in its subscription music services.
"We believe Napsteris results show that on-line music purchases continue to grow," wrote Mr. Milunovich. "We do not see the small rise in absolute number of subscribers (now at 270,000) as taking share from Appleis iTunes."
He also noted that Apple had just reported passing the 300 million mark in iTunes downloads sales, which was faster than he had previously estimated in his models.
Acknowledging that iPod competition is strengthening, Mr. Milunovich said that Appleis biggest issue is still making enough iPods to meet demand, specifically with the newest addition to the family, iPod shuffle.
In support of this, Mr. Milunovich noted that Best Buy had seen triple digit growth in the sale of digital media devices, and that Apple is seeing strong traffic and demand in its fleet of retail Apple Stores.
Mr. Milunovich is maintaining his split-adjusted price target of $51 per share.
*In the interest of full disclosure, the author holds a small share in APPL stock that was not an influence in the creation of this article.