Analyst: iTunes Could Have "Notable Impact" on Fiscal 05, 06

iTunes downloads could move from being merely a driver of iPod sales to having a "notable impact" on Apple Computeris bottom line in fiscal 2005 and 2006, a Wall Street analyst predicted Tuesday.

Piper Jaffray analyst Gene Munster said in a research note obtained by The Mac Observer that downloads for fiscal 2005 could reach 513 million, and one billion in fiscal 2006, and that these sales would be meaningful to Appleis bottom line.

At the heart of these predictions is Piper Jaffray research that showed iPod owners were averaging 6.6 downloads from Appleis iTunes Music Store.

"If we apply this 6.6x ratio to our cumulative iPod- installed base estimates through CY05 and lower the ratio to 6.0x in CY06," wrote Mr. Munster, "iTunes downloads for CY05 would be at 513m vs. our current estimate of 387m, with CY06 iTunes downloads of 1.0b vs. our current estimate of 542m."

While Mr. Munster specified that iTunes sales wouldnit have as big an effect in 2005, he said that iTunes could contribute between four and seven cents per share in profit in 2006, depending on operating margins for the online music service.

The research note reiterated Piper Jaffrayis "Outperform" rating for Appleis stock, as well as a 12-month price target of US$100.

*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.  

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