Analyst: iPod Q1 Growth "Surprisingly Light"

Appleis first quarter of 2008 was the best in the companyis 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 Appleis 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%).