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December 19, 2005
An analyst raises iPod shipment estimates
Piper Jaffrey analyst Gene Munster has made a name for himself with some bullish calls on Apple's stock, including a prediction just over a year ago that shares would hit $100--up from just over $50 at the time. Apple still hasn't hit triple digits, but it's come closer than many would have thought when Munster made this bold prediction.
Since then, Munster has been consistently bullish on Apple, but often not the most bullish as other analysts have jumped on the bandwagon. That goes for his view of how many iPods the company is likely to sell this Christmas quarter. While predictions from his colleagues have gone as high as 14 million, he had his number at nine million.
Until now. This morning he put out a report suggesting Apple will sell eleven million iPods in the December quarter. This is based primarily on what he says is better-than-expected availability from Apple, both through its online store and in its retail stores. As I reported a few weeks back, there have been broader shortages in Apple's retail stores.
To get to the eleven million number, Munster looked at historical market data from market researcher NPD Group that shows that that in the past two years, Apple sold 34% of all MP3 players in the months of October and November, and 66% of the total sold in December. In Munster's analysis, he backs that critical December figure to 45%, on the belief that 66% is just too big a number given the huge volumes at play. I wonder about that. It seems to me Apple's market share may hold up just fine. The fact is that no other music player has come close to capturing consumer interest as the iPod has. I think many people will be willing to leave an IOU under the tree, rather than buy a non-iPod product. Indeed, that's the conclusion of Morgan Stanley's Rebecca Runkle, who ran a survey that showed that just 4% of iPod shoppers plan to go with another make.
So the question comes down to availability. Munster may well be right that Apple can hit eleven million, but my personal experience suggests that supplies are pretty tight in some regions. Yesterday, my sister told me she wants to buy my nephew an iPod but hasn't been able to find one to buy. Also, I went to the Apple store in Emeryville, CA to pick up some iTunes gift cards. They were out of all the iPod nanos except the 4 gig white model. That bodes well for sales of regular iPods, as I'm sure many shoppers will simply decide to fork up the extra money. That's good news for Apple, since the pricier iPod carries better margins than the nano, according to analysts. Bottom line: it looks like Apple's in for another fabulous iPod quarter, whichever way you slice it.
iPod and iTunes
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Tracked on December 19, 2005 02:30 PM
Great blog. Where's Cliff, though?
Just wanted to make a correction with respect to your first sentence,
"Piper Jaffrey analyst Gene Munster has made a name for himself with some bullish calls on Apple's stock, including a prediction just over a year ago that shares would hit $100--up from just over $50 at the time. Apple still hasn't hit triple digits, but it's come closer than many would have thought when Munster made this bold prediction."
Apple actually now stands at about $143 or so since Munster's prediction. Munster set his target price in Nov. '04, and Apple did a 2-for-1 split at the very end of Feb. '05 (at a pre-split share price of almost $90).
Posted by: Mav at December 20, 2005 03:23 PM