Apple's Thrill is Gone: Analysts Question iPod Sales and Future Growth

Strategic Insights -

As Apple Computer prepares to report its quarterly earnings, analysts are cautioning that the company's iPod sales may be nearing their peak. Despite enjoying an 18% stock price increase over the past year, Apple is facing increasing competition from other manufacturers and concerns about the saturation of the iPod market. Managing Director of Equity Research at Caris & Company, Mark Stahlman, expressed skepticism about Apple's ability to sustain its sales momentum, citing the failure of the photo iPod and the threat of mp3 players in phones. Stahlman also highlighted the company's reliance on the iPod for revenue, warning that the market is "relatively saturated."

Key Takeaways:

  • Analysts are questioning Apple's ability to maintain its sales momentum due to increased competition and market saturation.
  • The failure of the photo iPod and the threat of mp3 players in phones are significant concerns for Apple's future growth.
  • Mark Stahlman, Managing Director of Equity Research at Caris & Company, believes the iPod market is "relatively saturated" and that Apple's sales may peak soon.
  • Apple's reliance on the iPod for revenue is a concern, with some analysts predicting a decline in sales in the coming quarters.
  • Co-founder of Elevation Partners, Roger McNamee, disagrees with Stahlman's pessimistic outlook, citing Apple's strong brand and market power.
  • McNamee believes that the cellular phone industry's approach to music is restrictive and may limit opportunities for growth.

Statistics:

  • Apple's stock price has increased by 18% over the past year.
  • The current whisper number for Apple's earnings is 36 cents a share, well ahead of analyst estimates of 31 cents.
  • Apple's sales are expected to come in slightly above consensus at 3.3 billion.
  • Mark Stahlman estimates that Apple's sales may taper off to 5 million iPod units per quarter in the future.
  • Roger McNamee predicts that Apple will sell half a billion iPods over time, but that unit volume is not the company's primary issue - margins are.

Sources:

  • CNBC/Dow Jones Business Video Analyst Interview
  • Mark Stahlman, Managing Director of Equity Research at Caris & Company
  • Roger McNamee, Co-founder of Elevation Partners