“If recent developments are any indication, Apple could have sour news for investors when it reports earnings next week. Announcements from two companies in the digital music player sector — and even from Apple itself — suggest that demand has slowed in recent months,” Troy Wolverton writes for TheStreet.com.
Wolverton comes to this conclusion because SigmaTel, which makes flash-memory for low-end music players cut its second quarter revenue estimates. Wolverton reports, “Company officials declined to say whether Apple, which uses SigmaTel chips in its iPod shuffle players, was among those customers whose sales slowed, but the company did say the slowdown was ‘broad-based.'”
SigmaTel’s announcement came one day after Creative Technology cut its own revenue outlook due to a shortfall on weaker-than-expected demand.
MacDailyNews Take: So, maybe nobody wants flash-based Creative players because they want iPod shuffles?
Wolverton continues the doom and gloom by writing that Apple’s recent price cuts “may point to slow demand at Apple for those products, if not for the company’s whole iPod lineup, analysts say.”
Wolverton does report that “NPD analyst Stephen Baker argues that the problems at SigmaTel and Creative are likely company-specific and don’t reflect a broader market problem. Apple’s move to cut prices and build inventory may simply be a strategic effort to maintain its dominance of the digital player market.”
Wolverton warns that if analysts like Baker are wrong, “what may be a sour taste in the mouth of Apple investors next week could turn bitter.”
Full article here.
MacDailyNews Take: Creative is spiraling down the bowl, so Apple is, too? Sorry, like Creative digital music players, we’re not buying. We’ll stick with First Albany which currently forecasts 5 million iPod units, Goldman Sachs which estimates 5.35 million iPod units, and Piper Jaffray which estimates 5.5 million iPod units this quarter.
Apple sold 5.311 million iPod units during its fiscal 2005 second quarter ended March 26, 2005 and 4.58 million iPod units during its fiscal 2005 first quarter ended December 25, 2004. In its fiscal 2004 fourth quarter ended September 25, 2004, Apple sold 2.016 million iPod units.
Apple is due to report quarterly results on July 13th.
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