“Just how long can the iPod keep playing that upbeat tune? That is the question investors and analysts are pondering as Apple Computer prepares to report fiscal third-quarter results after the market closes on Wednesday,” Scott Morrison writes for The Financial Times. “Triple-digit sales growth for Apple’s iconic digital music player sent the company’s share price soaring more than 200 per cent in 2004. But Apple rattled the market three months ago with guidance that was not quite optimistic enough.”
“Now, with Apple’s share price hovering about 16 per cent below its high earlier this year, Wall Street will be looking to Apple for signs that demand for the iPod will pick up going into the back-to-school and holiday shopping seasons,” Morrison writes.
Morrison writes, “There are a number of indicators that suggest the digital music player market is cooling. Apple rival Creative Technology, the Singapore group, recently warned of lower-than-expected demand. Apple recently cut prices on two of its music player models, including the iPod, a move the company said would help it capture market share. Some observers believed the price cuts pointed to slowing demand. More telling, perhaps, is the fact that consumers can actually find iPods in stock at Apple retail stores a far cry from the waits that customers faced just a few months ago. Apple also now promises free same-day shipping for all iPods ordered on the internet.”
Morrison writes, “For the quarter just ended, most analysts estimate Apple will have sold 5.4m-5.5m units. That would be a huge increase from 860,000 units sold in the same period last year but only a slight gain on the 5.3m units sold in the second quarter.”
Full article here.
MacDailyNews Take: The Street eats growth, not success. Obviously, Apple could sell 5.3-5.5 million iPods per quarter for the next twenty years and their share price will not be rewarded. Hey, their sales are stagnant! Hold.
If Creative Technology is Apple’s “rival,” Apple’s is great shape. Creative’s woes do not indicate problems at Apple, they’re caused by Apple. Apple gets reamed for not keeping up with demand and when they finally get the supply caught up, they get reamed for that, too. Consumers can actually find iPods in stock at Apple retail stores and buy them?! Apple lowered prices to sell more iPods?! Get the broker on the phone, “SELL! SELL! SELL!”
We love Wall Street. Remember, growth is the only thing that matters and, just like Krispy Kremes and RealNetworks honchos, once you give them some, the voracious Street wants double or triple the next time. Let’s see how they react to Apple’s financial results due out after the bell today.
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