American Technology Research upgrades Apple to ‘buy,’ $63 target, estimates 9.4m iPods this quarter

Analyst Shaw Wu of American Technology Research has upgraded Apple Computer to ‘buy’ and raised his target price to $63 from $48. In a research note offered to clients this morning, Wu mentions that Apple currently has robust product momentum.

Apple’s significant competitive advantage, driven by the company’s integrated hardware/software/service approach (read: Appel contorls the whole widget), has been strengthened, Wu mentions in his note.

American Technology Research estimates that Apple will be able to meet or exceed 9.4 million iPod unit sales for this quarter, given the recent launch of video capable iPod.

The New iPod with Video.  The ultimate music + video experience on the go.  Buy it now at the Apple Store. From $299. Free shipping.
The New iMac G5 – Built-in iSight camera and remote control with Front Row media experience. From $1299. Free shipping.
More realistic price target in our opinion than BofA’s $52, but, boy, these analysts sure expect Apple to move a lot of iPods this quarter, don’t they? Are these unrealistic iPod estimates of 9.3-9.4 million between BofA and ATR or do you think Apple can hit (or exceed) numbers like this on the holiday quarter?

Related articles:
BofA analyst: Apple video play an ‘evolutionary opportunity,’ 9.3m iPods to be sold this quarter – October 17, 2005
Apple has the potential to change not just the audio industry, but the whole entertainment industry – October 17, 2005
Advertisers welcome Apple’s iTunes Store commerical-free content – October 17, 2005
New York Times writer can’t think different: ‘video iPod may not be ready for prime time’ – October 17, 2005
Podfather: iPod porn is going to be huge – October 14, 2005
Forrester Research: Apple transformed music distribution, now it is doing the same for video – October 14, 2005
Get ready for the iPod video torrent search sites – October 13, 2005
Apple’s new iMac G5, iTunes 6, iPod video designed to bait Hollywood – October 13, 2005
Apple video iPod+iTunes could create mass audience for video on the go, despite studios’ misgivings – October 13, 2005
Using QuickTime Pro to create videos for playback in new Apple iPods – October 13, 2005
Analyst: Apple has just produced ‘the tipping point’ for entertainment content – October 13, 2005
Apple’s video play likely to unsettle movie, TV, advertising and retail markets for years to come – October 12, 2005


  1. 9M is a reach (but doable) with this product mix in the Holiday quarter.

    Apple sold more than 1M nanos in 17 days of last quarter. to make 9M, they will have to sell 100,000 a day for 90 days, or 1 million every 10 days. That is massive momentum, but at the same time, it is the holiday quarter and hey don’t just have the nano – they have the new iPod too.

    It will come down to two things:

    (1) Are nano buyers also G5 buyers? If the answer is yes, then sales will be canibalized as the same market segments decides between a nano OR a G5 iPod. I tend to believe there is significant cross over in the segment and that many will opt for the $299 30 GB G5 iPod over the $249 4GB nano.

    (2) Are alternatives (Sony PSP) cooler this season than iPod? If you can only get one ~$300 consumer electronics gift in your stocking, would it be an iPod flavor, or a PSP? I am afraid many kids – who have an iPod flavor from last season, will ultimately decide they need a PSP to replace their Game Boy rather than upgrade their iPod. Many adults on the other hand will enjoy their G5 iPod with video to watch on the tred mill and could care less about a PSP.

    MDN word: party

  2. 9.4 Million???

    Apple is selling more ipods than they can make.

    They cannot make 7 million in one quarter.

    I know they are ramping up production, but 2 more million in one quarter.

    Watch Apple stock drop at the next quarterly report when Apple ONLY sells 9 million iPods and has a back log of 6-8 weeks on all iPods.

    What tea leaves or LSD are they using to come up with these numbers?

  3. Let’s say it takes 5 minutes to assemble, test and package a nano.

    That’s 12 nano units every hour, or 250 every day assuming you have shifts going all day and they take a lunch break and a few comfort breaks as you Americans say.

    There are 98 days in the quarter, so a single production seat might build around 24,700 units in the quarter.

    If you have 350 production seats, that’s over 8.5 million iPod nano units.

    We know Apple can make/sell 4.5 million hard-drive iPods in a quarter – it did so last holiday quarter.

    So the only questions are…

    Can they get enough NAND RAM to make 8.5 million nanos (7.5 million for sale, 150K for DOA warranty/failure, the remainder to ensure they have some product to sell in January)? They’re going to need around 13.5 million 16-gigabit modules, which means somebody’s fabrication plants are going to be busy making chips.

    Can they get enough 30GB and 60GB hard drives? They’re going to need around 3 to 3.5 million units in total – probably around 1,8 million 30GB units and the remainder in 60GBs.

  4. If Apple can keep up with supply, they will sell at least 12 million iPods. It’s a lot, but look at the trends of the last few years and you’ll see that holiday sales always jump at least this dramatically. 12 million is a feasible number. Next year, the equivalent jump may be difficult because they’ll have come close to the market saturation point, but the iPod presents a new model of annual innovation that previous consumer electronics did not, so it’s not clear where the growth curve will trail off.

  5. I don’t think these numbers are high enough. I think apple could actually reach them, and I want the incredible 15% stock dive and bounce back in 3 days act that we saw last week. my stock portfolio could use it.

  6. G#$*&@(#&mnit;!! Stupid inability to edit! Ahhhhhh!!!!!!!!!!

    What I meant to say — before I accidentally deleted it — was . . .

    I agree with Mike, above. This is getting out of hand. Apple may be in the process of becoming a victim of their own success, but now we’re at 9+ million units / quarter?!?!?!? These analysts are really pissing me off. As my little boy would say when he senses BS (and even HE could figure this out as being BS) . . .


  7. As has been said here the biggest issue will be availability of parts for the nano and the pods.

    The pod HD should be okay – apple have been making 60 gigs for a while and 30 gig drives have also been available, although the drive supplier / size may have changed.

    The flasm memory is another issue. Is Samsung making 10-20 million chips per quarter for Apple to get their 40%.

    This will be the biggest question – can Apple make 5-10 million nanos for the Xmas quarter or is it going to be like the old times where Apple can supply enough units to meet demand.

    I personally think that Apple could sell 12 million pods this quarter, but that that number will be more like 10 million due to supply issues. I went to Fry’s this weekend and they did not have any nanos for sale or on display. I’m sure Apple are losing sales by the product not being available in all the usual outlets.

    I also agree that if Apple don’t meet the 9-10 million number, the stock will plummet. If I own shares around that time I will probably sell them before the results come out.

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