Napster not a threat

Merrill Lynch is raising its estimate for iPod unit sales to 4.5 million this quarter and 20 million for the year (15 million HD-based units and 5 million iPod Shuffle units). Although iPod competition is strengthening, the firm says it believes demand for the iPod shuffle continues to outstrip supply. "We believe Napster's results show that on-line music purchases continue to grow. We do not see the small rise in absolute number of subscribers (now at 270,000) as taking share from Apple's iTunes." Merrill Lynch also reported that the average iPod user in the U.S. spends $150 on accessories. Additionally, "Apple store managers tell us that iPod interest is translating into Mac sales." Merrill Lynch reiterated its Buy rating with a price objective of $51 per share. [increased yearly iPod estimate to 20 million based on revised ML report]

by MacNN Staff