Apple maintains "outperform" rating

Piper Jaffray today maintained an "outperform" rating for Apple, citing the "halo effect" and iTunes online music sales growth. Apple's domination in digital music is said to be a critical piece to the story, however iPod revenue is not believed to be the only growth avenue for the company. iPod sales will continue to be a foundation for growth in other parts of Apple's business. iTunes is assumed to account for five-percent of Apple's total revenue with downloads numbering at 1.365 billion by 2006. Over 35 million iPods are expected to have shipped by the end of 2005, further fueling the iPod's "halo effect." Based on the one-million plus tracks sold in Japan over the first four days, pockets of untapped demand are said to remain in the international market for digital music. Risks cited include the fact that Apple is highly dependant upon spending trends in the education, consumer and creative professional markets.

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