updated 02:30 pm EST, Tue November 29, 2005
Shuffles, Nanos, Aperture
recently with the start of the holiday shopping season, which may surprise some iPod followers because the 4GB Nanos were outselling the 2GB models by a wide margin immediately following their introduction. American Technology Research analyst Shaw Wu said "It appears that holiday shoppers (particularly first-time iPod buyers) are more concerned with the price point as opposed to the storage capacity." The analyst believes this is a sign that Apple's bet on a $200 price point for the 2GB Nano has begun to pay off, the same way it did with the $200 4GB iPod mini, according to AppleInsider. Wu also reported evidence of strong sales of Apple's sub-$130 iPod shuffles and $500 Aperture post-production photography software. "While this is favorable for revenue, we believe it is also favorable for margins as we believe 2GB Nanos and iPod shuffles are amongst the higher margin iPods given their lower NAND flash content," Wu said.
The analyst also believes that Apple is now producing more 2GB iPod nanos than the 4GB model. American Technology Research is raising its December quarter consensus estimates for the second time to $4.9 billion in revenue and 54 cents in earnings-per-share, up from $4.8 billion and 52 cents. The firm is also modeling gross margins of 27.8 percent, up from 27.6 percent. Shaw Wu said "in terms of leverage, we estimate each 10 basis point improvement adds $11-12 million in net income." American Technology Research maintained its "Buy" rating on Apple shares, raising its target price from $66 to $77.