updated 05:10 pm EST, Thu February 9, 2006
ML iPod estimates up
Merill Lynch has raised its iPod sales estimates for the March quarter, folowing the introduction of the 1GB iPod nano and the price reduction on Apple's iPod shuffles. In a research note to clients, Merill Lynch research analyst Richard Farmer said he now expects Apple to ship 10.1 million iPods, up from the previous estimate of 9.8 million. The firm also increased its fiscal year 2006 estimates to 53.2 million (from 52.3 million). "The new 1GB iPod nano makes Apple's lower-end offerings more competitive with numerous Asian players," states the note. Merill also says that the recent decline in Apple's stock (AAPL), brings the stock "closer to reasonable valuation," as well as a continued concern over Intel transition issues with Adobe and Microsoft. Adobe said it would not be transitioning its software into Universal binary until as late 2007.
Farmer notes that the slow transition to Intel processors and the launch of Microsofts' new operating system, Vista, could hold back Mac annual growth. However, he also mentioned that the iPod's "halo effect" could "more than offset these issues, creating upside to our model."
He continued, saying that Merril Lynch assumes "72 percent compound annual growth [CAGR] for iPod units for 2005-2007, which implies a 2007 penetration into the consumer PC installed base approaching 56 percent. This seems reasonable though not easy to dramatically outperform."