Strong iPod sales drive AAPL

Sales of Apple's iPod this quarter may be higher than expected, which could lead to an upside in the company's March quarter financials. The strong iPod sales--which could hit 8.8 million units this quarter--could help the company counter any weakness in Mac sales, according to a new analyst report. Analyst Shaw Wu of American Technology Research told clients that cuts in the pricing of the Shuffle and the new 1GB iPod nano have spurred sales of the popular MP3 player--especially in non-Apple channels. "In addition, our checks indicate that the new iPod Hi-Fi speaker system is seeing strong initial sales and the video iPod demand continues to be strong, well above seasonal trends and down modestly from the very high December quarter levels."

Despite continuing pressure on the stock, Wu raised his March quarter estimates to $0.43 per share profit on $4.43 billion in revenue, up from $4.37 billion and $0.42. The anlayst also says that Apple could see as many 8.8 million iPod sales, up from his previous estimate of 7.7 million. The report to clients notes that Wu's estimates are above Apple's guidance of $4.3 billion and $0.38 per share, but below consensus estimates of $4.6 billion and $0.44 and 9.5 million iPods.

Wu maintains a "buy" rating on Apple stock with a 12-month price target of $101.

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