iPod sales tracking behind estimates

Apple may be facing slowing iPod sales--if it does not introduce a new iPod--as July data released by market researcher NPD shows that Apple may fall short of analysts' iPod unit estimates for the September quarter. Analyst firm Piper Jaffray, which still expects Apple to introduce an updated or new iPod nano by the end of the quarter, today said that iPod sales during the first month of the September quarter--July--were slower than anticipated. Based on numbers from NPD, the Senior Research Analyst Gene Munster said that his analysis of iPod unit data points indicate a slight downside to Piper's estimates of 8.6 million for the quarter--unless the company revises its iPod lineup or experiences a change iPod sales trends. Munster said that the July NPD data indicate sales of about 8.0 million units for the entire quarter: "The number is based on various assumptions and is an extrapolation of one month of data, so we believe investors should supplement this data point with other information."

The firm, however, admitted that it was too early make a call on the September quarter and its analysis was based a limited set of data.

"We believe that Apple can still meet our and Street estimates if a new iPod ships by quarter end. We currently expect Apple will ship a new or updated iPod nano by the end of the September quarter," Munster said in a research note released to clients.

Traditionally, July sales are much lower than the August and September months, so the firm used last year's sales trends to help extrapolate its numbers for the current September quarter.

"While our iPod NPD extrapolation analysis suggests that iPod shipments through the month of July are tracking slightly below plan, we continue to believe that Apple will ship new/updated iPods (likely updated Nano) in September," the firm told clients. "Assuming Apple does ship new iPods in September and depending on the timing of shipment within the month, we believe it is still possible that our 8.6 million unit estimate for the quarter can be achieved. Without a new iPod this quarter, we expect slight downside to our estimate, as suggested by NPD data.

Piper Jaffray maintains an "Outperform" rating on Apple with a price target of $99.

Filed under: iPod