updated 11:30 am EST, Thu December 14, 2006
AmTech on iTunes concerns
Recent concerns about Apple's iTunes Music Store sales falling rapidly are overdone, according to American Technology Research senior analyst Shaw Wu. "Recently, there has been concern about declining iTunes store sales and the negative impact on Apple," Wu said. "We believe these concerns are overdone and we would take advantage of these misplaced fears to add to Apple positions." Analysis of Apple's iTunes downloads shows strong growth through 2005 and 2006 with estimates of music downloads in January of 2005 averaging roughly 1.28 million per day, translating to a 95 percent gain year over year. American Technology Research reiterates its 'buy' rating on Apple shares with a price target of $99.
Wu also analyzed Apple's 'other music related products and services' revenue line item over the last eight quarters, which includes iTunes and associated iPod accessories. Results showed top-line growth rates ranging from 71-276 percent year over year. "We believe it might not even matter how iTunes sales do, meaning tracking iTunes sales might not be that conclusive in predicting iPod sales (which are what really matters)."