iPod sales up 8% in Jan, could hit 10.8m for quarter

Apple could sell as many 10.8 million iPods in the March quarter, beating Merrill Lynch estimates of by 6 percent if the company's iPod line continues its January sales trends. The firm currently estimates that Apple will sell 10.2 million iPods during the quarter, but noted January numbers released by market research firm NPD are tracking slightly ahead of its estimates. They were tracking, however, more inline with consensus estimates, which Merrill says are near 11 million units. While the January data provide confirmation of the company estimates on average selling price (ASP), Merrill said it was too early to call the quarter, noting that January numbers were not enough to provide revised estimates and that the raw January numbers reflect a 5-week selling period.

"Given that January typically makes up only 25 percent of the March quarter, plus wide tracking error between US NPD data and Apple's global results, ultimately it's not enough information to make a strong call on C1Q07 estimates," Merrill analyst Richard Farmer told clients in a research note. "January NPD iPod unit growth was 35 percent year-over-year, but only up 8 percent when adjusting for the extra selling week in January 2007."

The weekly data from NPD is a subset of the monthly tracker and does not include Apple stores. The numbers, however, show an expected seasonal drop-off following the strong sales of more than 20 million iPods in the December quarter--in part due to the strong sales in Apple's international markets. Farmer said that the 8 percent growth in January compares with 33 percent growth in December and November.

"If the January run rate of 8 percent year-over-year persists in February and
March, and the average tracking error of 18 percent also holds, then Apple would report iPod units of about 10.8mn, or 6 percent higher than our estimate."

The firm has a 'buy' rating on Apple stock with a target price of $113.

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