Analyst: 11% of Windows iPod users to buy a Mac
AppleInsider StaffIn a research note released to clients on Thursday and obtained by AppleInsider, Needham & Co. analyst Charlie Wolf raised his target price on Apple Computer to $104 a share. The analyst reiterated his assumption that 11% of Windows users owning iPods will purchase a Mac, and notes that sales at the iTunes Music Store have accelerated to a $450 million annual run rate. "The increase in music sales in combination with a decrease in peripheral sales in our revised model raises Apple's overall gross profits because music sales are much more profitable than peripheral sales," Wolf said. In addition to raising its Apple price target from $83 to $104, the firm also raised its earnings per share estimates from $1.85 to $2.00 in fiscal 2005, and from $2.25 to $2.50 in 2006. Needham maintains a 'Buy' rating on Apple.
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43 Comments
Music sales are more profitable than peripheral sales?
I think 450M is a revenue number. Multiply by 0.05 and you get the money Apple actually sees (22.5M), and then realize that much of that goes into costs. The online music business is a tough one, and Apple uses it to drive iPod sales, which drive hardware sales.
If online music were easy, everyone would be succeeding at it instead of falling of the bandwagon so damn hard.
Music sales are more profitable than peripheral sales?
That statement struck me as odd too.
Doesn't Apple pocket something like $.02 for each song they sell?
That statement struck me as odd too.
Doesn't Apple pocket something like $.02 for each song they sell?
It's not that low and the original estimates were based on MUCH lower volume of music sales. The volume Apple is selling now and is on pace to sell is astonishing and is making the Music Store a money maker in itself.
when Ipod sales dry up the music store will still be going strong.
And the Movie store still yet to come.