Apple's new iPod line to produce "homerun" of a holiday quarter

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Investment bank Piper Jaffray said Thursday that Apple's recent iPod product line overhaul has placed the company in its best position ever for the holiday shopping season, but warned investors against anticipating much upside from the announcements during the soon-to-end Sept. quarter.

Speaking to clients in a research note, analyst Gene Munster explained that while expectations for Apple's December quarter — which begins on Sunday — are extremely high given the company's new media player lineup, history suggests that the impact on the Sept. quarter will be minimal.

"We believe the new iPods will lead to a homerun December iPod quarter, but the Street needs to be realistic about September iPod units given that all of new iPods were only available for two weeks in the quarter," he wrote.

While Munster believes there's a 25 percent chance that the new offerings could fuel a significant rise in Apple's Sept. results, his analysis of the company's historical performance indicates that investors should expect no more than "slight upside at best."

"Our analysis of the last 5 major iPod releases and the iPod unit number in the first quarter of availability points to more conservative numbers," he explained in more detail. "Specifically, the Sept. 7, 2005 and the Sept. 12, 2006 iPod launches (which coincide extremely well with the Sept. 5, 2007 launch), led to an average of 6.1 percent quarterly growth in the Sept. quarter."

Assuming the same growth rate would apply this year, Munster suggests that investors anticipate an iPod unit sales number around 10.42 million units for the Sept. quarter ending Saturday. This compares to what the analyst calls a somewhat overzealous Street consensus estimate of 10.6 million units, and his own published guesstimate of 10.2 million units.

In his note to clients Thursday, the Piper Jaffray analyst also re-emphasized his belief that the new iPod line signals the completion of a focused product line for the Cupertino-based electronics maker. Unlike previous models, which were based on a simpler menu-based operating system, the ones announced earlier this month run on a modified version of the company's Mac OS X operating system.

"But most importantly, all of Apple's consumer electronics products are now based on OS X: Macs, iPods, the iPhone, and Apple TV all run a modified version of the same operating system," he continued. "Instead of diversifying its business too dramatically, as some have argued, we believe Apple has effectively focused its business on OS X, one of the company's core assets."

Munster maintained his Outperform rating on shares of Apple with a 12-month price target of $211 — currently the financial industry's highest.