Apple Stock Falls Amid Reports of Slowing iPod Sales
SAN FRANCISCO (June 3) - Shares of Apple Computer Inc. fell about 5 percent on Friday, fueled by an Internet report of swelling inventory of its iPod digital music players.
Apple, meanwhile, is preparing for a conference next week that may see the launch of a new version of its iPod Shuffle player with more capacity, one analyst said.
The decline in Apple shares came after appleinsider.com, a Web site that discusses issues related to the company's products, said Apple is ''overstocked on most iPod models with about a month remaining in its third fiscal quarter.'' The report cited unnamed sources.
''Apple is believed to be sitting on its most significant inventory of iPod Shuffles since the player hit the market in February,'' the Web site said. ''According to reliable sources of information, tens of thousands of iPod Shuffles remain idle in the channels this week alongside a good number of iPod photos.''
An Apple spokesman said the company does not comment on ''rumors and speculation.''
''I think (the Web report) is right; there is inventory there, and we are only looking for a flat quarter'' for iPod unit shipments compared with the period ending in March, said Gene Munster, an analyst with Piper Jaffray.
Apple sold 5.3 million iPods, accounting for 31 percent of revenue, in the second quarter.
''But (Apple's) quarter is going to be fine. There will be an upside to revenue and more upside to earnings,'' Munster said, adding that growing iPod supplies are not surprising since the company did not introduce any new products during the quarter, and inventory caught up to slowing demand for the gadgets.
On Monday, Apple may discuss faster microchips for its Macintosh computers and possibly unveil an iPod Shuffle music player with more song storage capacity, said Munster. Chief Executive Steve Jobs will take the stage in a keynote at the Worldwide Developer Conference, a traditional venue for Apple product launches.
Current Shuffle models come with either 512 megabytes or 1 gigabyte of memory, enough to store about 120 songs or 240 songs, and cost $99 and $149, respectively.
Jobs could also discuss plans for a low-power version of International Business Machines Corp.'s (IBM.N) PowerPC 970 processor, which Apple calls the G5, said Kevin Krewell, editor in chief of the Microprocessor Report.
''The bigger and more important challenge is building a low-power version of the 970,'' Krewell said. ''The G4 (chip) in the notebook is getting long in the tooth.''
Apple's shares slipped $1.87 to $38.17 on Nasdaq.
Reut17:12 06-03-05
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