Apple: Unexceedable Expectations

After yesterday's results and before the launch of the video iPod, some analysts expressed disappointment with Apple's iPod sales which came in at 6.4 million for the quarter, including a million iPod nanos during the final 17 days alone. The iPod accounted for $1.2 billion, or 32 percent, of Apple's total sales and had more than threefold growth over a year earlier.

BusinessWeek writes that the sales fell short of expectations. Chris Crotty at iSuppli attributed the fall off to a shortage of flash memory. He said, "It has to be flash, I don't see what else it could be."

Shaw Wu at American Technology Research blamed it more on Apple's product mix. He remarked, "I know there are plenty of 2-gig nanos around. It's the 4-gig that you can't find in the stores. They keep talking about demand, but I sense a little bit of denial."

Gene Munster at Piper Jaffrey added, "From a fundamental point of view, it was a phenomenal quarter. From an expectations point of view, it was a disappointment."

In a Bloomberg article, similar sentiments were echoed. Gene Munster at Piper Jaffray said, "It wasn't a clean handoff from the Mini to the Nano. If you just look at the numbers, there's reason for concern and that's why the stock is trading down." Munster believed it was a production problem and not due to lack of demand. "I don't think it's fair to say the demand is not there," he added

American Technology Research analyst Shaw Wu added, "You have to deliver a flawless quarter when your stock is high and obviously it wasn't a flawless quarter."