Mr. Wu noted that Appleis latest MP3 player “is so far readily available at Apple stores, its online store, and [is] starting to show up at retail, including Amazon.com.” He said that many Apple stores have so far sold 200 to 500 of the 1,800 to 2,500 nanos they received; in contrast, the iPod mini “was sold out for nearly six months following its launch.” He also reported that black nanos are outselling the white ones by 5 to 1 on average, and as high as 8 to 1 in some locations.
The analyst continued to say that “Apple may need to make some changes to ensure [the iPod nanois] success as a high-volume product.” Observing that the iPod mini continues to be a strong seller, Mr. Wu wrote: “We believe the iPod nano may cause sticker shock as consumers are not getting more storage for their dollar, as they are accustomed to […] Apple may need to either increase the storage capacity to match at least the iPod mini or keep its storage capacities and cut the price by $50. We believe the former is more likely.”
Mr. Wu continues to maintain a “Hold” rating on Appleis stock, with a $42 price target. He wrote: “Our concerns with its high valuation, INTC processor transition, slowing growth and high investor expectations remain. We prefer the risk-reward in the mid-to-high $30s.” At 1:00 PM EST on Tuesday, Apple shares were $50.93, down 0.91% for the day.