SigmaTel retains grasp on iPod shuffle business?
In what should come as a relief to its investors, SigmaTel Inc. is likely to maintain its position as a supplier of audio chips for Apple Computer's iPod shuffle digital music players, analyst for Wedbush Morgan Securities said this week.
In a research report sent to clients on Tuesday, analyst Craig Berger said he has increased confidence that SigmaTel components will remain at the heart of the low-cost iPod for the remainder of the calendar year after a Samsung executive went on record in saying that Samsung had won Apple's iPod nano business from PortalPlayer.
"It is not surprising that Apple would ?punish? Samsung for commenting publicly about its position within the iPod nano follow-on, and we believe that SigmaTel is likely to be the resulting beneficiary of the Samsung executive?s gaffe," the analyst told clients. "We believe the shuffle business will contribute between $0.50 and $0.75 of earnings per share to SigmaTel in 2006, somewhat dampening the firm?s total operating losses."
Berger said his model for SigmaTel already includes shipments of 7.4 million iPod shuffle-bound chips for 2006. "There could potentially be some upside to these units if Apple continues to lower its Shuffle price as NAND flash costs continue to decline," he said. According to the analyst, each million iPod shuffle units the company ships will drive an additional $0.06 of earnings-per-share.
However, Berger said there is "no way" higher iPod shuffle unit shipments can single handily rectify the firm?s dire financial straits.
"In addition to seasonally soft MP3 player shipments in [the first half of 2006], we believe SigmaTel is being 'sandwiched' between Samsung/PortalPlayer at the high end of the MP3 chip market (with Apple) and Actions Semi at the low end, losing significant market share to the latter over the past year," the analyst wrote.
Shares of SigmaTel have been met with a steady decline since last summer as competition in the digital media player space has heightened. Shares now trade in the $5 range after falling from a 52-week high of over $24 last June.
Wedbush Morgan Securities maintains a "Sell" rating on the company's shares, with a price target of $5.
In a research report sent to clients on Tuesday, analyst Craig Berger said he has increased confidence that SigmaTel components will remain at the heart of the low-cost iPod for the remainder of the calendar year after a Samsung executive went on record in saying that Samsung had won Apple's iPod nano business from PortalPlayer.
"It is not surprising that Apple would ?punish? Samsung for commenting publicly about its position within the iPod nano follow-on, and we believe that SigmaTel is likely to be the resulting beneficiary of the Samsung executive?s gaffe," the analyst told clients. "We believe the shuffle business will contribute between $0.50 and $0.75 of earnings per share to SigmaTel in 2006, somewhat dampening the firm?s total operating losses."
Berger said his model for SigmaTel already includes shipments of 7.4 million iPod shuffle-bound chips for 2006. "There could potentially be some upside to these units if Apple continues to lower its Shuffle price as NAND flash costs continue to decline," he said. According to the analyst, each million iPod shuffle units the company ships will drive an additional $0.06 of earnings-per-share.
However, Berger said there is "no way" higher iPod shuffle unit shipments can single handily rectify the firm?s dire financial straits.
"In addition to seasonally soft MP3 player shipments in [the first half of 2006], we believe SigmaTel is being 'sandwiched' between Samsung/PortalPlayer at the high end of the MP3 chip market (with Apple) and Actions Semi at the low end, losing significant market share to the latter over the past year," the analyst wrote.
Shares of SigmaTel have been met with a steady decline since last summer as competition in the digital media player space has heightened. Shares now trade in the $5 range after falling from a 52-week high of over $24 last June.
Wedbush Morgan Securities maintains a "Sell" rating on the company's shares, with a price target of $5.
Comments
What the fuzz
Originally posted by FireEmblemPride
Will the iPod shuffles ever be updated?
Wait it's cloudy. No messages yet! Wait......wait.......wait......i'm getting something? I can see letters I think, yes they're letters alright. 'Y'......'E'.......'S', yes, yes! The Gods have spoken, and the answer is yes.
Originally posted by Ireland
As i'm typing this apple's shares are $59.92
What the fuzz
Apple's shares have nothing to do with this article. It's talking primarily about SigmaTel, not Apple.
The shuffle began life as a low-cost entry into the "World of iPod(tm)". As I recall, they started at $99 and $149. Now we have a nano at the $149 price point (amazing).
Here are some issues:
- if they increase shuffle capacity the "shuffle" and display-less character of the shuffle becomes an annoyance
- if they add a display they increase costs, and (possibly) size...if not size, they have to deal with some alternative form of display/UI than the current iPods
I sort of suspect that shuffle was designed for a couple of reasons:
1. An answer for the extreme price-sensitive market, and to ensure Apple wasn't going to lose (all of) them to competitors.
2. A "stop-gap" until they could get a "real" iPod down to that price-point. iPod nano 1GB is already there (or getting there).
3. It is actually kind of a clever small, durable, light, inexpensive music playing device for a lot of people as an "accent" ot a larger iPod. Someone wants to go out riding, running, walking, hiking, whatever...just load up a few hundred songs and click shuffle.
Originally posted by xanthohappy
Apple's shares have nothing to do with this article. It's talking primarily about SigmaTel, not Apple.
I was a bit pissed about the share price and I needed an outlet, so shoot me
Originally posted by Chris Cuilla
Curious thing about the shuffle is what can Apple do with it (to "update" it) without making it (really) a completely different product.
Here's what I think they'll do. I think they'll discontinue the 512mb shuffle, they'll have just one shuffle, the 1Gb one. A slight redesign will come, with focus more on thinner and better looking than smaller. They'll lower the price of it to $99 and bring out a Black one too.
So new shuffle: $99/1Gb/Black or White/thinner/sexier
That's what I think apple will do.
Was there any research that showed that colors were not a popular thing of the mini?
Originally posted by Michael_Moriarty
I really think Apple should bring back the colors like they had on the iPod mini. I thought it was a great idea and I think a lot of customers liked being able to get an iPod in other choices other than white.
Was there any research that showed that colors were not a popular thing of the mini?
I'm pretty sure the mini was the best selling ipod of all time, so that should speak well of people's opinion of colour. Even today I spotted like 5-6 women sporting pink ipod mini's out and about.
Originally posted by ecking
I'm pretty sure the mini was the best selling ipod of all time, so that should speak well of people's opinion of colour. Even today I spotted like 5-6 women sporting pink ipod mini's out and about.
The Nano outsells the Mini. If they had put the higher Rez color screen in the Mini, it would have been good. The Mini was always a jewel.
Other Korean companies like Reigncom resort to nationalsim and tell Korean people not to buy Apple because it's "unpatriotic". Pffff.
Originally posted by RRR89
Serves Samsung right for their cockiness and for ripping off Apple and other American companies with their price-fixing scams for all those years.
Other Korean companies like Reigncom resort to nationalsim and tell Korean people not to buy Apple because it's "unpatriotic". Pffff.
So Apple should use a chip that they considered inferior? They should come out with a product that would not be as good as the one they were intending to have?
This will make you feel better?
Originally posted by RRR89
I'm sure Apple weigh all these factors carefully before making any rash decisions and have a number of companies from which to choose for high quality components all over the world, not just from one supplier which has shafted them in the past.
And how has Samsung shafted them? By supplying them with the Flash they needed, at the prices they could pay?
This silliness Jobs has about companies announcing "wins" really should stop. It accomplishes nothing, except to make him appear a bit nuts.
It's standard practice in industry to announce when you have made a major deal. It's never a secret, unless it's with Apple. That's just dumb!
If Apple did select Samsung's chip, it was because it was the best chip for what they wanted to do, at the right price. to change that because Samsung announced it, is pretty stupid.
What happened to the careful process Apple went through to select this chip? It didn't matter? Apple picked it because the Wee-Gee board told them to? Or maybe they just threw darts at a wall with pictures of all the chips up there, and whichever one it hit was selected?