iPods flowing too slow to reach Street estimates?

Posted:
in iPod + iTunes + AppleTV edited January 2014
Apple's new iPods are a hit early in the holiday shopping season, but the company may not be able to sell as many of the digital music players as some Wall Street analysts have predicted, says research firm PiperJaffray.



An analysis of Apple retail stores and third-party retailers over the recent holiday weekend revealed "very strong" demand for iPods, according to anaylst Gene Munster. However, the analyst believes Apple is "holding inventory for its own stores" as third-party retailers reported very low supply of the players.



"Based on limited iPod availability (during times of peak demand) outside of Apple retail stores and apple.com, we continue to believe that some Street estimates for iPod unit shipments for the December quarter are too high," Munster said in a research note obtained by AppleInsider.



"We are currently modeling for total iPod shipments of 9 million. While we do believe slight upside to our estimate is achievable, we do not expect Apple will be able to ship the number of units that are already anticipated in some Street models."



Instead, the analyst expects see a "continuation of strong demand for both iPod and Mac" product lines during the current quarter with a "more robust" product year to follow next year.



"While 2005 was clearly a year heavy in iPod innovation at Apple, we do not expect a slowdown in new/updated iPods in 2006," Munster said. "In addition to new and updated iPods, 2006 will be a significant year for the Mac line. The incorporation of Intel and introduction of new form factors will both likely lead to the launch of several new/updated Macs in 2006, more changes to the Mac lineup than were seen in 2005."



PiperJaffray maintains an "Outperform" rating on Apple stock, but increased its price target from $68 to $79.



The opinions and analysis expressed above are those of research firm PiperJaffray are not necessarily those of AppleInsider.com.

Comments

  • Reply 1 of 20
    Just a question; is Apple allowed to reserve stock like this? I mean, fair enough - your company, your call. But if there's a separate company, which Apple Retail might be (I haven't checked), this is probably totally illegal!
  • Reply 2 of 20
    chuckerchucker Posts: 5,089member
    Quote:

    Originally posted by J@ffa

    if there's a separate company, which Apple Retail might be



    Apple Retail is a division of Apple. The two aren't separate companies, although their employment is separated.
  • Reply 3 of 20
    hobbeshobbes Posts: 1,252member
    It's legal. The only danger is pissing off Apple-authorized retailers. <shrug>
  • Reply 4 of 20
    melgrossmelgross Posts: 30,347member
    I'm not so sure. A company is not allowed to divert products to any favored supplier, including themselves.



    For example; When My company sold our own product thru our showroom here in NYC, we couldn't sell at lower prices than our dealers could, and we couldn't withhold product. Either would be actionable as unfair compitition.



    Apple is now subject to several lawsuits by dealers that claim that Apple did that very thing.



    Of course, proving that Apple did that is something else. But Apple does seem to be going to a more Dell-like approch. They want to take things into their own hands as much as possible.
  • Reply 5 of 20
    rokrok Posts: 3,519member
    it depends on the agreement that the third party agreed to. gotta read that fine-print...



    "apple computer, inc. reserves the right to hold all inventory of all popular products for itself and its retail initiative, so don't come crying this Christmas when the supply dries up. You have been warned. Sign below on the dotted line if you know what's good for you, or the girl gets it..."
  • Reply 6 of 20
    Quote:

    Originally posted by rok

    "...Sign below on the dotted line if you know what's good for you, or the girl gets it..."



  • Reply 7 of 20
    melgrossmelgross Posts: 30,347member
    Quote:

    Originally posted by rok

    [B]it depends on the agreement that the third party agreed to. gotta read that fine-print...



    "apple computer, inc. reserves the right to hold all inventory of all popular products for itself and its retail initiative, so don't come crying this Christmas when the supply dries up. You have been warned/B]



    THAT would be illegal.
  • Reply 8 of 20
    telomartelomar Posts: 1,804member
    Quote:

    Originally posted by melgross

    I'm not so sure. A company is not allowed to divert products to any favored supplier, including themselves.



    That's total nonsense. Companies pay for exclusive deals or guarantees of stock level all the time. It is solely dependent on the contracts. The only thing you could accuse Apple of is anti-competitive behavior where a company's wholesale arm provides deals to their retail arm that a 3rd party company couldn't match due to costs. Certainly companies have been accused of this but I'm yet to ever see it upheld in any court.



    What bothers me with Apple is the margins they give retailers. They are significantly less than any other CEs company.
  • Reply 9 of 20
    Aplogies for the daft question, but what is a "CEs company"?
  • Reply 10 of 20
    chuckerchucker Posts: 5,089member
    Quote:

    Originally posted by TheOtherRob

    Aplogies for the daft question, but what is a "CEs company"?



    Not-so-wild guess: Consumer Electronics.
  • Reply 11 of 20
    Oh man... let's all forget I ever asked that question...
  • Reply 12 of 20
    melgrossmelgross Posts: 30,347member
    Quote:

    Originally posted by Telomar

    That's total nonsense. Companies pay for exclusive deals or guarantees of stock level all the time. It is solely dependent on the contracts. The only thing you could accuse Apple of is anti-competitive behavior where a company's wholesale arm provides deals to their retail arm that a 3rd party company couldn't match due to costs. Certainly companies have been accused of this but I'm yet to ever see it upheld in any court.



    What bothers me with Apple is the margins they give retailers. They are significantly less than any other CEs company.




    Don;'t tell me that's nonsense. There are certain kinds of deals you are allowed to make, and deals you are not allowed to make. You are not allowed to supply parts or services to a division of your own company that is below the fair market value of that part or service, or lower than the lowest price charged to a distributer or direct seller.



    You are allowed to garrantee minimums, but not maximums. I could have an agreement with a dealer in a contract that I would supply 100 items at a certain price, but if they called for more, and they were available, I had to supply them. I wasn't allowed to hold back product.



    Don't spout nonsense yourself.
  • Reply 13 of 20
    Quote:

    Originally posted by melgross

    Don;'t tell me that's nonsense. There are certain kinds of deals you are allowed to make, and deals you are not allowed to make. You are not allowed to supply parts or services to a division of your own company that is below the fair market value of that part or service, or lower than the lowest price charged to a distributer or direct seller.



    You are allowed to garrantee minimums, but not maximums. I could have an agreement with a dealer in a contract that I would supply 100 items at a certain price, but if they called for more, and they were available, I had to supply them. I wasn't allowed to hold back product.



    Don't spout nonsense yourself.




    .
  • Reply 14 of 20
    telomartelomar Posts: 1,804member
    Quote:

    Originally posted by melgross

    Don;'t tell me that's nonsense. There are certain kinds of deals you are allowed to make, and deals you are not allowed to make. You are not allowed to supply parts or services to a division of your own company that is below the fair market value of that part or service, or lower than the lowest price charged to a distributer or direct seller.



    You are allowed to garrantee minimums, but not maximums. I could have an agreement with a dealer in a contract that I would supply 100 items at a certain price, but if they called for more, and they were available, I had to supply them. I wasn't allowed to hold back product.



    Don't spout nonsense yourself.




    Nowhere in there have you actually addressed the point. There is no evidence or suggestion that Apple is charging themselves separate prices to 3rd party retail arms. Such an act would be anti-competitive, but then as I've said I have never seen more than a slap on the wrist for such an act where the company "mends" its ways and promises to be good. You could object that margins for Apple retailers are incredibly small so 3rd party buyers put in smaller orders to prevent overstocking, I know of at least two major chains guilty of this. They are placing smaller orders every 2 weeks and taking Apple's stock as it becomes available.



    It's funny you try to disagree with me but you made my point exactly. You said it yourself, you may contract the supply of a minimum number of items. In such an event it is reasonable for a manufacturer to retain stock on hand so they may be certain of supply to fulfill their existing contractual obligations prior to new orders. Other companies can wait on new stock that becomes available as it is manufactured for new orders. None of that is illegal and it is a frequent occurrence, if you believe otherwise then quote the relevant acts and sections you believe it falls under.



    There is zero actual evidence to suggest Apple is withholding stock though.



    Quote:

    An analysis of Apple retail stores and third-party retailers over the recent holiday weekend revealed "very strong" demand for iPods, according to anaylst Gene Munster. However, the analyst believes Apple is "holding inventory for its own stores" as third-party retailers reported very low supply of the players.



    "Based on limited iPod availability (during times of peak demand) outside of Apple retail stores and apple.com, we continue to believe that some Street estimates for iPod unit shipments for the December quarter are too high," Munster said in a research note obtained by AppleInsider.



    That is the basis of the statement that they are withholding stock. All it tells me is 3rd party retailers are selling through stock faster than Apple stores. Who is actually surprised by that fact? Which do you think gets the higher foot traffic, especially from the broader PC community? Who is managing stock orders best with the least amount of logistical overhead?



    There is no evidence to suggest Apple is withholding stock though.
  • Reply 15 of 20
    jeffdmjeffdm Posts: 12,946member
    Quote:

    Originally posted by Telomar

    What bothers me with Apple is the margins they give retailers. They are significantly less than any other CEs company.



    How well do Apple retail margin compare to other regular computer brands?
  • Reply 16 of 20
    melgrossmelgross Posts: 30,347member
    Quote:

    Originally posted by Telomar

    Nowhere in there have you actually addressed the point. There is no evidence or suggestion that Apple is charging themselves separate prices to 3rd party retail arms. Such an act would be anti-competitive, but then as I've said I have never seen more than a slap on the wrist for such an act where the company "mends" its ways and promises to be good. You could object that margins for Apple retailers are incredibly small so 3rd party buyers put in smaller orders to prevent overstocking, I know of at least two major chains guilty of this. They are placing smaller orders every 2 weeks and taking Apple's stock as it becomes available.



    It's funny you try to disagree with me but you made my point exactly. You said it yourself, you may contract the supply of a minimum number of items. In such an event it is reasonable for a manufacturer to retain stock on hand so they may be certain of supply to fulfill their existing contractual obligations prior to new orders. Other companies can wait on new stock that becomes available as it is manufactured for new orders. None of that is illegal and it is a frequent occurrence, if you believe otherwise then quote the relevant acts and sections you believe it falls under.



    There is zero actual evidence to suggest Apple is withholding stock though.



    That is the basis of the statement that they are withholding stock. All it tells me is 3rd party retailers are selling through stock faster than Apple stores. Who is actually surprised by that fact? Which do you think gets the higher foot traffic, especially from the broader PC community? Who is managing stock orders best with the least amount of logistical overhead?



    There is no evidence to suggest Apple is withholding stock though.




    If you completely read my earlier post, you would have seen that I didn't say that Apple WAS doing this. what I said was this;



    "Apple is now subject to several lawsuits by dealers that claim that Apple did that very thing.



    Of course, proving that Apple did that is something else. But Apple does seem to be going to a more Dell-like approch. They want to take things into their own hands as much as possible."



    I mentioned the FACT of the lawsuits. That it would have to be proven, and that Apple wants to do more reselling themselves. All true.



    I was objecting to the untrue possibility of this statement made by someone else, even though it was a joke:



    "apple computer, inc. reserves the right to hold all inventory of all popular products for itself and its retail initiative, so don't come crying this Christmas when the supply dries up. You have been warned"



    You seemed to agree with that statement when you replied. If not, let's straighten this out.



    I wanted to clarify my point. I don't have to disagree with you on all of your points, do I? Some here seem to think that if you disagree with one point, you have to disagree with all. I was accused of being a politicion because I disagreed with one point of a post but agreed with the other. That's schizoid.



    What I'm saying is that I'm not allowed to hold back significant stock for my own sales purposes if my distributors or dealers need stock from me. If it can be shown that I withheld enough stock so that my own retail operation had more than enough, and that it recieved peferentional treatment in some way, while 3rd parties ran out, despite attempts to order more, there could be trouble.
  • Reply 17 of 20
    Quote:

    Originally posted by melgross

    If you completely read my earlier post, you would have seen that I didn't say that Apple WAS doing this. what I said was this;



    "Apple is now subject to several lawsuits by dealers that claim that Apple did that very thing.



    Of course, proving that Apple did that is something else. But Apple does seem to be going to a more Dell-like approch. They want to take things into their own hands as much as possible."



    I mentioned the FACT of the lawsuits. That it would have to be proven, and that Apple wants to do more reselling themselves. All true.



    I was objecting to the untrue possibility of this statement made by someone else, even though it was a joke:



    "apple computer, inc. reserves the right to hold all inventory of all popular products for itself and its retail initiative, so don't come crying this Christmas when the supply dries up. You have been warned"



    You seemed to agree with that statement when you replied. If not, let's straighten this out.



    I wanted to clarify my point. I don't have to disagree with you on all of your points, do I? Some here seem to think that if you disagree with one point, you have to disagree with all. I was accused of being a politicion because I disagreed with one point of a post but agreed with the other. That's schizoid.



    What I'm saying is that I'm not allowed to hold back significant stock for my own sales purposes if my distributors or dealers need stock from me. If it can be shown that I withheld enough stock so that my own retail operation had more than enough, and that it recieved peferentional treatment in some way, while 3rd parties ran out, despite attempts to order more, there could be trouble.




    All gossip mongering aside the really pathetic example of pandering is the 5 or more Amazon iPod advertisements on this site.



    Adblock to the rescue!
  • Reply 18 of 20
    melgrossmelgross Posts: 30,347member
    Quote:

    Originally posted by mdriftmeyer

    All gossip mongering aside the really pathetic example of pandering is the 5 or more Amazon iPod advertisements on this site.



    Adblock to the rescue!




    Come on, this is a gossip site.
  • Reply 19 of 20
    louzerlouzer Posts: 1,054member
    Quote:

    Originally posted by melgross

    For example; When My company sold our own product thru our showroom here in NYC, we couldn't sell at lower prices than our dealers could, and we couldn't withhold product. Either would be actionable as unfair compitition.



    Apple is now subject to several lawsuits by dealers that claim that Apple did that very thing.





    Actually, Apple is facing lawsuit(s) saying they charged their stores different prices then the retailers, not that they sold it for less. However, on the other side, its been said that Apple can't charge itself the same price as others, because that would be an accounting procedure error (something about charging more then cost is tantamount to moving money within the organization to prop up the numbers of a losing division). Its all about who shows the profits.



    Holding back inventory, that's a different story (but is subject to contracts and interpretations). Theoretically, though, couldn't apple claimed that their retail stores have contracts that ask for 5 million iPods, and the remaining ipods left have to be distributed to all the other stores? Who gets their minimums first? Oh, and who cares, since its all rumor and innuendo anyway (there's a shortage, Apple must be holding back!).
  • Reply 20 of 20
    melgrossmelgross Posts: 30,347member
    Quote:

    Originally posted by Louzer

    Actually, Apple is facing lawsuit(s) saying they charged their stores different prices then the retailers, not that they sold it for less. However, on the other side, its been said that Apple can't charge itself the same price as others, because that would be an accounting procedure error (something about charging more then cost is tantamount to moving money within the organization to prop up the numbers of a losing division). Its all about who shows the profits.



    Holding back inventory, that's a different story (but is subject to contracts and interpretations). Theoretically, though, couldn't apple claimed that their retail stores have contracts that ask for 5 million iPods, and the remaining ipods left have to be distributed to all the other stores? Who gets their minimums first? Oh, and who cares, since its all rumor and innuendo anyway (there's a shortage, Apple must be holding back!).




    Internal sales must be at market value. One division is expected, and required to profit on sales to another division. They must be held at arm's length.



    In other words, when manufacturing sells to retail, they must sell it as though the retail division were an independent company.



    Apple can't claim that they are doing something. It has to be in the books.



    I'm not saying they did anything wrong. I'm just trying to clarify the point of what it means.
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