iPod Shuffle Price Cut to Boost iPod Sales

Apple's decision to cut prices on its iPod shuffle range should help the company meet shipment forecasts across its iPod range, an analyst said Wednesday.

American Technology Research analyst Shaw Wu said: "We view this development as an incremental positive that helps eliminate one of the key risks lingering from its December quarter, namely that being light iPod units (we think from poor low-end shuffle sales) caused Apple to miss consensus shipments by 2-3 million."

The analyst, who rates the stock as one to buy with a price target of US$175 per share, expressed a little disappointment that Apple management failed to cut prices in the crucial Christmas quarter, saying that doing so would have helped drive "incremental demand" as new users grew hooked on Apple's music ecosystem.

"We believe these lower-cost shuffles could bring incremental sales of 500,000-1 million units per quarter, he said, observing the move will likely "put pressure on competitors."

The analyst concluded: "While near-term trends look difficult with a looming recession and a slow-down in consumer spending, we continue to believe Apple is well-positioned to weather the storm better than most with its strong fundamentals."