Apple shares jumped 5.7% after Goldman Sachs analyst David Bailey predicted Apple will launch a "full line-up of revamped iPods with significantly greater functionality... including the much-anticipated full-screen video iPod" in time for the holiday season, providing "another reason to own the stock." The note cites invitations Apple sent for a product launch September 5th, which bear the title "The beat goes on" and an image of a silhouetted man dancing while listening to an iPod. Bailey expects that with a new line, Apple will sell at least another 10.5 million iPods during the present quarter, and 19.8 million in Q4. The release of new iPods has been predicted by technology buffs, including industry consultant Carl Howe (full note). The remake comes in the face of growing competition to Apple's market-dominating iTunes online music store. Nokia Wednesday unveiled a new online music store and high-end handsets (full story). Earlier this month, Viacom's MTV Networks online music store joined with RealNetworks (full story), and Univeral Music has recently begun testing DRM-free music sales through Amazon, Wal-Mart and Google (full story). But to take Apple on, Creative Strategies' Tim Bajarin says, any store will have to move its music "to the devices that consumers really want, and that's where Apple kind of stays ahead of everybody." ITunes music sales represent approximately 11% of Apple's $22 billion revenue, and drive iPod sales. It last revamped the iPod a year ago when it boosted storage to 80 gigabytes, and rolled out a thinner iPod nano and Shuffle.
Sources: Bloomberg, Reuters, Dow Jones,
Commentary: Predicting Apple's New iPods: Evolutionary, But iPhone Inspired
Stocks/ETFs to watch: AAPL, NOK, VIA, RNWK, GOOG, WMT, AMZN
Earnings call transcripts: Apple F3Q07, Nokia Q2 2007, Amazon.com Q2 2007, Viacom Q2 2007
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