The delay of two models of Apple's (Nasdaq: AAPL) 
iPod music players could affect the computer maker's sales, according to an analyst report issued on Wednesday.
American Technology Research analyst Shaw Wu said that the latest iPod nano, the flash-based player that holds 1,000 songs, may not come to market until the fourth quarter of 2006. The nano was initially planned for rollout in the third quarter.
Likewise, a widescreen version of the video iPod was supposed to be introduced in time for the holidays. However difficulties in increasing battery life and screen size could delay the new video iPod's debut until the first quarter of 2007, Wu said.
Negative Impact
"The iPod is now generating more profit and revenue than [Apple's] computer business," Inside Digital Media Senior Analyst Phil Leigh told MacNewsWorld. Indeed, the MP3 players and the iTunes Music Store account for more than half of Apple's financial success in recent years.Since the video iPod is vital to movie and TV show sales on iTunes, its delay could pose a twofold negative impact: lost iPod sales and lost iTunes sales. Making matters worse, if the players are not available, customers may choose competing products, which could further hamper sales and profits for the company.
Wu's Reactions
"We believe consensus estimates to be unreasonable," Wu said in his report. "For fiscal year 2007, we are modeling US$22.1 billion [in revenue] and $2.45 in earnings per share, below consensus of $23.6 billion and $2.58."
On the other hand, the delays could result in improved spacing of times between the releases of future models, Wu added, which could ultimately sustain demand for the players. The current models of the nano and video iPod released last September created a strong demand during the holidays but "exhausted Apple's iPod pipeline for 2006," he said.
Wu maintained a "buy" rating for Apple stock, but he noted that the firm was reducing its price target to $75 from $101. Apple shares closed to an eight-month low on Wednesday at $56.02 and opened at $56.79 on Thursday morning. The stock was up $1.05 in trading Thursday afternoon. Apple was not immediately available for comment.
Another Silver Lining
All things iPod aside, Leigh is prophesying a turnaround for Apple's computer business. Apple could be standing at the threshold of major market share gain for two reasons, he said.
"First, people have experience with the iPod as a digital media peripheral, and now they are willing to consider the Apple computer as a digital media hub," Leigh said. "Secondly, Apple is now capable of running both Windows and the Apple OS."
The latter point is a major win for Apple's Intel-based Macs. Consumers who once declined to purchase a Mac because they couldn't run certain Windows programs are no longer faced with that obstacle.
"Even though there are going to be variations in how successfully the future path of iPod develops, it could soon be overshadowed by major gains in the computer business by Apple," Leigh noted.
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