Shares of Apple Computer dropped almost 5 percent on Friday on speculation that the company might be experiencing a slowdown in sales of iPods, the product that has largely driven the company's phenomenal growth the last few years.
The concern came after an independent Web site, AppleInsider.com, reported that shipments of iPods, the portable digital music player, appeared to be "flat or declining" this month, and that the product was "overstocked."
That followed a report released Thursday by the investment firm Goldman Sachs that said it expected shipments of iPods to be flat this quarter, and that Apple may need to drive more sales growth from its Macintosh computers. Goldman rates Apple stock "neutral."
Apple's shares lost US$1.80 on Friday to close at US$38.24.
Apple officials declined to comment on the reports. AppleInsider.com is one of three Web sites involved in a controversial dispute over whether Apple can force the sites to divulge the identity of their sources of confidential Apple information. A California judge has ruled that Apple can subpoena the sites, but that ruling has been appealed.
Gene Munster, an analyst at Piper Jaffray, said that any excess inventory of iPods, if true, would not concern him, because the June quarter is seasonally the weakest of the year. Over all, he said, demand for iPods remains strong.
"What we're seeing is seasonal weakness combined with better production," said Munster, who has an outperform rating on the stock.
In April, Apple told investors it had sold 5.3 million iPods during the second quarter, including sales of the company's new iPod Shuffle. Analysts predicted that iPod sales would be flat or slightly up during the current quarter, which closes at the end of June.
Charles Wolf, an analyst at Needham & Co, said he had no reason to think Apple was experiencing a significant slowdown in sales.
"You would expect to see sales moderate during this period," he said. "Seasonally, it's the slowest."
He has a "buy" rating on the company and owns Apple shares.
Apple's sales typically surge in the fall as the education market begins stocking up on products, followed by another surge before the holidays. The Goldman Sachs report forecast iPod sales of 8.5 million during the holiday quarter, compared with 4.6 million in the holiday quarter last year.
Investors may also have been reacting to news of a proposed legal settlement involving battery problems with early versions of the iPod, though the settlement is not expected to have a big impact on Apple's earnings.