"If someone were to tell investors two years ago that iPod sales would only contribute 14.2 percent of Apple's total revenue and that Apple's revenue would significantly accelerate to a shocking pace of 75 percent year-over-year, such an investor would probably guess that Apple's stock price would be trading at levels significantly higher than it did in 2006," he says. "And yet here we are: Two years later, iPod sales only contributed 14.2 percent of Apple's total fiscal Q4 2008 revenue which grew at a rate of 75 percent YoY. Yet, Apple's stock is only $4.00 higher than it was in November 2006."

In the first quarter of 2008, Wall Street, choosing to disregard iPhone and Mac revenue as being at the core of Apple's primary driver of future revenue growth, only focused on how iPod unit sales grew at a meager pace of five percent year-over-year, Zaky writes. Wall Street also seemed to disregard the fact that iPod revenue growth in quarter one was still 16.6 percent higher than it was in the same quarter last year.

"Even today, analysts and the media continue to question whether Apple could succeed in a recessionary environment due largely to the perceived uncertainty as to whether iPod sales can continue to grow in 2009," he says. "Several members of the media, including analysts and fund managers who don't cover technology stocks, continue to refer to Apple as the 'iPod maker' or simply a 'gadget maker' indicating that Apple's core business is derived from iPod sales. Nothing could be further from the truth."



Check out Zaky's entire blog for details, tables and charts.

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