"Our sources indicate that iPod sales are tracking ahead of expectations with an acceleration in 'fat boy' nanos [i.e., 3G nanos] and iPod touch more than offsetting slower growth in iPod shuffle and iPod classic," Wu said. "As a result, we are raising our iPod unit forecast to 25 million from 24 million versus the consensus of about 23.2 million."

This compares to consensus estimates on Wall Street of approximately 23.2 million. While the iPod and Mac sales continue strong, the analyst feels that iPhone sales may lag unless Apple makes some changes. "It appears Europe's ramp is less robust than expected due to high pricing and customer service snags offset by better than expected strength in the USA," Wu wrote. "We believe AAPL may need to cut iPhone prices to accelerate sales."

Despite this, for the current December quarter, Wu expects Apple to earn US$1.63 per share on revenues of $9.4 billion, up from $1.50 and $9.2 billion. This compares to Apple's own stated guidance of $1.42 in per share earnings on sales of $9.2 billion, and consensus estimates of $1.53 per share on $9.3 billion.