Credit Suisse First Boston (CSFB) on Wednesday issued a research report obtained by The Mac Observer. The note addresses problems in the flash memory market, where prices declined by 30% over the past month because of surplus inventories among manufacturers. That caused SigmaTel, Apple's supplier for the iPod shuffle's chip, to drop its revenue guidance for the current quarter from US$86-$95 million to $68-$72 million. CSFB, however, still sees "generally solid" sales for the iPod shuffle, despite their analysts' assertion that the MP3 player should have a display as well as broader functionality.

CSFB sees "limited downside" in its estimate of 1.9 million iPod shuffles sold by Apple this quarter, given that the firm thinks the hard drive-based iPod's sales have the "strength to likely offset any weakness in the shuffle." In fact, CSFB thinks its estimate of 3.4 million iPods sold this quarter "may be too conservative, based on our checks of sell-in of key iPod components."

As a result, CSFB has reiterated its "Outperform" rating on Apple's stock and says it "continues to expect solid results when the company reports June earnings on July 13. The firm has a $45 12-month target on the stock. Apple's stock closed the day on Wednesday down 2.52% to $36.37.

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