Reports that iPod sales are slowing caused the company's share to dip almost 5 per cent on Friday.

Goldman Sachs issued a report stating it expects shipments of Apple's digital music player to be flat this quarter. Goldman analysts David Bailey and Laura Conigliaro said: "We expect little, if any, sequential iPod growth." The Goldman analysts claimed sources confirmed "softness" in iPod sales.

The analysts projected second-quarter sales of iPod shuffle will be up 10 per cent to 2.1 million units, while sales of the higher-priced iPod mini and the traditional iPod will be lower at 1.9 million and 1.4 million, respectively, reports Globe and Mail.

Stock shock

These concerns are emphasised by an Apple Insider report that claims Apple is overstocked on most iPod models as sales have failed to keep pace with inflated expectations.

AppleInsider said iPod shipments "appear flat or declining this month as sources report the company is, for the first time in a long while, seemingly overstocked on most iPod models."

According to reliable sources of information, tens of thousands of iPod shuffles remain idle in the channels this week alongside a good number of iPod photos.

If Apple has more iPods than it is selling the rumoured 2GB iPod shuffle seems unlikely, unless the introduction of a new version was accompanied by a price drop for existing models, that could then be sold off.

Apple shares fell $1.80, or 4.5 per cent, closing at $38.24 on Friday.