Apple shares hit high on iPhone

Apple Computer Inc. Chief Executive Officer Steve Jobs holds the new iPhone in San Francisco, California January 9, 2007.

LOS ANGELES (Reuters) - Apple Inc. shares (AAPL.O) hit an all-time high on Wednesday as analysts raised share-price and earnings targets after the company unveiled the iPhone, which combines features of its popular iPod music player with smart phone technology.

The stock was up 4.2 percent at $96.46 in heavy afternoon Nasdaq trade after rising as high as $97.80.

Apple Chief Executive Steve Jobs on Tuesday introduced the eagerly anticipated mobile phone, which supports audio and video as well as Web surfing and runs on the company's robust operating system.

The iPhone with 4 gigabytes of flash memory would cost $499 (258 pounds) and a model with 8 gigabytes would sell for $599. It will be available in the United States in June, in Europe during the fourth quarter and in Asia in 2008.

"The new device appears to be a quantum leap forward in mobile devices," said PacificCrest analyst Steve Lidberg.

"The new Apple iPhone appears to be a very robust handheld device that could quickly carve a solid niche at the very high end of the smart phone segment," he added.

Still, Lidberg said the company could find it difficult to move high volumes of iPhones in the first quarters of the release due to its high price and lack of complete corporate e-mail support. He has a $100 12-month price target on Apple shares, which he rates at "outperform."

Also on Tuesday, Apple introduced Apple TV, a new $299 device that streams digital content from a home computer to a television. The company, which had first discussed the product in September, will ship it in February.

The announcements highlight a new wave of growth beginning to take shape at Silicon Valley-based Apple, Bear Stearns analyst Andrew Neff said in a client note in which he boosted the company's calendar 2007 price target to $125 from $100.

Neff, who rates Apple at "outperform," also raised his estimates for per-share earnings, including option expenses, to $2.83 from $2.75 for the year ending in September and to $4 from $3.20 for fiscal 2008.

The new estimates reflect the introduction of the iPhone and a minimal contribution from Apple TV.

Neff's estimate assumes 7.2 million iPhone units sold in the first year and some iPod cannibalization. He cautioned that the device could encounter barriers with regulators or mobile carriers and face challenges from existing smart phones.

Elsewhere, Credit Suisse analysts said in a client note that the announcement of the iPhone exceeded the hype.

The firm, which also has an "outperform" rating on the shares, raised its estimates and also boosted its stock price target to $120 from $90, due to expectations for iPhone and Apple TV.

Credit Suisse also boosted its fiscal 2007 earnings-per-share estimate to $2.94 from $2.74 and its fiscal 2008 share-price target to $3.66 from $3.18.