4th UPDATE: Apple Unveils IPhone; Shares At All-Time High

SAN FRANCISCO -(Dow Jones)- Apple Computer took another step beyond the computer business Tuesday and unveiled its highly anticipated cellular phone, sending shares to an all-time high.

The Silicon Valley manufacturer said the new phone, to ship in the U.S. in June, will take advantage of a clever touch-screen technology that will make using the complex features of a "smart" cell phone significantly easier. It also will play music and video and sync with Apple's iTunes online store to download songs and television programming.

"I think you'll agree we have reinvented the phone," Chief Executive Steve Jobs said while announcing the product at the Macworld trade show here. The phone, though, has a hefty price tag: A model with 4 gigabytes of storage will sell for $499 and a model with 8 gigabytes will go for $599.

The company emphasized its push beyond its flagship Macintosh computers by changing its name to Apple Inc. and demonstrating its Apple TV product.

The news from the MacWorld conference in San Francisco sent Apple shares soaring $7.10, or 8.3%, Tuesday to $92.57, an all-time closing high. About 119.5 million shares were traded, the most volume in Apple stock since Sept. 29, 2000, and more than 4 1/2 times its average daily volme.

The new phone, widely anticipated, appears different than today's smart phone. It comes without a keyboard and instead incorporates its controls in software that pops up on a large 3.5-inch screen. The screen can be viewed vertically or horizontally with photos and video automatically adjusting. The iPhone can connect to the Internet using wi-fi technology.

Analysts were quick to describe the product as trend setting - and likely just the first Apple phone to reach the market.

"I imagine this is a well thought out multiple-year strategy," said Rob Cross, an analyst at Cross Research, who added he expected the first iPhone to be "very successful" in the market. The company set a goal of shipping 10 million units in calendar 2008.

The iPhone also should have an impact on overall company sales, accelerating Apple's revenue growth to between 25% and 30% this year, said Jonathan Hoopes, an analyst at ThinkEquity Partners. Hoopes, who doesn't own Apple shares and whose firm doesn't conduct banking for the company, had previously expected growth in a percentage in the low 20%.

The company said it would sell the phone in an exclusive arrangement with AT&T's Cingular wireless service. It also announced it had agreed to buy rights to the iPhone name from Cisco Systems. Terms were not disclosed.

But while the iPhone is full of clever features, including the company's Safari browser to roam the Internet, it also is likely to appeal to a small segment of the cell phone market - consumers who use products like the Blackberry and Treo today.

It also has relatively limited battery life: five hours of talk time or 16 hours of music playback. And it has a hard drive much smaller than many iPods, giving it limited ability with large video files.

Shaw Wu, an analyst at American Technology Research, said that while the phone is "very impressive," there are some concerns over the pricing.

"The price point seems a little high," said Wu, who doesn't own shares of Apple and whose firm doesn't conduct banking for Apple.

Apple also announced At Macworld its Apple TV product, which lets user stream digital content to television sets. The device plugs directly into television sets and uses the company's wireless AirPort router to stream content from as many as five desktop or laptop computers. The company had display a prototype of this device, which was code named "iTV," in September.

The Apple TV will ship in February and will cost $299.

-By Mark Boslet, Dow Jones Newswires; 650-496-1366; mark.boslet@dowjones.com

(END) Dow Jones Newswires"

Posted to the site on 10th January 2007