Looks Good on You…

The Red Herring is reporting that sell-side analysts are taking their first cuts at estimating the impact of the new iPhone on Apple Computer’s earnings (AAPL-NASDAQ):

“We believe the iPhone has the potential to significantly alter Apple’s revenue trajectory, and therefore represents the biggest upside risk to our overall neutral outlook on the company,” Bernstein analyst Toni Sacconaghi wrote in report.

Bernstein said that in the most optimistic scenario—one that assumes iPod replicates the Motorola Razr success and doesn’t cannibalize iPod sales—the researcher would increase its fiscal year 2008 earnings projections by $0.33 per share, or about 10 percent.  The researcher said, however, that investors may have already priced that into a 15 percent run-up in Apple shares since November 1. Red Herring

but cannibalization issues make the calculations a bit of a guessing game:

Bernstein has some reservations about the iPhone effect on earnings. The researcher reiterated previous predictions that the gains could come at the expense of iPods, effectively cannibalizing those products.

“However, we believe the iPhone is likely to be largely cannibalistic to iPod sales, rather than entirely incremental to Apple, limiting upside,” wrote Mr. Sacconaghi.

Prudential’s Mr. Tortora agreed on the potential cannibalizing factor, which is figured into the researcher’s sales projections.

“Moreover, we have taken into consideration that fact that iPhones will likely cannibalize a portion of iPod sales, especially the nano,” Mr. Tortora wrote.

The devotion of the Apple cult certainly knows no bounds…

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