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Wednesday, August 13, 2008, 04:10 pm PT (07:10 pm ET)

Apple's Best Buy play makes 12m iPhones "very conservative"

An agreement for Best Buy to start selling iPhones will help make already strong estimates for Apple's device sales seem all too modest, according to an investment note from Lehman Brothers.

Analyst Ben Reitzes determines that the large increase in the number of American distribution points that comes with the Best Buy initiative, combined with more than one million iPhones sold on the launch weekend alone, should result in Apple blowing past earlier predictions for the rest of calendar 2008.

"We believe our estimate of 3.8 million iPhones sold in Apple’s [September quarter] is very conservative," Reitzes says. "Furthermore, we believe that initial demand overseas is very strong and will get much stronger; we estimate at least 8.3 million iPhones could be sold in [the December quarter]," equating to 12.1 million of the new devices trading hands during the summer and fall combined.

The analyst notes that Apple has enjoyed the results of its rapidly expanding Best Buy presence with Macs and may be poised to expand the "halo" effect with iPhones on sale at the third-party chain, as customers buying iPhones come back to buy other Apple products.

The timing of Apple's retail expansion is also seen as fortunate given a much healthier iPhone supply starting from late July, though the researchers at Lehman don't anticipate the Cupertino, Calif.-based company's supply levels to keep up with demand before September. International demand may exacerbate the problem with over 20 countries set to offer the device on August 22nd.

These factors could also be enough to skew estimates for future years, Reitzes adds. Lehman now believes its prediction of 24.2 million iPhones sold in Apple's fiscal 2009 is just as conservative as for the next few months and could be similarly pessimistic through fiscal 2010.

Not every analyst shares this point of view. Although Reitzes believes iPhone sales at Best Buy and elsewhere should have a significant effect on Apple's cash flow, UBS Investment Research analyst Maynard Um notes that each Best Buy store would have to sell about 200 iPhones to move Apple's earnings per share by one cent. That's performance unlikely to occur so early into the retail expansion, he argues.

Even if true, the Lehman expert views the move as a "tipping point" that will get iPhones into more places and boost sales, and that it won't be alone: in addition to redesigned MacBook lines which match information provided to AppleInsider, he also expects multiple MacBook Air variants, new iPods, and the possibility of an ultraportable media and messaging device appearing in the next six months.