Wall Street continues its Apple romance, driving the company stock to new highs amid a string of positive analyst earnings predictions for Apple.

Shares closed up $3.89 last night at $68.44. This follows a storm of analyst upgrades on company stock. Analysts see Apple's iPod sales continuing to climb, with the rate of iPod sales today exceeding that of Walkman sales 20 years ago.

Analyst consensus seems to favour the expectation that Apple will debut a new flash-based iPod early next year, perhaps as soon as Macworld Expo, San Francisco in January.

Apple flash

Merrill Lynch analyst Steven Milunovich once again stuck his head on the block yesterday to predict such a device. He expects it to cost between $149 and $199, and thinks it could grab a significant share of the flash player market, according to Forbes.

"This is a market Apple should want to participate in because it will pull new customers into the iPod/iTunes 'ecosystem'," he wrote.

Merrill Lynch also speculates that Apple's success with its iPods could offer the company a chance to grab a slice of another early market, the home entertainment server.

"Apple seems a likely candidate to build an entertainment server based on its iPod, iTunes, iPhoto, iDVD and AirPort Express products," the analysts wrote.

It's all about the (cashtill) music

The analyst firm now expects Apple to sell four million iPods in the December quarter, up from 3.5 million. It believes that 12.9 million iPods will be sold in Apple's 2005 fiscal year. Merrill's Apple target price is now $78, up from $61.

It's not just Merrill; in recent days numerous analysts, including those from UBS, the Banc of America, Piper Jaffray and Needham & Co, have all upgraded their Apple predictions, all describing the iPod as the 'cause celebre' for this fresh optimism. Apple's stock is up 300 per cent this year as a result.

Single note of caution

Piper Jaffray last week revealed its own survey of 200 iPod owners, which showed that six per cent of these have abandoned PCs for Macs, while another seven per cent plan to buy a Mac within a year.

Banc of America analyst Keith Bachman is also positive, but warned of overenthusiasm: "We have started to see the first signs of crossover from iPods (to computers), but fear investors are overestimating the potential."