Dialing in to the iPhone bonanza

(Fortune Magazine) -- Apple launches the iPhone next month, and early buzz suggests the gadget will be a big hit: Journalists who've seen the thing already are writing odes ("an austere, abstract, platonic-looking form that somehow also manages to feel warm and organic and ergonomic," gushed Time magazine), and its key distributor says it has received more than a million inquiries about the device, which will retail for $500 or $600, depending on the amount of memory in the phone.

Those looking for ways to invest in the expected iPhone juggernaut can buy shares of Apple (Charts, Fortune 500), of course, but with the stock trading near its all-time high - and at a lofty 32 times the previous four quarters' earnings - a less risky bet might be to invest in AT&T (Charts, Fortune 500) the exclusive phone operator for the iPhone in the U.S.

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Richard Klugman, an analyst with Prudential Securities, feels AT&T not only will benefit from iPhone sales but also will see a tidy boost to its overall wireless business as consumers crowd its stores for glimpses of the Apple phone. Klugman has a $48 price target on AT&T shares.

Another company that would benefit from iPhone mania is Broadcom (Charts), the chipmaker that reportedly produces technology for the phone's touchscreen controller. (The company already provides a multi-media chip for Apple's video iPods.)

Chris Caso, an analyst with Friedman Billings Ramsey, says the iPhone alone won't change Broadcom's fortunes, but he argues that the company's success with Apple could beget significant new business with other wireless-phone makers, a market now dominated by rivals Texas Instruments and Qualcomm. "There's definitely cachet in being in Apple's good graces," says Caso, who has a $38 price target on Broadcom stock.

Some analysts argue, contrary to conventional wisdom, that the Apple phone won't necessarily take a big bite out of other handset makers. Albert Lin, an analyst with American Technology Research, believes that in the long run the iPhone will ignite consumer interest in high-end phones, benefiting makers of so-called smartphones - devices that play music and movies and access the Web - such as Nokia (Charts), which he rates a buy.

"All the device makers would love to see the high-end market grow, and Apple will be instrumental" in stoking the trend, he says.