Updated from 1:21 p.m. EST

Apple ( AAPL) shares surged to a new high Wednesday, a day after their eye-popping runup on the rollout of the highly anticipated iPhone.

CEO Steve Jobs unveiled the iPod-based mobile phone during the MacWorld Conference in San Francisco Tuesday. "We're going to make some history together today," Jobs said as he took the stage.

Apple's stock was similarly working on new history. After rising 8% Tuesday, Apple tacked on nearly another 5% Wednesday, setting a new closing high of $97. Merrill Lynch boosted its price target on the stock to $113 from $102, and Bear Stearns took its target to $120 from $100.

The iPhone features a 3.5-inch touch screen, WiFi, Bluetooth and a 2-megapixel camera. It comes in a palm-sized shape at less than a half-inch thick. Cingular, the wireless unit of AT&T ( T), will be the first carrier to offer the phone.

Starting in June, the phone will be available with two storage sizes -- a 4-gigabyte model for $500 and an 8-gigabyte for $600, each with a two-year Cingular contract.

Cingular CEO Stan Sigman said he had so much confidence in the device that his company entered into the contractual agreement without ever seeing iPhone.

The phone runs on Apple's OS X software and includes the Safari Internet browser. Apple was reportedly in talks with Cisco ( CSCO) for use of the iPhone name, but late Wednesday, Cisco filed suit to prevent Apple from using the trademarked name.

Besides the touch screen, the iPhone has only one button, the home button that brings a user to a main screen. From there, the user touches the screen to listen to music, watch a video, email friends, surf the Web or make a phone call.

Jobs said that when making the iPhone, the company decided to ditch the small QWERTY keyboard and plastic buttons used to operate other smartphones -- such as Research In Motion's ( RIMM) BlackBerry -- and make a giant screen instead so that the functionality could easily change.

For instance, a touch-screen QWERTY keyboard pops up for typing email on the iPhone, but with a touch of the screen, a user can switch and listen to music from his iTunes library instead.

The user also can zoom in on a photo or part of a Web page by pinching his fingers together or tapping the screen twice.

The iPhone comes just as Motorola's ( MOT) iconic Razr phone has fallen out of favor.

With its music, Internet, camera and email features, the iPhone will compete against smartphones such as Nokia's ( NOK) E62; Research In Motion's new Pearl BlackBerry; Samsung's thin lineup, including the BlackJack; and the increasingly popular Sony Ericsson Walkman phones.

As expected, Jobs also launched the renamed Apple TV device, which allows people to wirelessly transmit television shows, movies and music stored on their computers to their TV sets. It has a 40-GB hard drive and can store up to 50 hours of video. The device can auto-sync from one PC, stream content from up to five computers and is controlled by one remote.

Apple TV sells for $299 and will ship in February, but the company is taking orders immediately.

Acknowledging that Apple Computer has become more than just a computer company, Jobs also said the company was dropping "Computer" from its name and will now be known as just "Apple."

During the annual keynote, Jobs also announced that more than half of all Macs sold through all channels -- not just at Apple retail stores -- are to new Mac users. He said that Apple's iTunes music store has now sold more than 2 billion songs and has surpassed Amazon ( AMZN) to become the fourth-largest music retailer in the country.

In addition, Viacom's ( VIA) Paramount Studios will now join Disney ( VIA) in selling some of its movies through iTunes.