Following yesterday’s iPod announcements, Merrill Lynch has raised its estimates on Apple. Citing increased iPod shipments, the firm raised the estimate for the fiscal first quarter ending in December to earnings of 42 cents per share on revenue of $2.95 billion, up from earnings of 40 cents per share on revenue of $2.85 billion. Merrill Lynch said that with the iPod Photo starting at $499 and the U2 iPod costing $349, the prices might seem high, “but that was the initial reaction to the iPod mini.” The firm also said that Apple is seeing an iPod “halo effect” on the Mac business and is gaining share in targeted markets.