Early signs point to a big holiday quarter for Apple

Apple(s AAPL) made a huge bet by stacking most of its new product releases in the fourth quarter of 2012, and based on some early data on holiday sales, the gamble might just pay off. An important early indicator is the demand for Apple’s most important product, the iPhone, and how well it did at carriers. This week, the two biggest carriers in the U.S. hinted that they sold more iPhones during the last three months 2012 than during the same period in 2011.
In an SEC filing on Wednesday, Verizon(s VOD)(s VZW) reported that it sold 9.8 million smartphones during the fourth quarter, which includes the all-important holiday season. The company specifically noted it saw a “higher mix of Apple smartphones” — meaning a greater percentage of the smartphones it sold were iPhones compared to the same quarter a year ago. Verizon also reported that even after two years of availability, its share of smartphones with LTE subscriptions shot up from 16 percent to 23 percent during the fourth quarter– a good indication that the LTE-capable iPhone 5 is popular among its subscribers.
Wells Fargo analyst Maynard Um did the math and found that the 9.8 million “compares to 7.7mm smartphones sold in Q4 2011 (an increase of 27% yr/yr).” By way of comparison, he wrote in a note to clients Wednesday, “Verizon’s Q4 2011 iPhone activations as a percentage of smartphones sales were ~56% or 4.3mm. We see the higher smartphone activations and higher iPhone mix as positive for Apple.”
AT&T(s T) reported Tuesday that it sold 10 million smartphones during the holiday quarter, the most ever in its history. And, the carrier confirmed, “most” of those were iPhones and Android phones. Both carriers will report their full earnings figures in two weeks.
AT&T has been offering the iPhone since the beginning and Verizon since 2010. That those two can still attract new iPhone buyers in large numbers is a good sign for the iPhone’s continued demand. When it comes to Apple’s ability to beat last year’s holiday sales, U.S. carriers are just one part of the equation. But other indications — like early sales figures from the iPhone 5’s launch — indicate a good level of demand for it in other countries as well.
The holiday quarter has become hugely important for Apple. Apple devices, particularly small mobile ones, have been a hallmark of gift giving during December since the iPod was the company’s hottest gadget. The fourth quarter of 2011 was Apple’s biggest holiday quarter ever. A downturn in sales in 2012 could send a message that Apple devices are no longer as desirable or cool. Apple’s decision to introduce its most important product refreshes (most of Apple’s revenues are derived from the iPhone and iPad) right before the holiday, encourages not only gift-giving but buying yourself a present during the quarter too.
The company reports earnings Jan. 23. A good or bad quarter will end up setting the tone for the year. And this year, with Apple’s stock slumping and investors wondering if Apple’s glow is wearing off, assuring them with a blockbuster earnings report isn’t a bonus: it’s basically a requirement at this point.