Despite evidence of strong Q4 iPhone sales, Apple investors nervous for earnings

For Apple (s aapl), blockbuster holiday quarter earnings have become something of a tradition that investors can happily anticipate. But this year, with Apple’s stock holders as skittish as ever, much of CEO Tim Cook’s job on Wednesday when his company reveals its earnings report for the first fiscal quarter of 2013 is going to be convincing them that the sky is not falling and that everything’s going to be fine for the rest of the year.
The numbers released so far by some Apple watchers and Apple partners point to a really good holiday for the company. On Tuesday, Verizon(s VZ) said it sold nearly 10 million smartphones between October and the end of December, and more than half of those were iPhones. It’s a higher percentage of iPhones than usual for Verizon, so that is one indication that Apple had a great holiday, at least in the U.S. AT&T(s T) indicated earlier this month in an SEC filing that it sold a record number of smartphones during the quarter, and “most” were iPhones and Android devices.(s GOOG)
Meanwhile, a study published by Kantar Worldpanel ComTech on Tuesday echoed Verizon’s results: for the three months up to Dec. 23, 51.2 percent of the smartphones sold in the U.S. were iPhones.
In any other year this would be greeted as excellent news. Instead, Apple’s stock continues to reflect a recent lack of confidence on the part of Apple investors, mainly about the months ahead. The stock peaked at $702.10 on Sept. 19, and has dropped 28 percent since, leaving it hovering around $500. The fall seems to have been exacerbated in early January by recent reports that Apple had cut orders for iPhone parts in response to lower demand for the iPhone.
But those doubts may be mollified at least in the short term should Apple put up record sales of the iPhone, impressive sales of the new iPad mini and the original iPad, and if Cook and his CFO Peter Oppenheimer can say the right things.
We’ll be following along with the earnings call starting at 2 p.m. PT on Wednesday. But before that, here’s what to watch for once the earnings are released:

  • Extra week. Wall Street’s estimates range from $52.01 billion to $59.55 billion in revenue, and earnings per share is targeted around $13.42. (Apple has forecast $52 billion and $11.75.) This may very well be the company’s biggest quarter ever in terms of sales and revenue. But when trying to compare to the year-ago quarter, keep in mind that the December quarter of 2012 had an extra week in it — 14 weeks, instead of 13 weeks of the same quarter in 2011. That’s a whole extra week of iPhone and iPad sales.
  • The iPhone mix. CIRP reported that the iPhone 4 and iPhone 4S remained extremely popular, even after the iPhone 5 arrived in stores. Unfortunately, not all iPhone sales are created equal. Selling any iPhone counts as a sale, but older devices have a lower price and Apple makes less on those than the newer, pricier models. If Apple doesn’t sell as many new iPhone 5s as the older models, that will affect the company’s margins.
  • iPad mini numbers. Wednesday is our first real chance to hear how the iPad mini did in its first-ever quarter. But it’s entirely possible that Apple may not break those numbers out at all. After its first weekend on sale, Apple announced that 3 million iPads were sold, but the company did not specify mini sales. It may very well do so this time if the device was as big of a hit over the holidays that many think.
  • Reading the financial tea leaves. Apple doesn’t disclose many of its future plans. But one way to understand that something big or new is coming is what Apple spends. For example, when the company was gearing up to buy up LG’s global supply of small LCDs in 2009, it clued investors in about the money it planned to spend. And more recently, Apple has reported very large increases in capital expenditures, which as Horace Dediu noted last month at Asymco, seems unrelated to simply ramping up production volume of current products. If Apple is making major supplier changes or planning new products or speeding up production this year, any mention of large expenditures could be a hint.
  • What Tim Cook says. It’s clear that a lot of investors wonder if Apple has another revolutionary product in it following the death of co-founder Steve Jobs in October 2011. They also wonder what on earth Apple’s going to be doing for the next few months since it released new versions of almost all of its products in the fall — in recent years Apple has released one big new product just about every quarter. Cook likes the mystery around Apple and its products but considering the level of handwringing out there right now, he is going to need more than his gentle Southern drawl to put his investors at ease. He tends to choose his words extremely carefully anyway so it’s not a bad bet that on the call Cook will try to find some way of assuring them that everything is under control.