Michael Abramsky (RBC Capital Markets): Are you expecting a similar reception in Europe when you launch the iPhone?

Peter Oppenheimer: We think it will do well in all markets. Later in the quarter we will be announcing some details about which carriers we will be working with.

Bill Fearnley (FTN Midwest): Is there going to be any effect potentially on revenue, revenue mix or revenue growth due to product transitions here?

Peter Oppenheimer: The June quarter tends to be more dominated by our K-12; higher end is strong, but it tends to be a little bit K-12 focused whereas in the September quarter it tends to be a bit more high end focused.

Bill Fearnley (FTN Midwest): Could you give us the direct versus indirect mix for the quarter?

Peter Oppenheimer: The direct mix was 53% of revenue, up from 49% in the year-ago quarter.

Bill Fearnley (FTN Midwest): Any issues with component availability in the quarter that we are currently in for the fourth quarter?

Timothy Cook: We ended the last quarter with channel inventory in the three to four-week range in the Mac. Given that we recently announced a new MacBook Pro, we are not able to get enough inventories in the channel by the end of the quarter.

Bill Shope (JP Morgan): Any color on the incremental OpEx required for the iPhone going forward?

Peter Oppenheimer: We are recording the OpEx for iPhone as period expense and spreading the revenue over a two-year period of time.

Matt Kather (W. R. Hambrecht): Is the gross margin on the iPhone for June above your gross margin corporate average?

Peter Oppenheimer: The impact was small, with revenue contribution of $5 million for the quarter.

Matt Kather (W. R. Hambrecht): How broad is the expansion program for the phone internationally?

Peter Oppenheimer: We plan to go into a few major countries in Europe next quarter; to move across other countries in Europe across 2008 and to enter Asia in 2008.