Timothy D. Cook: We have struggled there for several quarters and one data point does not make a trend but what happened was that the reception to iMac has been tremendous, our desktop chair moved from 6% to 10% year over year. The reaction to iPod Touch was overwhelming, which helped the iPod business have a much stronger revenue growth rate year over year, and so those two things together drove Japan’s performance.

Charles Wolf (Needham & Company): Orange in France is selling the iPhone for EUR399 with a two-year subscription, but it is selling it for EUR749 unlocked. Does Apple share in the incremental revenues that Orange gets on an unlocked phone?

Peter Oppenheimer: We are not discussing the terms of our agreements with the carriers so I can not specifically answer that.

Charles Wolf (Needham & Company): What is the division between direct and indirect sales worldwide?

Peter Oppenheimer: Direct sales in the quarter were 46% and that compared to 44% in the year-ago quarter.

Gene Munster (Piper Jaffray): What is the time set for the iPhone rollout internationally?

Timothy D. Cook: We still plan to enter Asia in 2008 and we also plan to roll out additional European countries during 2008.

Gene Munster (Piper Jaffray): Is there anything specific relative to the China market?

Timothy D. Cook: There is nothing specific to announce today.

Gene Munster (Piper Jaffray): What will take for Apple TV to become more of an actual business that can move the needle?

Timothy D. Cook: Many companies have tried in this space and missed. We are back with Apple TV take two with movie rentals directly from iTunes and we think we have it right this time.

Andrew Neff (Bear Stearns): When you talked about the U.S. iPods being flat, are you talking year over year?

Timothy D. Cook: Unit sales year over year were flat in the U.S.

Andrew Neff (Bear Stearns): With all this traffic coming in, what were you seeing in terms of consumer behavior in terms of proclivity to spend?

Peter Oppenheimer: In the December quarter, the retail stores had a quarter for the record books. Our Mac sales were 504,000 in the stores. That was up 64% year over year and over half the Macs we were selling, we sold to people that had never owned a Mac before, so that trend makes us feel good.

Andrew Neff (Bear Stearns): Could you give a sense about store opening plans for this year, what you see in domestic and international split?

Peter Oppenheimer: We expect to open about 35 to 40 stores in fiscal 2008. About 25 of our 204 stores are outside the United States and we will open more stores internationally in 2008 than we did in 2007, including our first stores in China.

Toni Sacconaghi (Sanford Bernstein): You saw different curve in demand in the U.S. in the last month of the quarter. Was that a statement that was only applicable to iPods or did the linearity curve in the U.S. regarding the Mac business look any different than it did last year?

Timothy D. Cook: Mac was strong throughout the quarter. The statement that I made was about iPod and it was a statement that when you got into the gift-buying season, the shape of the curve was somewhat different at the U.S. level, but at the worldwide level it was similar to the previous year.

Toni Sacconaghi (Sanford Bernstein): Can you comment on the number of unlocked phones that you believe were sold in the quarter?