The company had $105 million in capital for the March quarter.

From a theory basis, if the pricing stays relatively low and you maintain the pricing of your products, could you draw the conclusion that the margin should be other than 32%?

The company sees commodity pricing trending up in June. The company is now entering the education buying season. The June quarter tends to be more dominated by K to 12 which tend to buy the lower ASP products and Apple has, in fact, repriced its deployment.

iPhone is going to come in June. Do you think that it is going to be widely available in June or is it going to be relatively a few units in June?

It is very difficult to tell what the demand is until you are actually shipping the product. There seems to be an enormous amount of people that are waiting for and talking about it, but the company needs to start shipping and make the product available for sale before it can predict demand.

Did AT&T say that they have a million orders for iPhones?

AT&T is not taking orders there. They have a million people who are interested that have find upon the right side.

Do you think you could fulfill a million in the June quarter?

The management doesn’t want to predict what its supply would be.

Could you give an update on the timing of the iPhone outside the United States?

The company still plans to be in Europe in the fourth calendar quarter of this year and continues to plan to be in Asia in 2008.

In terms of distribution in the US with the iPhone, will it be exclusive with AT&T Cingular and Apple or will other Cingular partners be distributing the products such as Best Buy or RadioShack?

It will be sold through Cingular stores, the cingular.com, apple.com and Apple retail stores.

What percent of industry music sales was digital in the quarter? Last quarter it was around 11% or 12%. Is there any influence to the royalty rates you pay to the music companies?

The most recent quarter’s digital percent of total sales is going up. In the United States the market share of legally purchased and downloaded music is over 85% and the company is seeing strong growth on the iTunes music store

Japan has been flat three quarters in a row. What is going on there and what are you going to do to address it?

Japan is a challenging market. The Japan PC market according to IDC would contract by 2% last quarter. That’s identical to what the company did in terms of iPod and the MP3 market. Apple has maintained over 50% share for some time and however, the MP3 market itself isn’t growing and so the company’s units as a consequence are growing very small single digits. That coupled with an ASP decline in iPod produces a negative revenue compared year-over-year.

There are a number of things going with the channels on merchandising. The company is running Macintosh, the Mac PC ad on television, so there are a series of things that are being done at the only major market in the world that Apple is not doing well.

It looks like Mac channel inventory levels were down versus the last quarter. Can you quantify the impact of that inventory reduction on Mac unit sales during the quarter?

Apple started the quarter in the 3 to 4 week range and ended in the 3 to 4 week range and the absolute number of units were very similar from beginning to end.