Brian Blair (Wedge Partners): Could you comment on any iPod or marketing promotions you are doing in the international markets right now that are different from what we are seeing in the U.S.?

Peter Oppenheimer: We have some work that we are doing with Coke in Europe, specifically in the U.K. and Germany. They are going to put a specific web site out that is linked directly into iTunes and they will be giving away 70 million free songs over the next month or two.

Brian Blair (Wedge Partners): Are there any updates on any of the iTunes stores launching in international markets?

Peter Oppenheimer: We today have the iTunes music store in 21 countries, which is covering off close to 90% of where music is legally purchased. We look forward to bringing movies international in 2007.

Steve Lidberg (Pacific Crest Securities): Could you provide some thoughts with regards to your ability to attract additional major studio content into the feature film category for iTunes?

Peter Oppenheimer: Last October we announced TV shows with just five programs and within a year have over 220 today from over 40 networks. We have just launched movie downloads with one studio and have 75 titles and we plan to add more over time.

Jesse Tortora (Prudential): What do you see as the key levers that could provide upside or downside for this quarter?

Peter Oppenheimer: Certainly the level of sales and the mix within the products would be big levers and direct versus indirect sales would be another lever.

Tim Cook: Commodity costs are another one, although I believe we have a reasonable handle on those.

Jesse Tortora (Prudential): Have you seen a pickup in either iMac or iPod following the September price moves?

Tim Cook: The post-launch in iPod, we saw an acceleration of demand and it was that acceleration that allowed us to exceed our expectations for iPod in the quarter. The announcement of the new iMac lineup in early September was extremely well received.

We air freighted units to market in order to cut transit times and get them to our customers as quickly as we could. It was partly the iMac that led to a stalling below the four to five week target on the channel inventory.