5:08: Peter is talking about transitioning to all Intel chips in 9 months and that there 4,000 universal applications available, and that 80% of all integral mac applications will be available.

5:10: Peter is talking about the strength of portable sales. iTunes music is 85% of all legal downloads. 70% of all cars will be offering iPod adaptors. There was a 35% growth in sales this quarter compared to the same quarter last year.

5:12: talking about Apple retail, 50% of new Mac purchases are all new buyers

5:12: education sales best quarter of back-to-school higher education sales thanks to the back to school promotion and the macbook pro

5:13: talking about tax rates

5:14: added to cash balance

5:14: Peter is talking so fast and tossing out so many details it's almost impossible to keep up. He's talking about stock based compensation cost expections and what they expect future details to be.

In closing they're proud of their accomplishments. New heights on iPod shipments, Macs, going to questions:

Goldman Sachs: help us understand the lower price point the lower iPod price will have on margins? The new $79 shuffle will be down slightly, but excited about the lineup.

5:19: Citigroup asks about gross margins and retail pilot issues. There is a pilot in 7 stores, and is now opening up to 50. They will be selling software and desktops and notebooks, and is under close evaluation. There is a small pilot at Circuit City, but there is no data available.

Another analyst question. There is a question about 2007 being the most exciting product year for Apple. Should we all show up for MacWorld? Peter says they won't comment on product roadmap, but they're very excited about the year and think customers will be. The analyst asks about music, is something going on with download habits? Music sales were flat, but up 70% year over year. Peter noted summer is not best quarter for music sales. They expect it to pick up over the Christmas season as new album releases come out. What about inventory? The increase in inventory is due to retail stores increasing and Apple getting ready for holidays. Peter repeats the $11 billion in topline growth.

Bear/Stearnes asks about Japan slower sales and asks about the stock options and Job's involvement. As reported two weeks ago the special committee reported their key findings, one of which was that there was no misconduct by any current memeber of the management team. On Japan, year to year, mac sales slipped by 10%, and it's the weakest in the world, and they aren't pleased with their performance there. Year of year, revenue was up over 26% in Japan due to strong iPod sales.

JP Morgan asks about video sales. The music store is run above break even, and they're saying the music store is mainly viewed as driving iPod and iPod accessory sales. iPod share abroad is picking up and over 50% in various European companies.

Morgan Stanley is interested in channel inventory. Apple expects to bring them back to reasonable levels after MacBook strong demand.

5:25: Credit Suisse: how is Nano iPod demand? How did rollout go? Customer reception has been good, iPod demand demand accelerated and allowed them exceed quarter expectations.

This quarter sales to new owners of macs were up *over* 50%, which is interesting.

Piper/Jaffrey: how to think about demand for mac sales results? Thinks Intel transition helped drive mac sales as well as back to school sales. Any idea about when Shuffle ships? End of October.

Cross Research: anything on Bootcamp downloads? Bootcamp is over 1 million downloads, plan to keep integrating Bootcamp. In stores this quarter went over 50% new to mac sales. Metrics on iTunes stores and how well are movies doing? Game and movie sales will come at a future date, but Apple is very happy with the store performance.

Merill Lynch: talk to us about Mac gross margins? Won't be specific, but Apple is happy with them, and one of the reasons the gross margin exceeded what they initially gave. What do you think of Google's purchase of YouTube, in the long term video distribution do you think this will effect ITMS? No comment on YouTube, but continue to think video will be big.

5:38: Macpro, how is that doing? one anaylst is asking: still seeing delay in purchasing associated with some applications (Creative Suit) not being Universal.

Another analyst is asking about shuffle demand: taking orders online and through channels, and will be excited to get shipments going soon. At the developer's conference there were some new features in the next big OS update, are there any we don't know about? No comment really.

5:42: Any iPod promotions coming internationally? Some work being done with Coke in UK and Germany. 70 million free songs being given away there. Any ITMS international news? ITMS is in 21 countries, which is about 90% of where music is legally puchased, and movies will go international in 2007.

5: 44: America Technology Research asks about iTV, what kind of units to be produced? Pre-announced to give customers a view of the whole digital media ecosphere Apple was trying to put together.

Boston Company: how will extra week in Apple's quarter setup affect things? Peter expects increase in inventory.

An analyst guidance question regarding holidays? The economy is slowing, but headed for a slow landing, and they agree with this outlook. Will there be a recovery in channel inventory into the 4th quarter? Apple thinks there is a recovery that is manageable simply due to supply and demand. Apple says it will air freight inventory on computers for a portion of their inventory.

Pacific West Securities asks if there are hurdles to getting other studios on board with ITMS: it took a year to get most of the networks on board with ITMS, so just keep an eye out on ITMS.

An analyst asks how many retail store employees there are? 5,800.

Prudential: what are the key levels that will effect gross margins? The level of sales and the mix within the products and the direct versus indirect sales. Uptick in iMac or iPod demand? iPod demand uptick after shuffles helped exceed quarter. Last iMac upgrade had such demand they had to air freight and also is the reason for lower inventory levels.

The call is over.