Nancy Paxton - Senior Director, Investor Relations Tim Cook - Chief Executive Officer Peter Oppenheimer - Chief Financial Officer Gary Wipfler - Treasurer

Katy Huberty - Morgan Stanley Bill Shope - Goldman Sachs Antonio Sacconaghi - Sanford Bernstein Ben Reitzes - Barclays Steve Milunovich – UBS Shannon Cross - Cross Research Group Gene Munster - Piper Jaffray Keith Bachman - Bank of Montreal Scott Craig - Bank of America/Merrill Lynch Mark Moskowitz - JPMorgan Chris Whitmore - Deutsche Bank

Thank you. Good afternoon, and thanks to everyone for joining us. Speaking today are Apple’s CEO, Tim Cook and CFO, Peter Oppenheimer, and they will be joined by Treasurer, Gary Wipfler for the Q&A session with the analysts.Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, stock-based compensation expense, taxes, and future products. Actual results or trends could differ materially from our forecast. For more information, please refer to the Risk Factors discussed in Apple’s Form 10-K for 2012 and the Form 8-K filed with the SEC today along with the attached press release. Apple assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.I’d now like to turn the call over to Tim Cook for introductory remarks.

Thank you. Good afternoon, and thanks to everyone for joining us. Speaking today are Apple’s CEO, Tim Cook and CFO, Peter Oppenheimer, and they will be joined by Treasurer, Gary Wipfler for the Q&A session with the analysts.Please note that some of the information you will hear during our discussion today will consist of forward-looking statements, including without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, stock-based compensation expense, taxes, and future products. Actual results or trends could differ materially from our forecast. For more information, please refer to the Risk Factors discussed in Apple’s Form 10-K for 2012 and the Form 8-K filed with the SEC today along with the attached press release. Apple assumes no obligation to update any forward-looking statements or information, which speak as of their respective dates.I’d now like to turn the call over to Tim Cook for introductory remarks.

Thanks Tim. We’re very pleased to report the results of Apple’s first fiscal quarter. We established new all-time quarterly records for iPhone and iPad sales, significantly broadened our eco-system and generated Apple’s highest quarterly revenue and net income ever. Revenue for the quarter was 54.5 billion compared to 46.3 billion in the year ago quarter, an increase of 8.2 billion year-over-year. As a remainder our first quarter this fiscal year spanned 13 weeks whereas the first quarter last year included a 14th week. As such average weekly revenue was 4.2 billion in the current year quarter compared to 3.3 billion in the year ago quarter, an increase of 27%. The strong year-over-year growth was fuelled by record iPhone, iPad and iTune sales.Operating margin was 17.2 billion representing 31.6% of revenue. Net income was a record 13.1 billion just ahead of the amount generated in last year’s 14 week quarter and translated to diluted earnings per share of $13.81. Beginning this fiscal year we’re reorganizing the presentation of our results to provide greater transparency. First, we’ve established a new operating segment of Greater China given the very significant contribution of that region to our overall business. We define Greater China to include Mainland China, Hong Kong and Taiwan. Second, for segment reporting purposes we’re allocating certain manufacturing cost and variances including cost related to product tooling and manufacturing process equipment to our operating segments instead of including these expenditures in corporate expenses as we have done in the past.We have recast our operating income for each quarter in fiscal 2011 and 2012 to reflect this change and have provided a reconciliation on Apple.com/Investor. These changes have no impact in overall reported operating income. And third, we have realigned the presentation of product information in our summary data schedule to provide greater visibility to revenue by product category. Under this new format revenue from iPhone, iPad, Mac and iPod sales is presented exclusive of related service and accessory revenue. All revenue from iTunes, stand-alone Apple and third party software and services is presented as a single line item and revenue from all Apple and third party accessory sales is presented as a single line item. We believe this presentation provides a logical grouping of revenue sources and also provides greater transparency into our results. As for the details of this quarter, I'd like to begin with iPhone. We were very pleased to sell 47.8 million iPhones compared to 37 million in the year ago quarter, an increase of over 10 million iPhones.This represents a rate of almost 3.7 million iPhones per week in the current year quarter compared to 2.6 million per week in the year ago quarter. That’s an average increase of 39% per week consistent with IDC’s latest published forecast for the global smartphone market in the December quarter.And on a sequential basis iPhone sales grew 78% over the September quarter’s results. That’s over 3.5 times IDC’s latest published projection for sequential growth of the overall market resulting in iPhone market share growth. We experienced strong iPhone growth in each of our geographic segments most notably Greater China where iPhone sales more than doubled year-over-year. In the U.S. Kantar Worldpanel Comtech estimates that iPhone shares of smartphones sales increased from 45% in the year ago quarter to over 51% in the current year quarter.iPhone sales were driven by the tremendous popularity of iPhone 5 which we’re extremely proud to have launched in 100 countries by the end of December resulting in the fastest iPhone rollout ever. We ended the quarter with about 10.6 million iPhones in channel inventory a sequential increase of about 1.5 million iPhones and ended the quarter within our target range of four to six weeks of iPhone channel inventory on a look forward basis. While other mobile devices and operating systems faced increasing security risks and fragmented inconsistent user experiences, iPhone and iOS continued to deliver an exceptional experience that people love.They also provide a secure and trusted eco-system that IT departments require. iPhone continues to be embraced by government agencies and businesses across the globe. Many U.S. government agencies are issuing iPhones by the 1000s as part of their new mobile strategies. Some examples include NASA, the National Oceanic and Atmospheric Association, Immigration and Customs Enforcement, and the Transportation Security Administration.We are also seeing continued iPhone growth in business across the board from companies replacing existing smartphone deployments to businesses adding first-time smartphone users. Companies around the world like Neiman Marcus, Skanska, and Volvo are issuing iPhones to their employees to improve interactions with customers and give workers access to essential corporate data.Turning to iPad, we were thrilled to sell 22.9 million iPads during the quarter compared to 15.4 million in the year ago quarter. That translates to over 1.7 million iPads per week in the current year quarter compared to 1.1 million per week in the year ago quarter, an average increase of 60% per week, ahead of IDC’s latest published estimate of 56% growth for the tablet market. Customers are loving the fourth generation iPad with its faster performance and spectacular Retina display. And the iPad mini has been a tremendous hit offering the full iPad experience in an incredible design that you can hold in one hand.In addition to the tremendous response from consumers, iPad continues to be the tablet of choice for businesses and government agencies transforming the way their employees work. Financial institutions like Barclays, Nomura Securities, and Bank of Beijing are deploying iPad to enable employees to better service customers and work securely with financial portfolios and products. In particular, Barclays roll out of over 8000 iPads has generated tremendous employee engagement and feedback making it the most successful IT deployment in Barclays’ history. State and local governments in the United States are also rapidly adopting iPad. Court systems, county inspectors, and law enforcement agencies use iPad to streamline processes and replace huge amounts of paper. And state legislatures in Virginia, Texas, and West Virginia are all using iPads to give lawmakers instant access to government documents and information.Outside the U.S., 10,000 iPads are being deployed as part of broad adoption of a local government workflow solution in Sweden and over 5,000 iPads have been purchased by the government in the Netherlands for the Dutch Tax Authority and the Dutch Court System. We began and ended the quarter with about 3.4 million iPads in channel inventory. That left us below our target range of four to six weeks of iPad channel inventory on a look-forward basis.Turning to Mac, we sold 4.1 million units in the quarter compared to 5.2 million in the year ago quarter. IDC estimates the global personal computer market contracted by 6% during the December quarter. We introduced the new 13-inch MacBook Pro Retina display as well as our stunning new iMacs in October. As we projected a quarter ago, we were significantly constrained with respect to the new iMacs and were only able to ship them for the final month of the December quarter. We believe our Mac sales would have been much higher absent those constraints. We began and ended the quarter with between three and four weeks of Mac channel inventory on a look-forward basis, which is below our target range of four to five weeks.Moving to iPod, we sold 12.7 million iPods compared to 15.4 million in the year ago quarter. iPod touch was a popular item in the holiday season and continues to account for over of half of all iPods sold during the December quarter. iPod’s share of U.S. market for MP3 players was over 70% in the December quarter based on the latest data published by MPD and iPod continued to be the top selling MP3 player in most countries we track based on the latest data published by GFK.iTunes generated record results with revenue of $2.1 billion in the quarter. We established new all-time quarterly records for revenue from music, from movies, and from apps. We significantly expanded the footprint of our ecosystem during the quarter adding iTunes music stores in 56 countries, including Russia, Turkey, India and South Africa. That brings us to a total of 119 countries, where customers can choose from over 20 million songs to purchase and download.The App Store had a record-breaking December quarter with over 2 billion downloads in the month of December alone. The App Store now offers more than 775,000 apps to over 0.5 billion accountholders in 155 countries, including over 300,000 native iPad apps. Cumulative app downloads have now surpassed 40 billion and we’re delighted to have paid our app developers over 7 billion for sales of their incredible work. iPod continues to grow at amazing rate now with 250 million accounts and our customers love our iMessage service sending a staggering 2 billion plus iMessage’s per day.I would now like to turn to the Apple retail stores, revenue was in all-time high of over 6.4 billion with growth yield primarily by record iPhone and iPad sales. We opened in total 11 new stores during the quarter including four new stores in Greater China. We excited the quarter with 401 stores, a 150 of which are outside United States. We also relocated or expanded 14 stores that had outgrown their former space during the quarter. With an average of 396 stores opened, average revenue per store was 16.3 million or 1.25 million per store per week compared to 1.22 million per store per week in the year ago quarter. Retail segment income was 1.6 billion.We hosted a record 121 million visitors to our stores during the quarter compared to a 110 million in the year ago quarter. That translates to 23,000 visitors per store per week, a 7% increase year-over-year. Total company gross margin was 38.6% which was about 260 basis points higher than our guidance. About half of this difference were driven by lower products and transitory cost that we reflected in our guidance while the remainder resulted from a higher mix of iPhone’s, a weaker U.S. dollar and leverage on the higher revenue.Operating expenses were 3.9 billion included 460 million in stock based compensation expense. (Inaudible) was 462 million and the tax rate for the quarter was 26%. Turning to cash, our cash plus short term and long term marketable securities totaled a 137.1 billion at the end of the December quarter compared to a 121 billion at the end of the September quarter, a sequential increase of almost 16 billion.The increase in cash was net of 2.5 billion in dividends paid and 2 billion in an upfront payment in conjunction with our accelerated share repurchase program. Over 94 billion of our total cash was offshore at the end of the December quarter. Cash flow from operations was a record 23.4 billion growing by almost 6 billion year-over-year of 33% increase. Our Board of Directors has declared a dividend of $2.55 for common share payable on February 14th, 2013 the shareholders at record as of the close of business on February 11th, 2013.As we move ahead into the March quarter I would like to review our outlook which includes the types of forward-looking information that Nancy referred to at the beginning of the call. In addition to the reporting changes that I’ve already mentioned to further increase transparency into our business we’re changing our approach to how we provide guidance. In recent years our guidance reflected a conservative point estimate of results every quarter that we have reasonable confidence in achieving. Going forward we plan to provide a range of guidance that reflects our belief of what we’re likely to achieve. Well we cannot forecast with complete accuracy we believe we’re likely to report within the range of guidance we provide. Therefore for the March quarter we’re providing revenue guidance of between 41 billion and 43 billion compared to 39.2 billion in the year ago quarter. We expect gross margin to be between 37.5% and 38.5% reflecting approximately 90 million related to stock based compensation expense. We expect OpEx to be between 3.8 billion and 3.9 billion including about 480 million related to stock based compensation.We expect other income/(expense) to be about $350 million and we expect the tax rate to be about 26%. In closing we’re thrilled to have generated over 54 billion of revenue in a 13 week period while executing multiple major product transitions. We sold over 75 million iOS devices during the quarter which is a staggering number. We’re producing our best products ever and the execution by our engineering, operations and sales teams to deliver 10s of millions of such innovative, beautifully designed products in such a short time frame is phenomenal. We’re very pleased with our record iPhone and iPad sales, our record music moving and app sales and continued expansion of our robust eco-system. And finally we remain very confident in our new product pipeline.

Thanks Tim. We’re very pleased to report the results of Apple’s first fiscal quarter. We established new all-time quarterly records for iPhone and iPad sales, significantly broadened our eco-system and generated Apple’s highest quarterly revenue and net income ever. Revenue for the quarter was 54.5 billion compared to 46.3 billion in the year ago quarter, an increase of 8.2 billion year-over-year. As a remainder our first quarter this fiscal year spanned 13 weeks whereas the first quarter last year included a 14th week. As such average weekly revenue was 4.2 billion in the current year quarter compared to 3.3 billion in the year ago quarter, an increase of 27%. The strong year-over-year growth was fuelled by record iPhone, iPad and iTune sales.Operating margin was 17.2 billion representing 31.6% of revenue. Net income was a record 13.1 billion just ahead of the amount generated in last year’s 14 week quarter and translated to diluted earnings per share of $13.81. Beginning this fiscal year we’re reorganizing the presentation of our results to provide greater transparency. First, we’ve established a new operating segment of Greater China given the very significant contribution of that region to our overall business. We define Greater China to include Mainland China, Hong Kong and Taiwan. Second, for segment reporting purposes we’re allocating certain manufacturing cost and variances including cost related to product tooling and manufacturing process equipment to our operating segments instead of including these expenditures in corporate expenses as we have done in the past.We have recast our operating income for each quarter in fiscal 2011 and 2012 to reflect this change and have provided a reconciliation on Apple.com/Investor. These changes have no impact in overall reported operating income. And third, we have realigned the presentation of product information in our summary data schedule to provide greater visibility to revenue by product category. Under this new format revenue from iPhone, iPad, Mac and iPod sales is presented exclusive of related service and accessory revenue. All revenue from iTunes, stand-alone Apple and third party software and services is presented as a single line item and revenue from all Apple and third party accessory sales is presented as a single line item. We believe this presentation provides a logical grouping of revenue sources and also provides greater transparency into our results. As for the details of this quarter, I'd like to begin with iPhone. We were very pleased to sell 47.8 million iPhones compared to 37 million in the year ago quarter, an increase of over 10 million iPhones.This represents a rate of almost 3.7 million iPhones per week in the current year quarter compared to 2.6 million per week in the year ago quarter. That’s an average increase of 39% per week consistent with IDC’s latest published forecast for the global smartphone market in the December quarter.And on a sequential basis iPhone sales grew 78% over the September quarter’s results. That’s over 3.5 times IDC’s latest published projection for sequential growth of the overall market resulting in iPhone market share growth. We experienced strong iPhone growth in each of our geographic segments most notably Greater China where iPhone sales more than doubled year-over-year. In the U.S. Kantar Worldpanel Comtech estimates that iPhone shares of smartphones sales increased from 45% in the year ago quarter to over 51% in the current year quarter.iPhone sales were driven by the tremendous popularity of iPhone 5 which we’re extremely proud to have launched in 100 countries by the end of December resulting in the fastest iPhone rollout ever. We ended the quarter with about 10.6 million iPhones in channel inventory a sequential increase of about 1.5 million iPhones and ended the quarter within our target range of four to six weeks of iPhone channel inventory on a look forward basis. While other mobile devices and operating systems faced increasing security risks and fragmented inconsistent user experiences, iPhone and iOS continued to deliver an exceptional experience that people love.They also provide a secure and trusted eco-system that IT departments require. iPhone continues to be embraced by government agencies and businesses across the globe. Many U.S. government agencies are issuing iPhones by the 1000s as part of their new mobile strategies. Some examples include NASA, the National Oceanic and Atmospheric Association, Immigration and Customs Enforcement, and the Transportation Security Administration.We are also seeing continued iPhone growth in business across the board from companies replacing existing smartphone deployments to businesses adding first-time smartphone users. Companies around the world like Neiman Marcus, Skanska, and Volvo are issuing iPhones to their employees to improve interactions with customers and give workers access to essential corporate data.Turning to iPad, we were thrilled to sell 22.9 million iPads during the quarter compared to 15.4 million in the year ago quarter. That translates to over 1.7 million iPads per week in the current year quarter compared to 1.1 million per week in the year ago quarter, an average increase of 60% per week, ahead of IDC’s latest published estimate of 56% growth for the tablet market. Customers are loving the fourth generation iPad with its faster performance and spectacular Retina display. And the iPad mini has been a tremendous hit offering the full iPad experience in an incredible design that you can hold in one hand.In addition to the tremendous response from consumers, iPad continues to be the tablet of choice for businesses and government agencies transforming the way their employees work. Financial institutions like Barclays, Nomura Securities, and Bank of Beijing are deploying iPad to enable employees to better service customers and work securely with financial portfolios and products. In particular, Barclays roll out of over 8000 iPads has generated tremendous employee engagement and feedback making it the most successful IT deployment in Barclays’ history. State and local governments in the United States are also rapidly adopting iPad. Court systems, county inspectors, and law enforcement agencies use iPad to streamline processes and replace huge amounts of paper. And state legislatures in Virginia, Texas, and West Virginia are all using iPads to give lawmakers instant access to government documents and information.Outside the U.S., 10,000 iPads are being deployed as part of broad adoption of a local government workflow solution in Sweden and over 5,000 iPads have been purchased by the government in the Netherlands for the Dutch Tax Authority and the Dutch Court System. We began and ended the quarter with about 3.4 million iPads in channel inventory. That left us below our target range of four to six weeks of iPad channel inventory on a look-forward basis.Turning to Mac, we sold 4.1 million units in the quarter compared to 5.2 million in the year ago quarter. IDC estimates the global personal computer market contracted by 6% during the December quarter. We introduced the new 13-inch MacBook Pro Retina display as well as our stunning new iMacs in October. As we projected a quarter ago, we were significantly constrained with respect to the new iMacs and were only able to ship them for the final month of the December quarter. We believe our Mac sales would have been much higher absent those constraints. We began and ended the quarter with between three and four weeks of Mac channel inventory on a look-forward basis, which is below our target range of four to five weeks.Moving to iPod, we sold 12.7 million iPods compared to 15.4 million in the year ago quarter. iPod touch was a popular item in the holiday season and continues to account for over of half of all iPods sold during the December quarter. iPod’s share of U.S. market for MP3 players was over 70% in the December quarter based on the latest data published by MPD and iPod continued to be the top selling MP3 player in most countries we track based on the latest data published by GFK.iTunes generated record results with revenue of $2.1 billion in the quarter. We established new all-time quarterly records for revenue from music, from movies, and from apps. We significantly expanded the footprint of our ecosystem during the quarter adding iTunes music stores in 56 countries, including Russia, Turkey, India and South Africa. That brings us to a total of 119 countries, where customers can choose from over 20 million songs to purchase and download.The App Store had a record-breaking December quarter with over 2 billion downloads in the month of December alone. The App Store now offers more than 775,000 apps to over 0.5 billion accountholders in 155 countries, including over 300,000 native iPad apps. Cumulative app downloads have now surpassed 40 billion and we’re delighted to have paid our app developers over 7 billion for sales of their incredible work. iPod continues to grow at amazing rate now with 250 million accounts and our customers love our iMessage service sending a staggering 2 billion plus iMessage’s per day.I would now like to turn to the Apple retail stores, revenue was in all-time high of over 6.4 billion with growth yield primarily by record iPhone and iPad sales. We opened in total 11 new stores during the quarter including four new stores in Greater China. We excited the quarter with 401 stores, a 150 of which are outside United States. We also relocated or expanded 14 stores that had outgrown their former space during the quarter. With an average of 396 stores opened, average revenue per store was 16.3 million or 1.25 million per store per week compared to 1.22 million per store per week in the year ago quarter. Retail segment income was 1.6 billion.We hosted a record 121 million visitors to our stores during the quarter compared to a 110 million in the year ago quarter. That translates to 23,000 visitors per store per week, a 7% increase year-over-year. Total company gross margin was 38.6% which was about 260 basis points higher than our guidance. About half of this difference were driven by lower products and transitory cost that we reflected in our guidance while the remainder resulted from a higher mix of iPhone’s, a weaker U.S. dollar and leverage on the higher revenue.Operating expenses were 3.9 billion included 460 million in stock based compensation expense. (Inaudible) was 462 million and the tax rate for the quarter was 26%. Turning to cash, our cash plus short term and long term marketable securities totaled a 137.1 billion at the end of the December quarter compared to a 121 billion at the end of the September quarter, a sequential increase of almost 16 billion.The increase in cash was net of 2.5 billion in dividends paid and 2 billion in an upfront payment in conjunction with our accelerated share repurchase program. Over 94 billion of our total cash was offshore at the end of the December quarter. Cash flow from operations was a record 23.4 billion growing by almost 6 billion year-over-year of 33% increase. Our Board of Directors has declared a dividend of $2.55 for common share payable on February 14th, 2013 the shareholders at record as of the close of business on February 11th, 2013.As we move ahead into the March quarter I would like to review our outlook which includes the types of forward-looking information that Nancy referred to at the beginning of the call. In addition to the reporting changes that I’ve already mentioned to further increase transparency into our business we’re changing our approach to how we provide guidance. In recent years our guidance reflected a conservative point estimate of results every quarter that we have reasonable confidence in achieving. Going forward we plan to provide a range of guidance that reflects our belief of what we’re likely to achieve. Well we cannot forecast with complete accuracy we believe we’re likely to report within the range of guidance we provide. Therefore for the March quarter we’re providing revenue guidance of between 41 billion and 43 billion compared to 39.2 billion in the year ago quarter. We expect gross margin to be between 37.5% and 38.5% reflecting approximately 90 million related to stock based compensation expense. We expect OpEx to be between 3.8 billion and 3.9 billion including about 480 million related to stock based compensation.We expect other income/(expense) to be about $350 million and we expect the tax rate to be about 26%. In closing we’re thrilled to have generated over 54 billion of revenue in a 13 week period while executing multiple major product transitions. We sold over 75 million iOS devices during the quarter which is a staggering number. We’re producing our best products ever and the execution by our engineering, operations and sales teams to deliver 10s of millions of such innovative, beautifully designed products in such a short time frame is phenomenal. We’re very pleased with our record iPhone and iPad sales, our record music moving and app sales and continued expansion of our robust eco-system. And finally we remain very confident in our new product pipeline.

Katy Huberty - Morgan Stanley:

Katy Huberty - Morgan Stanley:

Katy Huberty - Morgan Stanley:

Bill Shope - Goldman Sachs:

Bill Shope - Goldman Sachs:

Bill Shope - Goldman Sachs:

Toni Sacconaghi - Sanford Bernstein:

Toni Sacconaghi - Sanford Bernstein:

Toni Sacconaghi - Sanford Bernstein:

Toni Sacconaghi - Sanford Bernstein:

Ben Reitzes - Barclays:

Ben Reitzes - Barclays:

Steve Milunovich – UBS:

Steve Milunovich - UBS:

Steve Milunovich - UBS:

Shannon Cross - Cross Research Group:

Shannon Cross - Cross Research Group:

Shannon Cross - Cross Research Group:

Gene Munster - Piper Jaffray:

Gene Munster - Piper Jaffray:

Keith Bachman - Bank of Montreal:

Keith Bachman - Bank of Montreal:

Keith Bachman - Bank of Montreal:

Scott Craig - Bank of America/Merrill Lynch: Thanks. Good afternoon. Hey, Tim can you maybe discuss the tablet market a little bit in relation to Macs and other PCs is sort of how you are thinking about the cannibalization of that market for the iPad relative to the PC market? And then secondly, typically each quarter, you sort of talk about some of the component constraints and you certainly talked about iPhone 4 being constrained and the iPad mini is better, so as you enter into the quarter where do you see the challenges for meeting demand for the calendar first quarter? Thanks.

Sure. Let me take the second part of that first. I think overall our team did just a fantastic job ramping a record number of new products during the quarter. We did have significant shortages due to robust demand on both iPad mini and both models of the iMac that persisted the entire quarter. And we are still short of both of those today as the matter of fact. Additionally, supply of iPhone 5 which short to demand until late in the quarter and iPhone 4 was short for the entire quarter, we believe that we can achieve a supply demand balance on iPad mini during this quarter and on iPhone 4 during this quarter. On iMac, we are confident that we are going to significantly increase the supply, but the demand here is very strong and we are not certain that we will achieve a supply demand balance during the quarter. In terms of cannibalization and how we think about this, I see cannibalization as a huge opportunity for us. One, our base philosophy is to never fear cannibalization. If we do, somebody else will just cannibalize it and so we never fear it. We know that iPhone has cannibalized some iPod business. It doesn’t worry us, but it’s done that. We know that iPad will cannibalize some Macs that doesn’t worry us. On iPad in particular, we have the mother of all opportunities here, because the Windows market is much, much larger than the Mac market is. And I think it is clear that it is clear that it’s already cannibalizing some and I think there is a tremendous amount more opportunity there. And as you know, I have said for two or three, actually three years now I believe that I believe the tablet market will be larger than the PC market at some point. And I still believe that. And you can see by the growth in tablets and the pressure on PCs that those lines are beginning to converge. And I think the other thing for us maybe not for others, but for us is if somebody will buys an iPad mini or an iPad and it’s their first Apple product, we had great experience through the years of knowing that when somebody buys their first Apple product that a percentage of these people windup buying another type of Apple product. And so if you remember what we had termed the halo effect for some time with the iPod, with the Mac, we are very confident that, that will happen and we are seeing some evidence of that on the iPad as well. And so I see cannibalization as a huge opportunity.

Thank you, Scott. Can we have the next question please?

And we will go to Mark Moskowitz with JPMorgan. Mark Moskowitz - JPMorgan: Yes, thanks. Good afternoon. Question Tim around the iPhone, Peter gave some transparency around the qualitative sequential and year-over-year potential increases in the iPad for the March quarter. How should we think about the iPhone family against that in terms of year-over-year and quarter-over-quarter potential increases or decreases, and are there any sort of dynamics around slower pace of LTE rollouts by the network carriers having an impact?

Mark Moskowitz - JPMorgan:

Mark Moskowitz - JPMorgan: Okay, thank you.

Thanks Mark. Can we have the next question please?

From Deutsche Bank we’ll go to Chris Whitmore. Chris Whitmore - Deutsche Bank: Thanks. Just a follow-up on the iPhone question with respect to the guidance, just, assuming there is some benefit from the Mac carryover effect and iPad release etcetera, and adjusting for the inventory, it seems you are guiding to kind of mid to high single-digit year-on-year unit growth for the iPhone business from a sell-through standpoint. Is that the right ballpark we should be thinking about and why the big deceleration from the 25% plus kind of weekly sales rate you quoted in your intro comments?

Sure, Chris, it’s Peter. We are not going to talk about guidance at a specific product level, but let me give you some things we thought about in coming up with the range of $41 billion to $43 billion. It is that range is a 5% to 10% year-over-year increase. And there are few factors that are impacting the year-over-year results making the strong performance of the business a little bit harder to see. So, let me point a few of these out. First of all, as we have talked about several times on the call, last year in the March quarter, we’ve built 2.6 million units of iPhone channel inventory, which allowed us to get into our 4 to 6-week range. That increased the revenue in the year ago quarter by $1.6 billion. And as Tim talked about that was sell-in that was not sell-through, we are thinking about the business on a sell-through basis. So, don’t lose sight of the 1.6 billion. Second, the iPhone 5 rollout this year, has been our fastest ever. We are selling in 100 countries by the end of December. Last year, we did not achieve this country distribution until the March quarter, which included China that we launched in January. Third, we made a very good strategic decision to introduce the iPad mini which customers love and to keep the price reduced iPad 2 in the line. As a result of this, we saw a reduction in our iPad ASPs of about $101 year-over-year in the December quarter. And you can see that, our iPad units grew faster than our iPad revenue in the December quarter. We would expect iPad ASPs to be down quite a bit in the March quarter on a year-over-year basis for the same reasons. And then finally, the PC market grew 4% last year in the March quarter, and this year IDC is projecting that to decline by 3%. So, considering these factors, the underlying performance of the business is much stronger than the 5% to 10% year-over-year growth implies and we remain very confident in our business and our new product pipeline. Chris Whitmore - Deutsche Bank: And for my follow-up I wanted to come back to something Tim said earlier about that you are not fearing cannibalization; I wanted to ask in context of your iPhone business given the strength you are seeing at the low end of your product line the iPhone 4 being stocked out during the quarter. There seems to be a lot of demand at lower price points for the iPhone, why not get more aggressive at lower price bands and move down market in the iPhone business? Thanks.

I am not going to go into our pricing strategy, but we feel great about the opportunity of getting products to customers and a percentage of those buying other Apple products. And that we have obviously seen evidence of that through history and continue to see evidence of that today.