Greg Klaben - Vice President of Investor Relations Ken Kannappan - Director, President and Chief Executive Officer Barbara Scherer - Senior Vice President, Finance & Administration and CFO

John Bright - Avondale Partners Reik Read - Robert Baird Manny Ricari - Kaufman Brothers Paul Koster - JP Morgan Tavis McCourt - Morgan Keegan Ingrid Ebeling - JMP Securities Bill Devalum - Seaton Capital Management. Ro Shopra - R. Morgan

Welcome everyone to the first quarter earnings call. (Operator Instructions) Mr. Klaben, you may begin your conference.

Joining me today to discuss our first quarter fiscal 2009 financial results are Ken Kannappan, Plantronics President and CEO, and Barbara Scherer, Senior Vice President of Finance & Administration and CFO. I would like to remind you that during the course of today’s conference call, we may make certain forward-looking statements that are subject to risks and uncertainties as outlined in today’s press release. As we’ve highlighted before, the risk factors in our press release and SEC filings are not standard boiler plate. We update these risk factors every quarter, adding and dropping language and changing the order, depending upon the timing and potential impact of the concerns that we foresee. We believe forecasting the results of operations is becoming increasingly difficult and we ask you to focus particular attention on these risk factors that could cause actual results to differ materially from those anticipated by any such statement. For further information, please refer to the company’s Forms 10K, 10Q, today’s press release, and other SEC filings. Plantronics first quarter fiscal 2009 net revenues were $219.2 million compare with $206.5 million in the first quarter of fiscal 2008. Revenues were above the guidance range of $205 to $210 million. Plantronics GAAP diluted earnings per share were $0.42 in the first quarter of fiscal 2009 compared with $0.31 in the same quarter of the prior year. This compares to the GAAP EPS guidance issued on January 29th, 2008 of $0.36 to $0.30. Non-GAAP diluted earnings per share for the current quarter were $0.45 compared with $0.37 in the first quarter of fiscal 2008. Earnings per share were greater than the previously provided non-GAAP guidance of $0.33 to $0.36. The differences between GAAP and non-GAAP earnings per share for the current quarter are primarily the cost of equity-based compensation and a $1.7 million dollar tax benefiting resulting from expiration of the statute of limitations in certain jurisdictions on previous tax filings. I’d like to remind you that on the Investor Relation section of our website, we have an updated PowerPoint presentation as well as an analysis metric sheet with all the financials and metrics released today. With that, I’ll turn the call over to Ken.

We believe the key take-aways from the first quarter of fiscal 2009 are 1) revenue came in above guidance driven by a surge in Bluetooth revenue resulting from the California and Washington hands-free laws. 2) Enterprise market conditions grew weaker in the U.S. and Europe as a slowdown of the financial services sector spread to other industries and geographics. This is also affecting the consumers segment that favor product portfolios and help the relevant demand in our market segments that were offset in this impact. 3) Our strategic plan to increase margins is on track. Last quarter we shared our long-term goal of increasing operating margins to a target model of 15 to 18% by fiscal 2011. Despite a significant increase in our product mix, consumer products, our non-GAAP operating increased from 10.7% a year ago quarter to 12.3% last quarter. 4) We are pleased with better than expected retail product placements with pending all tech lancing and product introductions. We’ve received a positive response from buyers for these products and we believe are competitive in their price points. In our first quarter of fiscal 2009, we achieved revenue growth of 6% and non-GAAP operating growth of 23% compared with the first quarter of last year. Office and contact revenues declined by 7%. For the past few quarters, strengthened European revenues largely offset the weakness in the U.S., revenue growth year-to-year; however the June quarter our sales to Europe were flat for the prior year quarter we began to see some weakness especially within financial services in Europe. In Bluetooth, we achieved record revenue of $55.2 million up 52% from the same quarter last year. It was driven by growth in all geographies. The sales were particularly strong in North America as a result of the hands-free driving laws in California and Washington. While makes holding and talking on the cell phone while driving illegal, it requires a hands-free device for mobile phone use. In California, it’s considered a primary offense either in office there simply needs perpetrator engage in act to pull them over. The average ticket is expected to be $79, which compares favorably with the price of a Bluetooth headset. I thought you might appreciate a summary of how much this law is intended to help people. Public policy institute of California is a non-profit, non-partisan institute, which studies the effects of California legislation. Study the impact by looking at data available on hands-free laws adopted already. In particularly in New York, where years of both pre and post law traffic collision data was available. To do this massive study to look at thousands upon thousands of data records resulted their analysis which they believe the totalities dropped over 20% in New York as a result of the law. Well they didn’t attempt to determine why the law was effective. The data is fairly clear that there was only a modest benefit under good road conditions with little traffic. Presumably even if you veer outside your lane while making a turn it doesn’t matter much in those cases, but there was a dramatic drop in totalities in cool weather and during rush hour conditions. Obviously these are the types of situations which steering control is more important. In extrapolating this data to California, which has drier weather and fewer icy winter roads, they assume that there will be considerably less benefit, but even in California they estimated that the law would save one to three people each day from 300 to 900 lives each year. Because even this study was an exhausted exercise, they did not attempt to directly estimate the number of injury accidents from property damage of law. But applying the same percentages that applies to 25,000 to 60,000 injury accidents would be avoided each year and $300 to $800 million of property damage and repairs would be avoided. So far we’ve been very pleased with California highway patrol, appears to be interested in informing the public about the law and enforcing it. Hands-free adoption in these states is the biggest catalyst we’ve seen in our history. Unit sales were up sharply and we’ve experienced the best utilization of our manufacturing plant in China and the highest product margins are history. A recently introduced product discovery 925 was proudly received by the market and our market position remains strong. While forecasting longer term impacts the hands-free laws of Bluetooth headsets is challenging, the following factors make California’s adoption different than past stated adoptions. 1) The critical mass of the number of drivers in the state of California allowed retailers to execute marketing programs. 2) The California highway patrol publicized a law putting signs up over freeways and engage in other activities to publicize it. They issued 1,000 citations in the first week and 2,500 by the end of the second. 3) Marketing by carriers and other Bluetooth headset vendors also helped increase awareness. 4) The category itself is gaining increasing acceptance and the prevalence of Bluetooth and cell phones also are continuing to grow. In past state adoptions, we experienced a spike in revenue in conjunction with the law’s effective date followed by a subsequent drop. Resell orders responded to the spike by overestimating the duration of demand and some other vendors leading to over-supply and pricing pressure before the market settled. We do believe that the overall category acceptance has improved. We are concerned that the industry may overestimate future demands. There are two other catalysts, one positive and one negative, that we believe will affect the Bluetooth headset market going forward. The first one which is the negative one is the increasing number of automobiles that offer Bluetooth as an option built into the car’s sound system, which we believe will increase over time and substantially impact voice-only Bluetooth headsets. The second is music, which we believe is significant positive. It is just not possible to enjoy music from an iPhone or any other music phone. Without an accessory, this market is primarily outside of the car. The strategy analytics estimate the handset sales will approach one billion units in 2012 and that 86% of those handsets will have stereo Bluetooth or 856 million units. Stereo Bluetooth handsets are expected to increase approximately six fold and use from music will also increase. The resulting impact on headset sales could be dramatic. Strategy analytic estimate stereo Bluetooth headsets going from 4 million units in 2007 to 30 million units in 2012. We believe this is a much bigger catalyst for headset sales and hands-free driving legislation and we offer a very competitive portfolio of products made for stereo Bluetooth and excited products to address this market opportunity. Now I’d like to turn to unified communications. Despite the economic environment, we remain very confident in our competitive position in all of our markets and the long-term opportunity unified communications creates for office headsets. In April, research issued a report on unified communications based on a survey in 300 major enterprises in North American and Western Europe. They found that despite weak economic conditions, corporations and major enterprise employees invest in a broad range of technologies and applications. Some increased their usage spending this year. According to the report, the catalyst for adoptions are many, including improving UC communications across the business, better communications and collaboration for distributed sites and remote workers. Very important in the current economic environment, lower total cost of ownership provided by UC. We are seeing a lot of activity among our customers from research by Unified Communications increasing our confidence it’ll serve as a strong catalyst to increase adoption with headsets in the office over the long term. The remainder of the fiscal 2009, we will continued to be focused on maximizing long-term sustainable revenue and earnings growth rate by 1) strengthening our core brand values of sound, style, and simplicity. 2) Maintaining revenue growth in a challenging economic environment. 3) Improving profitability despite increase in cost pressures and cost of business. 4) Focusing on fewer objectives and try to execute better. With that, I’ll turn the call over to Barbara to cover the first quarter in more detail.

Overall Q1 was a very strong quarter for us with revenues, GAAP, and non-GAAP EPS all better than the first quarter last year and above the high end of the guidance we provided in April. Our ACG segment had a record quarter in revenues primarily due to Bluetooth offset in part by a decline in our B2B business, which was affected by the continued economic slowdown in the U.S. In addition, we started to see the effect of the economic slowdown in our B2B business. Our AEG revenues were in line with our expectations. Year end $0.45 non-GAAP EPS, $0.09 cents above the high end of our guidance range. On the strength of both the higher revenues and sound strip progress on consumer margin improvement than we forecasted. Turning to the audio communications group segment, revenues of $198.5 million were up approximately 7%, or $13 million compared to the first quarter last year. The growth was driven primarily by our Bluetooth headsets for cell phones, with revenues up 52% or $18.9 million from a year ago, offset partly by a decrease of $9.4 million or 7% in office and contact center headsets. $8.7 million of the decline in OCT came from professional grade corded products and $.7 million was due to office wireless systems. Revenues by major product category were office and contact center $122.8 million, down 7% from Q1 a year ago. Mobile, $59.9 million, up 45%, PC and gaming, $9.6 million, was up 48%, due primarily to the transfer of certain PC headsets managed by AEG to ACG. AEG had about $1.7 million of such headsets in revenue Q1 a year ago, and Clarity at $6.2 million, up approximately 10%. Geographically, ACG’s growth in net revenues was up 4% domestically and up 11.5% internationally, resulting in a 62:38 domestic international mix compared to 64.36 a year ago. The decline in domestic revenue in ACG was primarily due to our OCC revenues, which were down 14% compared to the first quarter last year, offset by strong demand for a Bluetooth headset. In the US, sell-through for our commercial distribution channel was down 4% sequentially and 5% year-over-year. The US commercial distributors who report this sell-through information to us represented approximately 30% of total ACG segment revenue for the June quarter and those distributor inventories were essentially unchanged at the end of June compared to the end of March. ACG’s non-GAAP gross margin was 45.2% compared to 46.6% in the June quarter last year due to a less favorable product mix compared to that first quarter; however, despite the lower gross margin of consumer products compared to professional grade products, we increased the margin on the consumer products themselves. Our work to improve consumer gross margins, in particularly the gross margin on Bluetooth headsets was directly in line with our strategic plan to improve overall profitability. We demonstrated significant progress toward our FY11 target model. In fact, if we had not experienced the decrease in OCC revenues due to the economic factors, the ACG gross margin would have been even more solidly in the 45 to 48% range in Q1. Mobile was 30% of revenues compared to 22% in the first quarter last year and OCC revenues were down from 71 to 62% of total. We were able to partially overcome this mix shift and post a higher than expected gross profit margin by improving profitability in Bluetooth products and improving operationally in areas such as provisions for excess and obsolete inventory, warranty, costs, and overall manufacturing effectiveness. On a non-GAAP basis, our operating expenses increased approximately $3.2 million or 6% and declined as a percent of net revenues from 28.9 to $28.6% and as a result of all the ACG, Q1 non-GAAP operating margin was 16.6% compared to 17.7% in a year ago quarter. Our target model for ACG continues to be 45% to 48% gross margin and 18% to 20% operating margin. If we had not experience the $9.4 million reduction in OCC revenues due to the economic environment, particularly in the U.S., our ACG operating margin would also have done solidly in our target range. Now I’m going to turn to the audio entertainment group segment. AEG revenue was down slightly $.3 million compared to the same quarter a year ago; however, that year ago figure as I’ve mentioned, included Altec branded PC headsets, which AEG was responsible for back then. We consolidated responsibility for all PC headsets, regardless of brand, within ACG effective July 1st last year. That means that the results for Q1 FY09 are not entirely comparable to Q1 last year. Demand of revenue included in Q1 FY08 for AEG, it related to PC headsets was about $1.7 million. Setting that aside, AEG had some growth, principally in its PC audio and headphone product lines. Compared to a year ago, gross margin improved by 19 points from a loss to positive 8.4%, primarily as a result of the initiative to reduce surplus inventory through a concerted sales effort. Gross margin was also positively affected by more effective management of net pricing, approximately two points of the total improvement and the manufacturing restructuring initiative taken last fall. The manufacturing restructuring initiative added nearly three points to gross margin compared to year ago quarter. Non-GAAP operating expenses in AEG were down approximately 10% compared to the year ago quarter. In addition, in an effort to further reduce cost, AEG underwent a reduction in force toward the end of Q1, which is expected to yield annual savings of approximately $3.4 million. This principally affected employees in Pennsylvania. I think you can see the AEG management team is working hard to reduce cost and return the division to profitability. The non-GAAP operating loss for AEG was cut from $10.8 million in the first quarter a year ago down to $6 million this quarter. Our consolidated effective tax rate for the quarter was 23% on the non-GAAP basis compared to 24% in the year ago quarter. The decrease of the non-GAAP rate resulted from a shift in profits to outside the U.S. where it is taxed at a lower effective rate. The first quarter non-GAAP tax rate was consistent with our guidance provided in April. Our GAAP tax rate of 14.4% is lower than our GAAP tax rate of 22.3% in the year ago quarter, primarily due to a $1.7 million tax benefit in the current quarter resulting from the expiration of certain statutes of limitations with respect to tax filings we have made. As a result of all of that, our Q1 consolidated non-GAAP net income increased 23.8% from $17.8 million to $22 million. Foreign exchange did help our results, but only marginally with the weaker dollar against the Euro and pound helping revenues and gross margins, but also increasing expenses in our hedge loss. The dollar weakening against the Chinese yen and Mexican peso, however, negatively impacted gross margin. All in all, we estimate that our results were favorably affected by less than a penny in the first quarter due to FX. Turning to the business outlook, we have considered the historical patterns that we typically see in the September quarter with respect to bookings of our actual revenue and quarter-to-date bookings and backlog position and input from channel partners. We are building in some risk of a further slowdown in Amaya based on the slowing economy there, as well as the slowdown in the U.S. economy continuing to negatively affect our OCC business. Please also remember that with our book and ship business model, conditions can and do change rapidly. With those caveats, we are anticipating revenues to be flat to down for ACG, and up a little for AEG in the September quarter. The typical seasonal pattern for AEG in September is for revenues to be up, although significant revenue growth in AEG is not likely until the December quarter. We are anticipating that Bluetooth revenues could be up and remain strong, but could also decline after the spike effect from the California and Washington hands-free law and we do expect OCC revenues to be down particularly in Amaya. We therefore expect a less favorable mix in the ACG segment than we had in Q1 last year, but we also expect to reduce losses within AEG significantly versus Q1 a year ago. On a consolidated basis, our growth and operating margins should therefore be relatively close to what we achieved in a year ago quarter. So based on all that, we’re estimating a consolidated net revenue range of $210 to $220 million with non-GAAP EPS of $0.35 to $0.40. We’re continuing to expect about a $4.3 million non-cash charge under FAS 123(R) for equity compensation expense which will result in a target GAAP EPS range of $0.29 to $0.34 cents. Turning to the balance sheet, cash, cash equivalents and short-term investments increased by $27.1 million sequentially and increased $79.8 million since the first quarter a year ago. We ended the quarter with approximately $190 million in cash and cash equivalents. In the first quarter, we generated over $34 million in cash provided by operations, as well as approximately $2.4 million from stock option exercises and the sale of treasury stock, offset partially by approximately $4.8 million for use for capital expenditures and $4.8 million for dividend payments and repurchases of treasury stock. Our inventory returns were flat at 3.6 to 3.7 compared to the same quarter last year and our DSO increased from 53 days to 54. Our inventory at year-end includes approximately $5.7 million in safety stock of the chip set used in our wireless office headsets. We intend to continue to increase the level of safety stock over the course of FY09 and consume that safety stock in future years. Capital spending was $4.8 million, lower than deprecation and amortization of $7.1 million in the quarter. Capital spending as a percent of revenue was 2.2%. Our focus on asset utilization has paid off with net property plant and equipment relatively flat down $.4 million compared to the year ago and we also had the $4.3 million for amortization and equity based compensation expense. And with that, I will turn it back over to Kara, the conference facilitator for the Q&A session.

(Operator Instructions) Your first question comes from John Bright - Avondale Partners. John Bright - Avondale Partners: Great quarter on the mobile side the equation, understanding the sustainability of that certainly is going to be a question, but I do want to talk about the OCC market. That’s a tough one, Ken, but are there are levers that you can pull given that this is likely a price sensitivity issue right now to maybe push people over the edge for some of those headsets.

John, what we’ve found in the past is that it’s actually not a price sensitivity market. It’s a desire market and acts as something that I would call beyond reconiam. We don’t effect the actual elasticity of demand and we’ve done quite a number of tests on this and we’ve done a lot of research, but of course real world tests are the ones that really matter. The simple issue is that if a professional really wants the headset, they typically buy it. Usually the company winds up paying for it. Small differentials in price don’t really effect the aggregate market adoption of the category. What happens is if people cut price, of course they can gain and then market share shifts and typically those prices get matched and so no market share shifts and just simply the size of the total market actually decreases measured in revenue and stays flat measured in unit. What we believe is occurring during this period is that the level of economic activity is declining and in particular it is really unfortunately hitting a number of our key market segments. We have long indicated that some of the highest adoptions of vertical unfortunately include many of you on the line in the financial services sector and it’s a high adoption market for contact center. It’s a high adoption market for office and so we think that’s what’s hurting economic activity for us. We don’t really believe there’s going to be much price sensitivity. The other thing that happens when people reduce prices are sometimes you get people to buy now, but then you create a trough for later and we’re really not interested in resulting in that type of thing either by channel dealers or end users and that’s typically where that shows up. John Bright - Avondale Partners: On Altec, today or this morning, Logictec held their conference call and they cited PC speaker weakness in the marketplace. In your prepared remarks, you talk about better than expected retail placement for soon to be announced Altec products. Is there something I can correlate between those two?

No, not really. I think that our PC speaker revenues did not decline, but I would say honestly that they are a larger total player in that segment. What I was referring to was forward-looking and I think that they were talking about the results from their existing June quarter and I would also say that although I was talking across the business, that more of the placement are actually going to be on the docking audio side than on the PC speaker side, although there will be PC speaker placements as well, but we think will go well, but that was a forward-looking comment not a comment relative to the June quarter and therefore not really comparable to the results experienced from Logictec.

Our PC audio revenues within AEG were up about 10% and so that does compare favorably to the remarks at least the Logictec name.

Your next question comes from the line of Reik Read with Robert Baird. Reik Read - Robert Baird: Going to the call center side and I know you don’t always have perfect visibility into this, but what business trends are you seeing there? Are you seeing a reduction in seats that’s causing some weakness or relatively stable at this point?

We do think that there has been some reduction in seat. Where you see the most dramatic impact is usually that there are a significant reduction in new operations, which are the Greenfield sites that are a very significant and important piece of the business. Clearly, the placement business still continues for the contact center, yet there are with the lower level of economic activity, headcount usually declines a little bit. We did certainly within the financial service sector have a number of customers that had larger headcount reductions within that segment. Reik Read - Robert Baird: On the Bluetooth side of things, maybe ignoring the boost you saw from California and Washington, can you just talk about the underlying demand in that market?

First of all, we do think that the category as a whole has been gradually gaining acceptance and I mean this in a long cycle social structure. As you recall, going back some time in the early days, it was considered by a lot of people pretentious and rude when you were using a cell phone. In the early stage of Bluetooth headsets between their design and the lack of commonality of it, it was one of those things where people were saying hey, only for a geek, not for me. I think what we’ve seen is there’s been increasing acceptance of this category for people who want to use it that they’re increasingly comfortable going ahead and buying and using this type of product. With the advent of the hands-free laws in California, we think that’s taking another significant positive step forward. It’s increased in social acceptability. Of course, as we mentioned, the base in this with Bluetooth phones has also increased dramatically. So those are just positive things. I do think that the data we have and I will say that it is by no means perfect at this time, it does suggest that a significant portion of the revenue increase for the industry as a whole in the June quarter was due to these hands-free laws suggesting that the underlying market growth is a little bit lower than expected, based upon the sell off data that we’re able to get by geography, which again is not complete or perfect. We do think that our own portfolio has been increasingly well accepted, both on the high end but we’re not on the very low end, but the low end of our range. The low end of our range, it’s the best of class product, it performs well, it’s simple, and it’s reliable. At the high end of the range, the 925 by people who’ve used it and any other competitive product, it’s preferred. When you go to Amazon or anywhere else and the people who’ve actually used more than one, they like it the best. It’s light, it’s comfortable, it works well, and it’s got great sound, very convenient. So we think we have done well in both of those kinds of extreme segments of the market as well as in the mid-range part where we feel very well to the business user and particularly the individual who wants to be able to use it in combination with their other office communications equipment. Reik Read - Robert Baird: Barbara, I thought as part of your comments you had suggested at least I thought that Bluetooth could be up sequentially and I take it that you’re seeing good follow through from the two hands-free laws at this point. I understand that it’s very difficult to tell when that tailwind will end, but as of now I’m taking it that things continue to go well?

Well it’s partially perhaps some tailwind, but we also have additional placement this quarter of some of the products such as the Discovery 925 while launched last quarter, they weren’t launched everywhere.

We didn’t have enough supply to see all channels in the first quarter.

And then are other new products. So the major resets for consumer products are in the spring and fall and the fall is bigger and so we have new products that we’re introducing and placing in the consumer Bluetooth space just like we have in the Altec space and we expect to have incremental revenue from that. So it’s potential that Bluetooth could be up sequentially. It depends how much of the organic new, the increased market share and some of the tailwind is offset by the spike on the Q1 side going away.

Your next question comes from the line of Manny Ricari with Kaufman Brothers. Manny Ricari - Kaufman Brothers: To touch on the OCC, I think, Barbara, if I heard you correctly that the wireless was down year-over-year?

It was. It was just 700,000, but it was in fact down. It was 1% down. Manny Ricari - Kaufman Brothers: Is there anything going on within that market? Is it just the economic conditions or do you see the transition from wire to wireless now slowing?

No, this is really the first quarter that we’ve seen a sharp slowdown in Europe and it was broad in Europe, not just wireless office but also corded, and the economies there are definitely slowing and with that decline factoring in it led to this slight year-over-year decline in total.

We do think the wireless products do map pretty heavily to financial services and so that is part of the reason they were proportionately weaker to the prior very strong relative strength.

Relative to quarter, they’re still much stronger. The quarter is down $8.7 million and we’re only down $700,000 in wireless office, so relatively I think they’re still holding up, actually quite nicely given the environment. Reik Read - Robert Baird: Question on the margin side, you spoke about that Bluetooth really helped drive the utilization in China. Can you talk a little about where you stand with the utilization overall?

We definitely have the ability to produce far more product in China than we are producing, so yes there is room for further improvement. I don’t have the exact utilization, but in general, we’ve been only on one shift. So in general, we still have plenty of room to increase. Reik Read - Robert Baird: Curious, with the Olympics there, that doesn’t impact your manufacturing at all there. It’s not closing down for a month or anything like that, right?

No we’re pretty far removed from Beijing. We’re about an hour and a quarter out of Shanghai.

Your next question comes from the line of Paul Koster with JP Morgan. Paul Koster - JP Morgan: It sounds like you reached the point where the wireless gross margins are at least as good as corded on a consistent basis in both segments. Is that a correct statement?

Not entirely, but they’re really pretty close within the OCC world, both way above segment average. There is a separation there, but it’s not that significant. Paul Koster - JP Morgan: Judging by your answers to the prior questions, the primary reason for improvement in the Bluetooth gross margins has been volume.

Volume has been a plus, but we’ve done a lot of things to improve the profit margins, including the actual products themselves, cost reductions in them, the new products having better cost value ratios, other thing that we have worked to improve every element of our total cost structure.

Actually volume helps, but if you just look at the relationship between the net realized price and the standard cost which does include an alarcation of overhead, that relationship has the single biggest improvement versus a year ago and that just goes to fundamentally how you’re designing the product or the price point and then your ability to actually realize the price point that you design for. That’s the biggest improvement relative to volume. Maybe there’s like a point from volume. E&O is lower. We’ve been doing a much better job of managing that. Warranty has gotten a bit better, but the biggest improvement is just on the fundamental relationship of what you can sell it for to what your product cost is. Paul Koster - JP Morgan: In your prepared remarks, you talked of stereo sales as a big growth opportunity in Bluetooth. What percentage of your sales in the consumer segment relate to a stereo product?

It’s a small percentage that relates to headsets or for mobile. Of course, there’s a variety of products we’ve been selling under Altec as well. We have had a couple of products that have some level of sales. I don’t have the percentage handy, but I think it’s included on a situation where we were a little early to that market opportunity and often in the very early stages there is an OEM dominated segment where they’re able to supply the phone and the accessory and then it begins to become better for the market vendor as well. Paul Koster - JP Morgan: Has the competitive landscape in either segment on the headset side significantly in the last few months.

Not really, there have been various announcement and other things, but we really don’t think there have been at the end of it significant changes in the last couple months.

Your next question comes from the line of Tavis McCourt - Morgan Keegan. Tavis McCourt - Morgan Keegan: Barbara, did you give us the revenue figures within AEG between the computer speakers and the docking stations?

No I didn’t, but we had actually quite a number of categories, but the PC speakers were $9.2 million, docking audio is $9.8, headphones were $1.4 and then there’s about $300,000 of other. Tavis McCourt - Morgan Keegan: Did you give an actual dollar amount, round figures of what they meant this quarter in terms of dollar amount?

A couple of comments back on that. If you’re referring to the Bluetooth sales, let me just explain that we sell our products with very rare exception to nationwide resellers, whether those are carriers or retailers, and they don’t dedicate those inventories to particular locations. Almost all of those resellers and carriers provide us with sell off information. Traditionally have not given it to us by geography on these sorts of consumer products. In this particular case, they are giving us some information by geography, but we don’t have it all and have it complete and that results in there being a little bit of incompleteness in how we can answer that question. Again, we do think that at the end of it for the industry as a whole, most of the revenue increase appears to be due to the California and Washington hands-free laws. We think that we may have gained a little bit above that level due to the strength of some of our product portfolio. Tavis McCourt - Morgan Keegan: In terms of the sales and marketing trend as we go forward through this year, you historically have done a pretty decent job of dialing sales and marketing back and forth depending on overall demand levels in the economy. Is that something you’ll look to do if you continue to see weakness on the enterprise side or where you’re more taken some share through this downturn?

I think that our expectations we’re unlikely to see significant market share movement and it’s probably a period of time where the weakness that we’re seeing in the market is reflective of the economic conditions. If we found a productive use for marketing dollars by spending them, we’d actually increase adoption and increase the category, we’d actually do that, but I do think this is a situation where in general it’s harder to get a good opportunity and so it’s more likely that we’ll reduce slightly in that area. Going against that, we’re still very, very bullish on this long-term opportunity and significant opportunity for value. So now it’s rationing back to boost earnings in the short term. We’re trying to be intelligent with our spending. We do think this economic recession is related and it will bounce back when the economy is recovered. Tavis McCourt - Morgan Keegan: Did the U.S. business get weaker this quarter than it was the previous quarter or at a similar level than last three quarters?

It did get weaker, but only marginally. We’re actually down a million dollars from $70 to $69 million in the U.S. sequentially. Year-over-year, it’s actually the worst comparison, because we’ve peaked at a little over $80 million in the U.S. in Q1 a year ago. We dropped almost a million dollars Q4 to Q1, but that was actually the smallest sequential decrease we seen in fourth quarter decreases that we had in the U.S.

Your next question comes from the line of Ingrid Ebeling - JMP Securities. Ingrid Ebeling - JMP Securities: I was wondering if you could give us an idea about what you’re seeing on the Bluetooth in terms of ASPs and I know it’s early, but how numbers have been thus far this quarter and if you could comment on how a tax rate for Bluetooth will fare given a number of higher end smart phones such as the iPhone and others that we’re starting to see become more popular with consumers and what your take is on what type of a tax rate we could see with the higher price smart phones.

So in general, ASPs remain fairly good. I think what we’ve seen is the significant period of time of significant price erosion, now with California leaving that aside for a second, but more and more Bluetooth buyers, aside from that surge, were becoming more knowledgeable repeat customers and I think also many of those higher end phones, people want something that’s going to work and work pretty well. So those things seem to be favorable to us. We do think tax rate have been rising very slowly again with the surge coming here from California. There may have been some other questions buried in what you asked or that I don’t recall in what you asked. If I missed a point, can you repeat it? Ingrid Ebeling - JMP Securities: Just wanted to see if you have a sense of how felter rates have been thus far in July.

We’ve got a small amount of data. The reason I’m hesitant to share it is that 1) some of you analysts I know do spot checks on various channels and they’re not always correlated terribly well to each other or to our overall business and at this point in time we have extremely limited data in July which normally lags. We see some people do give it to us on a week-by-week basis, but it’s a minority and therefore this information might be misrepresented, but I’m going to share it because it’s negative and that way it’s in the interest of product. When it gets to be a drop in July, which was what we expected and consistent with the fact that the hands-free law went into effect July 1 and therefore the first week of July the decrease was something we anticipated and I do want to caution that very limited data. Ingrid Ebeling - JMP Securities: Barbara, could you please repeat your commentary on the outlook is for the AEG segment profitability. I missed that.

We’re expecting revenues to be up somewhat sequentially in the September quarter. We’re expecting to have a good reduction in losses compared to a year ago and we’re continuing to target break even for the December quarter. Ingrid Ebeling - JMP Securities: And profitability quarter-to-quarter, do you have any comments on that?

Not beyond what I just said. No.

Your next question comes from Bill Devalum with Seaton Capital Management. Bill Devalum - Seaton Capital Management.: First of all, would you please discuss the share buyback that you did in the quarter and what your thoughts are going forward and then secondarily, as one of the few folks that does not own an iPhone today, would you please describe the behavior that you’re seeing from those consumers when it comes to headsets and incorporating music into their headsets.

I don’t have the exact number of shares repurchased, but about $2.4 million in use of cash during the quarter on the stock buyback. We still have a substantial amount left under the authorization and we’ve been buying under predetermined formulas a certain amount per day. Bill Devalum - Seaton Capital Management.: Relative to your thoughts going forward with the share buyback programs.

We’re planning to continue it in essence. It’s a previously announced program that we’re operating with and continues to be accretive. So there’s no plan to change that program.

We still intend to execute on the plan that’s already been announced and a longer term sense we absolutely try to use excess cash flow to improve shareholder value and we’ve done I think 17 stock buyback program or something, so we intend to do these over time.

Let me switch to the iPhone for a second. Although if you have further questions on the share buyback, let us know. We’ve generally found good acceptance of our premium products with the iPhone customer at this point in time. The 925, which is in those stores is being very very well received with that product. The iPhone, although it is very much a music phone, ironically it does not actually have stereo Bluetooth enabled in A2DP and therefore you are seeing less stereo Bluetooth being sold with that phone than you might otherwise had hoped for and of course it does at this point with a corded stereo solution so it is remaining more of a corded market than a stereo market, although over time we expect that to evolve.

Your next question comes from the line of Rose Shopra with R. Morgan. Ro Shopra - R. Morgan: The restructuring that’s ongoing in Asia, what’s left to do over there which is driving you to break even?

In Asia, that’s with regard to the Altec business and essentially we just need to finish the liquidation process of those legal entities which involve final audio and final tax filings and more administrative matters and so we have some staff and some expenses associated with wrapping up those items, but in the least, on the Hong Kong facility I want to say it’s November and so we have some continuing expense from that as well, but essentially operationally things are done. It’s just we don’t have 100% of the benefits and the numbers, but it’s close to that at this point, worth about 3 points or so in comparison to a year ago. Ro Shopra - R. Morgan: Speaking with AET just for a second, a sense of the new products which are upcoming for the fall? Docking audios, headphones, can you give us a sense there?

There’s a range of products and I don’t really want to go into the specifics. It’ll be good enough, so to speak, but we think that there are a couple of very significant innovations in the docking audio line, less so but still some in the other parts of the business. Ro Shopra - R. Morgan: How have fuel prices impacted you this quarter, inbound/outbound shipping?

Costs are broadly under pressure in a couple of things on the fuel prices. First, the cost of plastic has gone up pretty substantially, because the cost of petroleum, secondly because China recently removed the subsidy on the petroleum in the country and so that affects plastic and then of course logistic costs are broadly affected by petroleum. I don’t know what Barbara answered the numbers specifically, but there’s no question in a lot of areas of the business we have seen rising cost into a greater degree than we had expected. Barbara, can you give us specific numbers?

I’m finding the right year-over-year comparison. Give me one second here. Ro Shopra - R. Morgan: Why don’t I ask this last question. I just want to get a sense of the lead time that is required for an order of Bluetooth headsets to get into the channel. Like how much time does it actually take? How much time do you have to get it there?

Well it depends. Sometimes somebody is buying what I would call completely standard products from us in relatively modest quantities and on a routine order they expect us to ship it the next day and it’s not necessarily a big quantity and we frequently do. Sometimes we’re dealing with a large order and the order may be more involved and we have to put it into their package or there’s some other variation or the order size is particularly long and then the lead time particularly as a result of that order we often have some other capacity constraint and need to add incremental tooling or something like that, could stretch out into months. Ro Shopra - R. Morgan: The reason I’m asking, Ken, is at the end of I think last quarter and it’s in the transcript where you threw cold water on the fact that the California legislation may not offer the upside to Bluetooth headsets and I’m just trying to figure out would you not have known at that time that orders were coming in? If there were that many Bluetooth headsets to be sold or shipped to California or Washington, would you not have known at that time?

The answer is we know some stuff. We don’t know everything. Much of the sales that we’ve had there is that in response to people who were already buying our products, buying more of our products. One of the exceptions to that really is the 925, which is a new product, but that in essence was sold out anyway in terms of our supply constraint. Ro Shopra - R. Morgan: Then to follow on with that, would you not know that there’s going to be a certain amount of upside this quarter? I know you’re saying that it can be up a little bit.

So let me try to explain this a little bit better, because maybe I’m not doing a good job here. For large new placements, the customer requirements that have lead time, we can know with greater leads, but a significant amount of business is also well replenished in business based upon the actual sell through. The retailers do their best, including the carriers, to try to manage their inventory and supply, but they themselves are not actually sure in advance what the level of demand is going to be. Really with the exception of variations and market share and new product placement, most of which are not dramatic in most quarters. So a lot more of the business is based upon sell off and is based upon that model I gave you before of replenishing based upon what actually sells through and that the amount that sells through can vary. In this particular case in this September quarter as Barbara mentioned, there were a few more than usual orders with more lead time. They were a little bit larger and that’s part of the reason that we have somewhat greater optimism than we would normally have had in September quarter given what we would normally expect to occur with the California law.

I’ll go back to the fuel cost and just as it related to freight in on our ACG business, we’ve experienced we’re about a half point higher freight in as a percent of revenue compared to Q1 a year ago and in the case of Altec where the products are much heavier, we’re up 1.8 point sequentially. So a very significant impact on the Altec business and not inconsequential impact on the headset business, but we do have a lighter product and a greater density on our shipments.

There are no further questions at this time.

I would like to thank all of you for attending our call. As always, we’re always available if you have any further questions and we greatly appreciate your time. Thank you.