James L. Muehlbauer: The services business includes a number of different things. The 6% of sales includes our warranty business, our computer services business, our home theater business, our mobile installation business, and some of the other service elements we have, which are referred to in our previous filings around the warranty business, the 2.2% of sales. That is just one component of that services bucket and it happens to be the biggest component.

Mitchell Kaiser (Piper Jaffray): Would you expect services to be 6% inclusive of warranties for the whole year?

James L. Muehlbauer: It moves during the quarter, so it is about 6% for the entire year.

Bill Sims (Citigroup): You are growing the notebook computer business and continuing to gain market share. However, according to NPD, it appears the industry saw a sequential softening from July to August this year versus years past. Did you as well see that take place in the industry, and can you comment about what are you seeing in the notebook computer business?

David Morrish: We continue to see strong growth in terms of our computing notebook share and desktops are moving along nicely in that same environment and customers responded to our offerings during that timeframe. The biggest thing as well is we continue to see growth in our geek services as well. All combined, when we look at how Best Buy performed, we are pleased in terms of how customers reacted to our offerings. We did not see a significant pattern shift at all. It stood the same. There were some indications in the industry that a few players saw some softening but for the most part, it seemed to remain robust.

Gary Balter (Credit Suisse): You are in the markets that housing is getting hit - Florida, California, Michigan. Are you seeing big differences in those markets versus your other markets?

Darren R. Jackson: When we look across our business, we look at the strategic drivers of the business, our loyalty, our customer satisfaction, our reward zone, and adaptability. When we look across the U.S., what we are learning is that when we get it right with the customer, we can navigate an environment if we keep our head up and adapt. We were not thrilled with the financial results but we had a sense of satisfaction with the strategic results and that is what we saw play through. It just so happened that this quarter, that the strategic results, the financial results in places like Detroit, Michigan made a difference.

Brian Nagel (UBS Equities): Could you specify the product categories where you think you had particularly strong gains?

David Morrish:We have been picking up market share over the last 12 months in a significant way across most of our categories. We have combined our strength in hardware with our services. With the HD advantage program last September through Super Bowl and up until this year, we have seen significant gains across the portfolio of products in home theater. Beginning in February with our overt effort to connect Geek Squad services and hardware, we have seen acceleration in the PC business as well. Across all the components of what we consider to be the PC business - desktops, notebooks, peripherals, software, et cetera. On top of that, because we are combining it, our services business is picking up market share as well. It is across the board and it is more significant than we had seen prior to about 12 months ago. We are always opening up new stores, so that is always contributing. Our percent of new stores to our total though is less than it has been historically, so it is more of the core business that is gaining market share than it is new store related.

Robert A. Willett: In addition, we have also done well in gaming and also in digital imaging. Those areas we are investing heavily in and they are working well for us, and so the across-the-board picture is the right one.

Matt Fassler (Goldman Sachs): Could you put the second quarter home theater gross margin performance in context of how that should help you think about the second half?

Mike Vitelli: Last year, there was one thing that was evident for a growing increase in flat panel availability and we all started to notice that in the industry, that the opposite is true now, particularly in smaller screen sizes. As we had success in notebooks, a lot of the manufacturers shifted some of their small screen size production to notebook and monitor panels, so that now 32-inch and below are in tight supply, which is a positive in the sense of as far as pricing is concerned. Larger screens sizes are coming into the marketplace and that is where we are seeing the biggest increase in availability and in price declines right now, as those categories are starting to become more affordable. Looking out into the second half, we see more stability in the availability versus the demand and that will translate itself into a more positive third quarter activity.

Mike Voss (Alex Brown Investment Management): How much cash was used to buy back stock in the quarter, was it the full $3 billion or something less than that?

James L. Muehlbauer: It was the full $3 billion.

Mike Voss (Alex Brown Investment Management): It looks like you paid around $53 a share. How do you juxtapose that relative to the stock that never traded at that level in the entire quarter?

Ryan Robinson: The way that the math works on that is we only received a partial delivery of the shares underneath that agreement, so it is inaccurate just to take the number of shares divided by the dollar amount because there will be a supplemental delivery at the back end of the contract. The number of shares under that supplemental delivery is in the range that we talked about. It would depend on the market price but we would estimate it somewhere between 7 million and 12 million shares.

Mike Voss (Alex Brown Investment Management): When all is said and done, what do you think the average cost that you would have paid for the shares to be?

Ryan Robinson: It would approximate the volume weighted average price during the contract period, which runs from mid July through the end of the fiscal year.

Mike Voss (Alex Brown Investment Management): Would it be in the low to mid 40s, given that the preponderance of the shares has already been purchased?

Ryan Robinson: Yes. What we do not know is what the price is going to be between now and the end of February.

Scott Ciccarelli (RBC Capital Markets): What the outlook is on investment spending?

James L. Muehlbauer: We never stop investment spending in our growth options and we are gaining some of the benefits in our business and our expense model from previous expenditures. The performance in our Canadian business after initial years of infrastructure investment is an example of that. Our services business has grown after a number of years of investment spending behind that, so those are two real life examples showing up in our numbers today of leverage we are getting from previous investments. When we saw the results in our first quarter, conventional wisdom may have said to start to dial back in our investment. We did not do that. As a matter of fact, we pushed forward. We opened up more new stores in the first half of this year, almost 70% more than we did last year. We continue to see that as a strong growth vehicle and we look for options to continue to improve our expense structure going forward. We are not moderating the expense lever based on just the current environment we are in. We are continuing to push forward on our growth options because we think that is the longer term answer that makes our business model work and will deliver those consistent shareholder returns going forward.

Danielle Fox (Merrill Lynch): What do you expect to be different this year versus last in the promotional environment for Christmas?

James L. Muehlbauer: As we look at the back half of this year, consistent with what we said on the last call, we know that we are lapping a dramatically more promotional environment that we experienced last year, and our confidence in that around the performance for this year is predicated on what we have heard in the marketplace from the different constituents, being our vendors and our customers, around the experience they had in the back half of last year. Our intelligence tells us that we are going to have a more rational promotional environment. That is played out in our numbers to date. In our margins within the second quarter demonstrate that. We have a long way to go yet in the back half of the year but it is that collective intelligence we have in the external marketplace that has given us that view. The other things that we look at is the competitive environment from the store fronts that are out in the back half of the year has changed year over year. We have fewer competitors like CompUSA, we have Tweeter who has got fewer stores than they had last year, so there is less retail square footage in the space that we were selling products that allows us to accelerate for the customer. We have expanded our strategic relationship with HSBC and we are using that relationship to improve our loyalty programs internally, which is having a positive impact on our ability to provide customers with attractive financial offers to buy some of the larger ticket items in our portfolio. We continue to be happy with that relationship and believe that is bringing a competitive advantage in the marketplace for us.

David Morrish: In the PC business last year in the back half, there was a fair amount of angst around the transition of the XP operating system, and so a number of products were cleared out early by some competitors. That led to a rush at the end of the cycle. This year, it is a much more rational cycle in the PC business and Vista has also provided some level of stability in terms of, with its features and benefits, more customers are trading up in that space to enjoy those features and benefits. There are higher prices in terms of PCs overall compared to last year, and with regard to the transition costs that were experienced last year.