Robert A. Willett: What we are seeing as we go around stores at the moment is that the investments that we have been making, the work that the field teams have been doing, the investments we have been making from a technology and supply chain perspective are starting to pay dividends. The quality of execution in the stores at the moment is incredible.

Shari L. Ballard: When we head into this weekend and the upcoming weekends, we still have a lot of traffic coming into the store. We have a fair number of customers who come into our stores every day, looking to do business with us and leave without being able to do it because they can not find what they are looking for. The store teams in particular the online teams, are working hard to get at the large percentage of people that come in wanting to purchase and are leaving without that purchase. We see that as a huge opportunity for us with the traffic we have today to close out the holiday.

Gregory Miller (Morgan Stanley): How much of a positive was the lapping of promotional, particularly in television if you look versus a year ago?

James L. Muehlbauer: It is hard to tell when we pull apart the promotional environment last year versus the change in offers that we made but if you go back to the third quarter of last year, our gross profit was down 85 basis points and 30 to 40 basis points of that was driven by the rates we saw in the marketplace, particularly in home theater and notebooks during that time. We have been encouraged by the progress that we have made both last quarter and this quarter in our home theater space and it would be a mistake just to solely attribute too much of that improvement to the promotional environments. Our teams have gotten much more insight on the types of customer offers that drive the most interest in the marketplace and we have been refining our HDA advantage program over the year to get sharper on what our customers want and improving our margin performance in that space.
That was an important driver that we see as sustaining in the business. The promotional lever piece may have been in the 15 to 20, 25 basis points range but it is difficult to pull that apart when you look category by category, offer by offer.

Gregory Miller (Morgan Stanley): Is it fair to say that there was a portion last year that was just promotion but then there were other improvements made to structurally improve gross margin in those categories?

James L. Muehlbauer: We made some specific investments to respond to the competitive environment to put us in a position to win for both last year and going forward. Our fourth quarter performance bore that out and the way we have been building share in some of our key categories this year has been a continuing benefit of the statements we made in our choices last third quarter.

Gregory Miller (Morgan Stanley): On the negative side, was the pressure mix or was rate down within some of those categories?

James L. Muehlbauer: In the third quarter of this year it is primarily mix. Our gaming business is on fire. It is an area of high consumer interest and we continue to have that business mix greater. It is still going to be dilutive in the next quarter but we are going to see less of that as we start to lap last year’s strong gaming performance when there was greater availability of some of the initial hardware launches.

David Strasser (Banc of America): How do you think about this shift from the hardware to the software and when do you think that becomes more prominent?

Julie Owen: We are looking optimistically as we have seen a lot of the cycles in the past. You start out with usually a new hardware release and then follow with the software titles. They do not usually happen at the same time and we have had the same situation in this last 12 months with the releases. We are looking optimistically for next year in terms of the software that is going to continue to come out, especially as we seek a new kind of software in the social and casual gaming areas, so the Rock Band, Guitar Hero III, and then the excitement that we see for consumers around the Wii. We see a lot of enthusiasm from customers wanting to get a lot more engaged in the gaming experience, not only on the individual level but with their families.

David Strasser (Banc of America): Do you think that next year becomes a better gross margin, less comparables?

Julie Owen: There is an opportunity next year for us to continue to figure out how is the customer using the solution in their household and then what are the things that go with that solution? As people bring in more gaming systems, how does that connect to their home theater system, what other accessories and things do they need? We are going to be doing a lot of the same kind of work for the customer that TVs and notebooks has done around putting together the best offer that makes sure the customer is getting the full benefit of what they are trying to do.

David Strasser (Banc of America): What do you think are the products that continue to gain momentum versus products that maybe slowed down in 2008?

Bradbury H. Anderson: If you look at the balance of our products, we are optimistic about 2008, whether it is in the computer field, television field, gaming field, there is a lot of products that have good arcs. Plus combined with something we feel is that we are making improvements in our internal operation which allows us to grow businesses at a faster rate than they might growth otherwise.

David Strasser (Banc of America): If you put the macro out of it, do you think there is a better product cycle next year than there is this year, looking at it on a combined basis?

David Morrish: What we have been working on the last couple of years is get an understanding of our customers’ needs as they look at their products. We have been taking those needs to our manufacturers and developing products that allow us to shift what we are trying to build and we are focusing much more on the output of those machines and how do we create an experience for the customer. As you read through our circular, what you have seen this year and what you are going to see more of next year is both private label products that deliver a different experience but also our branded partners are developing exclusive products for us that give us an opportunity to accelerate growth from a experience perspective that also allows us to add on all of the additional accessories that drive margin and sales opportunity for us.

Brian J. Dunn: What we are enthusiastic about is what I believe is our most powerful growth engine and that is the fact that we are becoming more and more skilled in connecting and hearing what our employees in the field who are connecting with the customers every day have to say and turning that into actionable strategies. We are enormously enthusiastic about what that means for next year and the 10 years after that.

Mike Vitelli: One thing we are expecting to hear over the course of the next 14 months from today, the television system in the United States is going to switch from analog to digital on February 18, 2009. That is going to happen. This next year, the drumbeat of that change is going to go through the country and we believe our employees in our stores are going to be in a great position to help our customers through that transition. It is going to be one of the biggest transitions that happened anyplace in the world of changing an entire television system. It is complicated on one level and simple on one level but 300 million people are going to want to know what is going on and we think Best Buy is going to be a great place for them to find that out.

Gerald Feldman (Telsey Advisory Group): You now are going to open about 150 stores globally. Where exactly they will be and what does this mean for next year?

James L. Muehlbauer: A vast majority of the store openings that we are planning for this year are focused on our domestic business. We will be opening up 100 stores this year. That is up from the 90 stores that we forecasted at the beginning of the year. We are pleased that we can have store growth outside of the U.S. of approximately 50 stores, including our Canadian and our international operations. We have not provided comments on what we think our store growth plans are going to be for next year. Suffice it to say, with some of the great opportunities our employees our unlocking in serving customers, some of the product cycle changes, we are bullish on the store runway we have in front of us yet and the returns we are seeing from our new stores planned.

Chris Horvers (Bear Stearns): For the calendar shift in the third and fourth quarter, are you talking about 300 basis points in domestic comparables, what the EPS benefit was and what comes out into the fourth quarter?

James L. Muehlbauer: The impact was 2.5% in the third quarter. We expect that that will be less in the fourth quarter; just because of the size of the fourth quarter is so much bigger from a revenue perspective. That will moderate to something closer to 1% for the total fourth quarter. We estimate that it was worth 3 to 4 cents on the third quarter, so from an operating income growth perspective, our reported operating income growth was up 79%. If we exclude the calendar shift, it merely would have been up 60% or so.