Good morning. My name is Vonda and I will be your conferenceoperator today. At this time, I would like to welcome everyone to the Logitechsecond quarter fiscal 2008 earnings conference call. (Operator Instructions) Iwould now like to turn the call over to Mr. Joe Greenhalgh of InvestorRelations. Please go ahead, sir.

Thank you, Vonda. I would like to welcome you to theLogitech conference call to discuss the company’s results for the quarter endedSeptember 30, 2007, the second quarter of Logitech's fiscal year 2008. Thepress release, a live webcast of this call and accompanying presentation slidesarea available online at Logitech.com. This conference call will include forward-looking statementsthat are being made under the Safe Harbor of the Securities Litigation ReformAct of 1996, including forward-looking statements with respect to futureoperating results. The forward-looking statements involve risks anduncertainties that could cause actual results to differ materially from thatanticipated in the statements. Factors that could cause actual results to differ materiallyinclude those set forth in Logitech's annual report on Form 20-F dated May 25,2007, and subsequent filings available online on the SEC EDGAR database and inthe final paragraph of the press release reporting second quarter resultsissued by Logitech and available at Logitech.com. The press release also contains accompanying financialinformation for this call. Forward-looking statements made during this callrepresent the management outlook only as of today and the company undertakes noobligation to update or revise any forward-looking statements as a result ofnew developments or otherwise. I would like to remind you that this call is being recorded,including the question-and-answer portion, and will be available for replay onthe Logitech website. For those of you just joining us, let me repeat; thepresentation slides accompanying this call are also available on our website. Joining us today are Guerrino De Luca, Logitech's Presidentand Chief Executive Officer; Mark Hawkins, Senior Vice President of Finance andInformation Technology and Chief Financial Officer; and Gerry Quindlen, SeniorVice President, Worldwide Sales and Marketing. I would now like to turn the call over to Mark.

Thanks, Joe. Let me start with an overview of ourrecord-breaking Q2 operating performance. Our sales grew by 19%, reaching anall-time high for Q2, with solid double-digit growth achieved across all retailgeographies and exceptionally strong growth in OEM. Our gross margins increased by 180 basis points compared tothe prior year and equaled our all-time high. Our operating income grew 54%,setting a new record for Q2 performance. We ended the quarter with a strongcash position and we generated $103 million in cash flow from operations, an$80 million improvement over the prior year. Our gross margins, they reached an all-time high at 36.3%, asubstantial improvement over last year’s 34.5%. The gross margin improvementwas achieved across all product families, primarily driven by the combinationof our ongoing product cost reductions and our supply chain efficiencies. If you look at our operating income, our operating incomegrew by 54%, reaching a record high for Q2. Now, during the last quarter’scall, we planned to increase the alignment between our operating expense growthand our gross profit growth and I am pleased to report that we made excellentprogress during the quarter, as our gross profit grew by 25%, more than twiceas fast as our operating expenses. Now let me shift to an overview of the situation with ourshort-term investments. Our Q2 results through operating income as well as mostof the accounts in our balance sheet are final, but we are currently unable toprovide final results for our net income, or the value of our short-terminvestments as of September 30, 2007. Let me give you some background on whathappened and what to expect. At the start of Q3, we discovered what had begun over oneyear earlier as a fully protected investment in Triple A structured financeinstruments composed of U.S. government backed student loans had migrated intoan investment in Triple A rated…

Thank you, Mark. Thanks again to all of you for joining ustoday. I am delighted with our outstanding operating results in Q2. We returnedto strong double-digit sales growth with good growth across all retail regionsand a spectacular quarter in OEM. Our gross profit grew over twice as fast asour operating expenses and we achieved record Q2 operating income. There were a number of major highlights in the quarter. Wedelivered a significant year-over-year improvement in gross margin for thefifth quarter in a row. This improvement achieved despite aggressivepromotional activities in multiple retail product categories, reflectedconsistently excellent performance by our product and operations teams, andcontinued to provide us with a strong source of flexibility and competitiveadvantage. I was quite pleased with our ability to realign ouroperating expenses growth and our gross profit growth. We’ve been diligent inmanaging our headcount additions and discretionary spending while continuing tomake the investments needed to drive future growth. It is clear that ourstrategy is paying off. Our Q2 performance demonstrated robust demand for ourproducts across the majority of our retail portfolio. Our line of Harmony remotesreturned to strong growth with sales more than doubling in EMEA. We deliveredaccelerated growth in speakers and keyboards and we made progress in webcams. Another highlight of the quarter was our successful launchof a large number of new products. The operational and logistical complexityassociated with the worldwide rollout of many new products across multiplecategories is significant and our ability to manage this complexity was a majorenabler of a strong top line growth and a strong bottom line performance. Let me briefly comment on the issue with our short-terminvestments. As you can imagine, I am very disappointed that the unauthorizedaction and misrepresentation of a single individual had such a negative impact.Painful as it is, it is important to remember that this was completelyunrelated…

(Operator Instructions) Your first question comes from the line ofSimon Schaeffer with Goldman Sachs.

Good afternoon. Thanks very much. I wanted to ask a questionon the excess cash situation, just about what happened this quarter. I waswondering how the company looked at -- what we perceive to be somewhat of anexcessive capitalization again in terms of excess cash and perhaps some of thechallenges that you incurred again highlighting that excess capitalization.Thank you.

I think Mark may comment on this one but let me saysomething; I understand your question. It is true that our cash managementtraditionally, always and in the future will be focused on totalconservativeness and that’s why we were completely blindsided by what happenedhere, which has nothing to do with our philosophy of cash management. It hasnothing to do with the policies we have and I think Mark explained it enough,enough of what happened. The truth is we have always said that the best use of cashis potentially buying companies, potentially making acquisitions, and we havemade them and will continue to make them, and buying back our stock, which is agreat investment and a great way to return money to our shareholders. This incident, as regrettable as it is, doesn’t change thatphilosophy.

Your next question comes from the line of Ted Chung withBear Stearns.

Great, thank you. Just a quick question; with thisshort-term investment, has there been any impact on the previous earnings orresults?

Ted, let me just describe that; the answer is no. Theseinvestments were Triple A and were liquid and trading at par during the priorperiods. It was only during this period and Q2 when the issue of liquidity wasdiscovered and the problem was discovered and worked through, so there are noissues. The prior period accounting is correct.

Okay, let me ask it in a different way; was there a muchhigher return for these investments that might have boosted your earnings fromprior quarters?

Actually, there was a de minimis effect in the return onthese investments, so that -- actually, the yield was de minimis.

Okay, great. And what type of controls have you implementedsince then that would assure us that this type of event will not happen?

Ted, the number one action that we’ve taken and the mostimportant action was we’ve changed personnel, number one, full stop. There areother things that we could speak of that are more than the time we have herebut there are other things that have been done and are begin deployed as wespeak. But the number one most important significant thing has happened.

Thank you.

Your next question comes from the line of Matthew Yates with Merrill Lynch.

Good afternoon, guys. My first question, and I know we’vetalked about this before in the past but can we go through it one more time,please? On the effect of a weaker dollar on your company, both in terms of thetranslation on the sales growth and also the transaction on your gross margin,please.

Matthew, this is a question that I am happy to cover. Acouple of things here; one is that we look at the entire circumstance withforeign exchange and we’ve always called out that we never made any claim interms this having a negative or positive effect on our company throughout thehistory, even when the currency goes one way or the other. It is not the primary driver of our performance. The primarydriver of our performance is more associated with the mix of the product ingross margin. That has a much bigger effect from that standpoint. We think it is really well over-simplified to stand back andtry to discern this effect, given all the pricing, natural productintroductions that we make, and also the fact that we are very global in termsof where we manufacture and where we sell, so there is really no comment to bemade on this one from that standpoint.

Let me add on something here; this is a recurring theme andevidently, we have not been good enough in explaining it but it is -- look atthe amount of products that we introduced in the last three months. All theseproducts have been priced under the current currency scenario and all of theseproducts are just part of our revenue, so obviously the European consumer istaking advantage of the strong Euro and should be, way more than Logitech. I don’t know if that’s clear but that’s where we come from.

Okay, thank you for that. Just a couple of follow-ups, if Ican; this one’s for Mark on the working capital over the last few quarters. Asyou say, you’ve really raised the importance internally of that. At this point,do you have a feel as to how much more you could do on that side?

Matthew, we see no reason, no structural reason why wecannot continue to improve. We are really pleased to see the results. A 20-dayimprovement year-on-year from the prior year’s period is really a healthyimprovement. I wouldn’t have you expect that same rate of improvement but wesee no structural reason why we can’t get more. I don’t guide on this but weare going to continue to be attentive and I know you and I’ve talked. This hasbeen a focus for some time and you can expect us to continue to be attentive tothis, and no structural reasons why we can’t further improve.

And just one more, if I can; you talked about the benefit ofsome supply chain efficiencies on the gross margin. Can you just elaborate alittle bit more on that?

I sure can. One of the things that is kind of a virtuouscycle, Matthew, when you really get into the cash conversion and we startworking on the inventory turnover is when you have less inventory, you haveless supply chain cost. And there is an incredible virtual impact all the waythrough the warehouses and what not, and that’s one of the direct effects of thatvirtuous cycle.

Can I squeeze in one more? When I look at your salesguidance for this year, are you assuming normal seasonality?

Again, we don’t guide by quarter from that standpoint.Looking forward, I think the best thing is just to think about our overallguidance that Guerrino talked about. I understand your point there, Matthew butI’ll just have to pass on that.

Let me add something here, a forward-looking statement and Ihave the privilege to make it. If you look at the first half of this year, weare roughly 14.5% growth, so our goal -- not our guidance, our goal for thetarget for the year is 15%. I think that there is no expectation on anythingdramatic to happen to help us get there.

Okay, thank you very much, guys.

Matthew, one other last point on the supply chain; I do wantto call out just the outstanding performance of our logistics team in everyaspect of their execution is helping, in addition to them helping to drive theinventory turns, which provides that virtuous cycle in supply chain. So both ofthose we should call out.

Your next question comes from the line of Manuel Recareywith Kaufman Brothers.

Thanks and great quarter. I have a question on guidance, ifI can ask it another way; as you look out into the second half of the year, doyou -- how do you feel or what is your view on consumer spending, consideringthe strong growth that you had in the August quarter? Do you feel that,especially here in the U.S., that the issues in the housing market and so forthis going to have an impact on consumer spending?

Historically, our performance has been rather uncorrelatedwith the consumer sentiment and consumer spending. As you very well know, themajority of our products are sold at what I continue to call below thecheck-with-your-spouse threshold. People don’t have to consult to buy a mouseor a webcam. They don’t have to have a family reunion to do it. And usually,these kinds of purchases -- and remember, we are the premium vendor in thatspace, the premium vendor in the affordable category -- usually what happens indifficult times, consumers tend to redirect their purchases and therefore theymay do without some higher ticket item, one that doesn’t come well through afamily reunion. And people look at one another and say no, maybe not this time. But when it comes to buying a joystick or speaker for youriPod, it is just a pleasure to do it and you buy it at the highest levelpossible because it is actually affordable. And this kind of dynamic we’ve seenin the past. Now, will things change in the future? Will this country’seconomy completely collapse? I certainly don’t think so but I would say thatthere is no underlying, dramatic relationship between consumer sentiment ingeneral in this country or otherwise and our performance. Just as an add-on, in this quarter that was not particularlyhappy for the consumer in this country, our AMR growth was 17% and so thatshould indicate where things are going.

Okay, thanks. And another question maybe for Mark; could youjust give a little bit more color -- is it product mix the reason why revenueis up 19% and units were up 10%?

I think product mix is really the factor. When you look atour pricing, our pricing is largely stable, Manny. I think you have a goodinsight around our model. We are just getting nice receptions for some high-endproducts. You know, our Harmony 1000, just a great high-end product. Thecustomers love it and are buying that. You look at our diNovo Edge high-end keyboardas another example that people are putting their money out for. I think you’ve got the exact right angle, which is we’rejust getting nice reception for some of our products.

To be clear, our strategy is not necessarily to make thathappen. Our strategy is not to say we are happy with the high-end and we don’tcare about anything else. One of the most interesting aspects of the results inthis quarter has been the spectacular performance of cordless notebook mice, inwhich we had a dramatic growth in revenue, like 45% -- I don’t have the numberin front of me right now, and 20 points more growth in units. And we are veryhappy with that. We are taking advantage of the opportunities where they comeand our product line performs in different ways and different seasons, but thisis an absolutely high priority of ours. We are as interested in having Logitechpresent at the entry level as we are in having our high end products to be soexciting for our consumers.

Great. Thanks very much.

Your next question comes from the line of John Bright withAvondale Partners.

Thank you. Mark, on the impairment, do I understand thiscorrectly -- it’s $55 million to $75 million in Q2 on the books, and then youwill see a gain of approximately half of that in Q3?

That is exactly correct, John. You can expect that. In fact,the money is in the bank for the other half at this point. It is just in the Q3period, so you can absolutely expect that.

All right. Can you talk about the linearity of the quarter,Mark, from a sales perspective?

The linearity for Q2, again Q2 is a back-end loaded quarter.We had a little bit more than half of our retail business ends in the last monthof the quarter and that’s Q2-ish and that’s kind of what happens, John.

It was nothing different than historical patterns?

No, no.

Okay, and then Guerrino, the partnership for webcams, youare talking about announcing that before the end of the year. Is this somethingthat could benefit our webcam sales in this holiday season, or should we thinkabout this more as a 2008 calendar benefit?

It’s hard to answer this one. I think if I remember when wedid major things with webcams a couple of years ago or four years, it may takesome time for the consumer to get there. So it is hard to anticipate. We have avery, very aggressive marketing strategy around this and you will see ithappening and I won’t discuss it in detail but it is very hard to predict howfast this will impact. I am more excited about this partnership for it’s long-termvalue than I am to stimulate short-term sales. I think we have a lot of weaponsto do so, including our products, but I am certainly -- the reason I amenthusiastic with this category is that I believe that there is fuel that canbe put in the engine and this fuel will actually reaccelerate the engine. Don’t ask me to be too specific as to when exactly, but I’msure it will.

Gerry, congrats on the promotion. Strategically, Logitechhas, from an acquisition front, been a bolt-on acquisition type of company.Philosophically, do you see any change in that thought process in your newrole?

I don’t. We’ve done a good job in the acquisitions thatwe’ve made and as Guerrino said, it’s been a part of our strategy in the pastand it will be going forward, and so no. I’d say no.

All right. Thank you. Congrats on a solid quarter,gentlemen.

Your next question comes from the line of Tavis McCourt withMorgan Keegan.

Well, a couple of things, Tavis; one is that certainlyinnovation has been driving this fundamental performance, if you will. We cansee that with new product replacements. When you compare that year on year andthat’s been kind of a consistent theme from that standpoint. I think the other thing is the mix does have an effect andwe talk about that and just in understanding our model, but it is important tonote that the product replacements year on year have fundamentally created adifferent level of performance. We are also just getting, as I was trying to call out, thevirtuous cycle of supply chain and logistics with the cash conversion cycle,which we’re pleased about, and it just really starts to work into a powerfulmomentum, if you will. These are fundamentally the drivers. Now, when you come backand you say what is our guidance going to be, the range has been historically32% to 34% -- you know, we’re not prepared to talk about guidance beyond thatother than what you’ve heard from Guerrino for this year. We constantlyreassess what is the range that one should expect going forward, but I want tomake one point, Tavis, that’s very important. We see the fact that these grossmargins are where they are at as incredibly powerful from a flexibilitystandpoint in terms of allowing us to do the things we need to do in the marketto achieve the goals we want to achieve. So we couldn’t be more pleased at this virtuous cycle. Wecouldn’t be more pleased at the record-breaking gross margins and the virtuouscash cycle that we are seeing.

And in terms of -- I mean, it looks like a lot of thestrength this quarter came from PC speakers and OEM, which has traditionallybeen two of your lower gross margin product lines. It the gross marginimprovement within those lines or is it really just across the board?

This is another element that is nice to speak about. Weagain are seeing across-the-board improvement but these two areas, certainlywe’re seeing improvement on, and the PC speakers in particular is just a reallystrong performance. Our product generation, our engineering team has just donea fabulous job and then our supply chain team takes it to a -- operations teamtake it to another level. Both of those have improved, specifically the PCspeakers in particular significantly. Hope that helps.

And in terms of PC speakers, Mark, it seems like you’ve seena big reacceleration there. I’ve got to believe you are substantiallyoutgrowing that market at that point. Is there anything dramatic going on inthat market that has enabled you to do that? Has somebody left the market? Haveyou gained shelf space or is it really just the new products having greatersell-through then the old?

No, nobody has left the market and there’s been nodiscontinuity there. In fact, we see a lot of players. This is the mostfragmented market in which we play and so you may see a lot of smaller playerslosing share. We have a particularly strong presence. We are the leadingbrand by far in Europe and that’s what drives a lot of that growth, but no, Idon’t think there is any structural change. The truth is that we are designing, we have designed aspeaker line which is totally focused on digital music and gaming for the PC.And we believe we are the only one that has got the formula right in thatspace. You have a lot of speaker players that play across many categories andthey fundamentally provide sound. We provide sound for the digital world on thePC in gaming and music. It’s different and I think the consumers see it. Just as an example, we have the first PC speaker designedspecifically for gaming. It is call G51. If you’re a gamer, you should buy it.I strongly recommend it. It has everything that a gamer needs around speakers.You may say what is that? Well, we can talk for about an hour about thefeatures that this thing has for gamers. No one does that. So this approach that is very focused around the PC and thedigital lifestyle of gamers and music enthusiasts is paying off big time.

I wish I had time to be a gamer, and then my last questionwas on slim devices. You kind of called it out as contributing to revenues thisquarter. Can you just qualitatively speak about where you are and distributionof that product right now? When it becomes more worldwide distribution, isthere still product upgrades or improvements you are looking to make to theproduct before you really go global with that distribution?

The answer to both question is yes, in the sense that we areseeing a gradual increase of our presence. We are way, way not where we willbe, both in EMEA and in the U.S. And this is a new category. It requires acareful understanding of the selling proposition at the point of sale, if youwill allow me that sort of marketing speech, and that is what we are workingon. We are very pleased with the momentum. We are very pleasedwith how this is rolling out but we are way not there yet, and that to me is --in a way, I am very enthusiastic across the product portfolio. You know howstrongly I believe that Harmony is an incredible potential and how excited I amabout our mice and keyboards -- that is amazing and beyond and I don’t want tojust forget any line. But this is like the next little seed and we arecarefully growing it. You asked whether there is going to be improvement; you bet.There will be improvements in the product offerings and making it even moreappealing to the consumer but that’s another story and I’m not prepared todiscuss it in details right now.

Great. Thanks a lot and not a bad 10-year run, Guerrino.Congratulations.

Wait for the next 10. Thank you.

Your next question comes from the line of Michael Foeth withVontobel.

Good afternoon, good morning. I have three questions; firstof all, I would like to congratulate Gerry for his promotion. I was wonderingwho is going to succeed him in sales and marketing, because I guess that’s animportant job as well?

We are in the process of undertaking that and we’ll be announcingthat within probably the next quarter. Thank you for the comment on thepromotion. I will continue to do that role. We’ve announced essentially atransition today, so this is effective January 1, so I will continue to be theSVP sales and marketing for Q3.

Great. Second question, a follow-up on the measures -- maybethat’s a question for Mark -- on the measures that you are implementing toprevent those kinds of issues that you’ve seen here in Q2 with the short-terminvestments. I mean, obviously changing personnel is not really preventingthings from happening again in the future. I guess you need other measuresthere in place. What do you have in mind?

Michael, there’s a variety of things that we will be doing.There are things that we have done that are more detailed and more involvedthan we want to get to on this conference already today. But we feel like themost important thing we did is address the personnel issue and that’s critical. But you can be assured that there are things that havealready been done and in fact will continue to be done to continue to driveimprovement.

Okay, thanks. And my last question would be with respect tothe webcam market in Europe. What kind of promotional activities have youinitiated yet and what results are you seeing on that? What can we expect forthe current quarter, not in terms of numbers but where things are evolving?

As you’ll recall in Q1, Europe saw a dramatic decline ofwebcams year over year and while we had a decline this quarter, it wassignificantly less, so we are seeing the same kind of dynamic that we saw inthe United States one quarter before. It is a much better sequentialperformance, a much lower decline year over year. That’s an indication thatthings are moving in the right direction. Promotionally and marketing wise at the point of sale,you’ll see more -- you have seen and you will see more emphasis on usage thanon competitiveness, if you want, more emphasis on what you can do with this asopposed to this is a better webcam than the other guy’s webcam. We said that we would do that and it is paying off. But Ithink the most significant thing you will see in the coming few months is themarketing implication of the partnership that we’ll announce. And as I am notprepared to talk about that in detail, I won’t be able to explain the detailsof that but it is obvious that both online and offline, in the cyberworld andin the real world, we will take advantage of that.

Okay, I look forward to that. Thanks a lot.

Your next question comes from the line of Andrew Neff withBear Stearns.

Just to go over the issues that you talked about with theinvestment, can you just give us a sense of what was the -- I mean, if youdidn’t get any earnings out of it, if you didn’t get -- what was the thinkingbehind this? What was going on here? Why do this?

Thank you very much. I’ll take it over for Mark, who isanxious to answer this because this is such a fundamental point. The answer iswe have no idea. The answer is -- and that’s why we are completely -- that’swhy we didn’t see it before because the yields were just imperceptibly betterthan what you would have gotten from a total secured government-backed assetand security. So it was just marginal. And sometimes people are carried awaywith this marginal one, two, three basis points and they just do what theythink is right. The point here is that Mark authorized an investment, whichwas absolutely, totally secured and we were absolutely certain, on the basis ofthe yields alone, that that’s what was going on. In reality, our Treasurerdecided that he wanted to do better, not only just acted without authorizationand B, never told anybody -- actually, the contrary; told everybody that whatwe owned was exactly what we thought we would own. And by the way, the assets we own today, as impaired as theyare, were and are Triple A rated. You know what happens in this market thesedays and so how much you want to rely on ratings. I am not qualified to discussthat. I’m not the expert but that’s the story. The story is there wasabsolutely marginal benefit but maybe good enough for a Treasurer to be happyabout it. But that’s the key point for us. You know how conservativewe are in cash management. We’ve been accused to be over-conservative in cashmanagement. I don’t think we’ve ever been over-conservative. Fundamentally,fundamentally this is our philosophy and this was a profound violation of ourphilosophy. Whether the gain could have been higher or smaller, I don’teven care. This is not the way we manage our cash and we were misled andsomebody acted without authorization and without our knowledge. That’s the gistof it. It’s isolated. It’s circumscribe. It’s what it is. We have to move on.

If I could just ask two other things on that; one, and Mark,you addressed this before, but is there a level of review of your other -- haveyou gone through your other investments -- you’ve got a lot of cash elsewhere-- so that you know this is contained here? And second, just if you could talk about incentives; werethere incentives for the Treasurer’s office to -- based on profits or thingslike that?

Let me speak to a few things. The first thing is in terms ofour investments, our investments in Logitech are in short-term bank depositsand that has been confirmed. That’s what we do. Again, it’s been conservative,that’s where we’re at and the only other thing that’s been authorized isgovernment-backed security, specifically that investment with the contingencethat it be government-backed, principal guaranteed securities. So there isnothing else other than short-term bank deposits, cash at major world classbanks. In terms of incentives, there is nobody that makescommission on this. There are no incentives from that standpoint, so that isvery, very clear from that standpoint. This was an event exactly as describedby Guerrino. It was unauthorized. It was misrepresented and mis -- actuallyinternally reported and the issue has been dealt with, it’s been isolate. It’sbeen fully addressed and more. So that’s where we’re at.

I think you ask a very interesting question aboutincentives. Just to be clear, the entire company, the management of thecompany, the only incentive that we have is on top line and bottom line for theentire company, so you can understand that’s the -- that’s the I could puttogether and we’ll continue there.

Thank you.

Your next question comes from the line of Andy Hargreaveswith Pacific Crest.

Just on the webcam market, I suppose, you guys are gainingshare here and kind of steady in Europe. Can you just give us your thoughts onwhy the market isn’t growing? And then, as part of that, is this newpartnership going to be an entirely new application that we haven’t thought ofor that doesn’t exist right now, or is it just a new partnership for somethingthat already does exist.

First of all, your first comment, we are -- our share isstable in Europe. We are not gaining share. Our share has rebounded in theU.S., which I think is the best news. It has rebounded at the level it wasbefore Microsoft entered the category, so I couldn’t be more pleased. Microsoft is still playing, by the way, and Microsoftevidently both Logitech and Microsoft took share from other players, which bythe way was what we had anticipated at the beginning. I am very happy to seethat happen. In terms of the partnership, I am sorry. I cannot answeryour question. I can only tell you that this partnership will enable us toaddress a significantly large community that has not experienced the fullbenefit of video. That is all I can say.

And then just one other question on the remote market, youhad mentioned kind of an interest in the OEM opportunity there. Could you giveus any update or how you are thinking about that?

My thinking hasn’t changed. We are very interested in thatopportunity. I think that over time, you will see us as a player in that space,which we fundamentally haven’t touched, but stay tuned.

Thanks.

Your next question comes from the line of Ross Argolis fromSellium Investment Management.

Yes, a quick question on the investment securities. I’m notgoing to ask you who, but did you basically get a counter-party to absorb halfthe loss in the third quarter and that’s why you are getting out at par in the-- not the third quarter, in the next quarter?

Ross, there was an agreement that’s confidential in naturethat was struck where half the investment was sold at par. Unfortunately, Ireally can’t speak to any details behind that due to the confidential nature ofit, but I think the economic implications of what has been done, you accuratelyunderstand, which is we have in the bank half that investment right now in ourshort-term cash deposits. It’s there. It was at par, so half of the exposure isgone. That’s all I can say. I wish I could say more but you can imagine the sensitivityof this.

Thank you.

We’ll take the last question.

Your last question comes from the line of Matthew Yates withMerrill Lynch.

Thanks for taking the follow-up. It was about the managementtransition and Guerrino, could you say if the board interviewed anyoneexternally for the post, or was the plan always an internal candidate?

The details of this is confidential. We will not discussthem. I can tell you that the board went through a very broad and deepassessment across the board. The process has taken a long time. As I told theboard years ago, I didn’t think anybody should run this company for more than10 years. You can imagine that this has taken a long time. I don’t have many experiences of executive transitions. I’venever been a former CEO but I believe from everything I’ve seen and fromeverything I’ve been told that this has been the most structured, the most well-doneprocess that any board has gone through. It’s not for me to say but I’m tellingyou because I think that that is the case and I couldn’t be happier than we gotto choose Gerry. You will get to know him. He is dynamite and I am very happyto be associated with it for the long-term. So, which actually leads me to a conclusion that I wanted toshare with you. First of all, thanks for being on the call. Ten years ago, whenI took over this job at Logitech, the company had a very strong vision and atremendous potential. Ten years later, Logitech is five times bigger, 20 timesmore profitable, and yet has the same strong vision and the same tremendouspotential. I look forward to working with Gerry to help him accomplishin the coming years what Daniel Borel helped me accomplish in the past 10, andI could not be more excited at this prospect and at our opportunities. Thank you for joining us today. Have a good day.

This concludes today’s Logitech second quarter fiscal 2008earnings conference call. You may now disconnect.