Good day, ladies and gentlemen, and welcome to Logitech second quarter financial results conference call. At this time, all participants are in listen-only mode. We will be conducting a Q&A session towards the end of this conference and instructions will follow at this time. This call is being recorded for replay purposes and may not be reproduced in whole or in part without written authorization from Logitech. I would now like to introduce the host for today’s call, Ms. Teresa Thuruthiyil, Director of Investor Relations at Logitech. Please proceed.

Welcome to the Logitech conference call to discuss the company’s results for the quarter ended September 30th, 2009, the second quarter of Logitech’s fiscal year 2010. The press release, a live webcast of this call and accompanying presentation slides are available online at logitech.com. This conference call will include forward-looking statements, including forward-looking statements with respect to future operating results that are being made under the Safe Harbor of the Securities Litigation Reform Act of 1995. The forward-looking statements involve risks and uncertainties that could cause actual results to differ materially from those anticipated in the statements. Factors that could cause actual results to differ materially include those set forth in Logitech’s Annual Report on Form 10-K dated June 1, 2009 and subsequent filings which are available online on the SEC EDGAR database and in the final paragraph of the press release reporting second quarter results, issued by Logitech and available at logitech.com. The press release also contains accompanying financial information for this call. The forward-looking statements made during this call represent management’s outlook only as of today and the Company undertakes no obligation to update or revise any forward-looking statements as a result of new 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 on the Logitech website. For those of you just joining us, let me repeat that presentation slides accompanying this call are also available on our website. Joining us today are Jerry Quindlen, President and Chief Executive Officer, Erik Bardman, Senior Vice President of Finance and Chief Financial Office, and Joe Greenhalgh, Vice President for Corporate Finance and Investor Relations. I’d now like to turn the call over to Jerry.

Thanks Teresa and thanks to all of you for joining us. I am pleased that our Q2 results significantly exceeded our expectations. We delivered sales, operating profit, and gross margin that were higher than the outlook we shared at the start of the quarter. And we continued to demonstrate strong working capital management. A key driver in exceeding our Q2 outlook was better than expected sell-through of our products in our two largest geographies, EMEA and the Americas. This had a positive impact on our sales and our profitability and allowed us to effectively achieve alignment between our sell-in and our sell-through in these two regions sooner than anticipated. Let me share some of the regional data. Our retail sales in EMEA declined by 24% compared to the prior year with sell-through down by 21%. Sell-through was better than expected in our largest markets, Germany, France, and the UK. More importantly, we believe that sell-through in EMEA bottomed out in Q2 and we expect improved sell-through in that region going forward. Our results were comparatively stronger in the Americas where our retail sales fell by just 5% with sell-through down by 9% compared to the prior year. Sell-through was better than we expected in both the US and Canada. We also experienced an associated reduction in promotional pressure in the Americas which was a significant contributor to the strong sequential improvement in our gross margin. We are pleased that as we anticipated the channel reset is complete in our two largest regions. We believe this positions us well for the second half of the year. Turning to Asia Pacific, the channel reset in this region is taking a bit longer to complete than we had expected. As a result, we experienced a fairly large difference between our retail sales which…

Thanks Jerry. I will start with an overview of our Q2 sales performance. Please note that the growth percentages that follow are in comparison to Q2 of fiscal 2009. Our retail sales fell by 19% with units down 14%. Looking at our regional sales in local currency, the decline was 21% in EMEA and 29% in Asia compared to 24% and 28% in US dollars. Units were down by 17% in EMEA, by 29% in Asia Pacific and were up by 3% in the Americas. Although sales performance was weaker than unit shipments in most of our product families except for remotes, our overall retail average selling price fell by just 5% compared to the prior year, a significantly smaller decline than in the previous two quarters. More importantly, retail average selling price increased by 10% on a sequential basis, with gains in remotes, audio, keyboard desktop and gaming categories. Sales of our products priced above $100 represented 15% of our retail sales in Q2, down from 18% in the prior year but up from 12% in Q1. The sequential improvement primarily reflected better performance in the remotes category. Looking at sales of our products at ASPs below $60, their share of the total was essentially unchanged, up from 65% last year to 67% this year. We see this as another indicator that the substantial ASP pressure that we had experienced in recent quarters has begun to ease. In Q2, the retail audio category was once again our best performing product family with sales up by 4% and units growing by 9%. The category benefited from very strong sales of our iPod speakers which increased by almost 50% driven by strong response to our newest speaker docks. It was a solid quarter for PC headsets with sales up 14%. And…

Thanks Joe. I want to comment now on our Outlook and plans going forward. Let me start by saying that I'm pleased that we continue to successfully execute our plan to navigate the current economic downturn. At the start of the quarter, we said we anticipated a return to profitability in Q2, and we significantly exceeded those expectations. We are now on track to deliver profit growth in the second half of fiscal 2010 starting in Q3. One of the key reasons for our confidence in improved profitability is our exciting line up of new products. Let me briefly highlight several of the ones that we launched during Q2. I'll start with the video category where we significantly upgraded our product line with the introduction of seven new webcams. Our new offerings priced from $29 in the low end up to $99 on the high end offer value conscious consumers a variety of alternatives to meet their video calling needs. And all of these webcams offer a greatly simplified video calling experience with the use of Logitech Vid which comes bundled with all of our new webcams. Since the launch of Vid in late June, we have added more than 1.5 million Vid users and the number continues to grow. In Q2, we added to our track record for driving nearly every major innovation in mouse technology with the introduction of the Logitech Performance Mouse MX and the Logitech Anywhere Mouse MX. The full-size performance mouse and the more compact anywhere mouse feature Logitech Darkfield Laser Tracking which allows you to use your mouse on virtually any surface, including clear glass and high-gloss surfaces. These products have generated consistently favorable user reviews on sites like Amazon and we're very pleased with the market acceptance thus far. In addition to providing…

(Operator instructions). And our first question will come from the line of Tavis McCourt with Morgan Keegan. Please proceed. Tavis McCourt – Morgan Keegan: Hi guys. This is Tavis and congrats on getting back to profitability. A couple of housekeeping items, first in terms of the tax rate going forward, what should we be using based on the current mix and what you expect? And then secondly on housekeeping, it was kind of an exceptional quarter for share buybacks this quarter, is that a level that you think you'd be willing to do going forward or is it kind of an artificially high-level for buyback this quarter? And then my question for you Jerry is you mentioned a couple of items where you believe you have taken some share recently through the downturn. Can you highlight maybe a couple of categories that you lost share and what you're going to regain the momentum in those categories?

Yes, good morning, Tavis. The – from a share standpoint, you know the categories where we have been consistently gaining share, PC speakers and remotes, if I look at the other categories, in general as our comments, as we said in our comments, we have been mostly stable. If you look at country by country, you have countries where we are down a couple of points in mice or webcams and then there is other countries where we are up a couple of points, but on a global basis, our shares are mostly stable. Let me address the buyback question, I'll let Joe take the tax rate part of your question. From a buyback standpoint, we have $25 million remaining in the current program as I think Joe said in his comments and we have another 250 million after that. Our two biggest focuses from a use of cash standpoint remain stock buyback and acquisitions, and we will continue to buy back our stock and we will continue to look for acquisitions. So you can expect to continue to see us use our cash to buy back stock in the coming quarter.

And Tavis, this is Joe. On the tax rate, I'm afraid I don't have a number I can give you. I think we have kept our outlook this year to one quarter at a time and because of the volatility in the tax environment, we haven't provided a quarterly outlook for tax. So I think it's probably reasonable to assume for the full-year, it's not going to be as low as it's been in the past, just given where we are so far for the first six months. That's about as much as I can tell you at the moment. Tavis McCourt – Morgan Keegan: Okay, thanks.

And our next question will come from the line of Jonathan Tseng with Merrill Lynch. Please proceed. Jonathan Tseng – Merrill Lynch: Hi guys. This is Jonathan from Merrill Lynch. I just wanted to dig into the guidance a bit, I mean the gross margins, you are guiding for 50 basis points sequential improvement in the December quarter, even though you've got a seasonal improvement of a couple of 100 [ph] basis points, you have a full quarter of new products. You seem to have a benefit from the weakening dollar (inaudible) is there something I am missing here, is the channel really full or something with more soft dollar going on the top line, am I kind of missing something here on the gross margin guidance?

Johnny, I think that first of all, let's put that guidance in perspective. In Q1, our gross margin was sitting around 24%, in a single quarter, we added almost 700 basis points sequentially in gross margin, we got back into the 30 sooner than we expected. For Q3, we are saying 31% which is very close to our long-term range of 30 to 34, so we couldn't be happier with the progress we have made so far. Keep in mind though we are still in an environment that is characterized by very weak demand. We haven't seen sell-through growth and there is definitely promotional pressure associated with that weak demand environment. So we think that that is the reason for the 31% and we feel comfortable with it at this point. Jonathan Tseng – Merrill Lynch: Thanks very much. And just following up, I guess again on the revenue guidance, you pointed to about 17% sequential revenue growth in the midpoint, historically again there has been a bigger bump from Q3 to Q4, kind of 20 to 40%. Have you seen any change in the seasonality of the product you sell nowadays or is there some FX thing that was going on just wondering if there is any more thoughts on that revenue guidance and the seasonality there?

Yes. Where we are coming from there, Johnny, is pretty straightforward. I mean while we couldn't be more pleased with the progress we made getting back to profitability, the gross margin improvement Joe just talked about, the completion of the reset in AMR and EMEA, you know and we beat our sell-through plan in all three regions, I think it is incredibly important to remind everyone that our sell-through while improved, while better than our expectations, was still negative in all three regions, from slightly negative in APJ, down about a percent to down 21 in Europe. Europe was much better than we expected and we are convinced that it's the bottom and we expect a sequential improvement in sell-through in Europe in Q3. But all three regions were still in negative territory, so we still have a long way to go, at least in our largest region till we are back to positive sell-through territory. That is really – so we don't see any sustained evidence yet of a bounce back in consumer demand. What we're saying is we positioned the company to return to profit growth starting in Q3 even if consumer demand doesn't rebound. Now, if it does rebound, if consumer show up at holiday in a much bigger way than we and a lot of companies expect, that is definitely upside, but that is really what is behind our guidance at this point. Jonathan Tseng – Merrill Lynch: That's great. Thanks very much.

And our next question will come from the line of Simon Schafer with Goldman Sachs. Please proceed. Simon Schafer – Goldman Sachs: Thank you very much. Yes, fantastic gross margin and execution in the quarter. I was just wondering whether I could ask a couple of follow-up questions. The 600 or the close to 700 basis points in gross margin improvement, I think you alluded to the fact that some of that is obviously based on just the completion of what you call the channel reset and so on, and some of that is pricing, but I was wondering as to whether you can maybe break out as to how much of it was channel reset i.e. sell sell-through versus sell-in versus pricing versus mix shift and so on?

Yes, Simon, I think the biggest factor by far was the reduced promotion pressure in the channel as a result of the completion of the reset and reaching alignment between sell-in and sell-through sooner than we expected. And that was specific really to the Americas where we saw the real benefit there and I think that is the region where we have seen the most extreme promotional pressure during the course of this downturn. It was a place where we had the opportunity for the most improvement and I think that is what we saw during the quarter. I think the other two factors that helped us on a sequential basis, one was the launch of the new products, and I think that helped us in two ways, one, given the fact that those products were new, they were just subject to less promotional pressure than a product that had been on the shelves for one to two years. And secondly a lot of the new products we launched had better margins than the products that they replaced. And the final factor and I have ranked these in terms of their significance overall was the weaker dollar. So I think it's a combination of those three in that order. Simon Schafer – Goldman Sachs: How much was the contribution from the currency delta?

I am not going to quantify it but it was the least significant of the three that I mentioned. Simon Schafer – Goldman Sachs: Understood, thank you very much. And then just a broader question for Jerry, you talked about a significant amount of product introductions, more towards what I think you described as the value range. Number one, I was wondering as to what percentage that is now of the mix and perhaps you could walk us through a little bit what your initial observation or experience is in terms of margin accretion of such a lower price point category? Thank you very much.

Yes. I think Simon we said that we have maybe a few more products that are – this year that are oriented in what we would call the value range, let's say below $60. I'm not sure – I wouldn't characterize it as substantially more. You know for example we talked in the call about introducing some lower priced army products, but still you know the 8700 is at $149. So we are continuing to innovate at all price points. You know I can't breakout the specific margin impact of any of those products but I can remind you of something we said repeatedly which is that you know our lower-priced products tend to have margins as good as and in some cases better than higher priced products. And I think Joe mentioned in his comments that we have seen from a – from an ASP and a mix standpoint that the percent of products sold above $100 stabilized in the quarter, and the same thing at the lower end. So that is a very important sign to us as well. Simon Schafer – Goldman Sachs: Understood, thank you.

Thank you.

And your next question will come from the line of Yair Reiner with Oppenheimer & Co. Please proceed. Yair Reiner – Oppenheimer & Co.: Thank you, good morning. A question again about the guidance and the outlook for December, what are you seeing in terms of retailers' appetites for taking on inventory than over the last nine months or so, and what are you kind of baking in in terms of inventory replenishment in the channel?

Well you know we don't see any – we don't see any what I would call consistent signals from retailers that they are suddenly in a mood to carry more inventory of take what I would call inventory risk. I believe that they remain fairly cautious, I mean it varies retailer-by-retailer depending on how they are doing, but if I were to characterize them in general, I think the mood out there is still fairly cautious. I continue to believe that everyone, retailers as well as manufacturers, are waiting to see if the consumer shows up in a big way at holiday time. You know retailers are more than happy to have their manufacturing partners take the channel risk and be ready to either airship product or move it in a just-in-time basis to their stores if the demand is there. But they are not sending us any signals that they would like to carry a lot more inventory because they think suddenly the consumer is going to be in a jovial mood at the holiday time. You know we're working with our channel partners to – when we see a product that is doing very well, we are making sure that that is readily available for retailers, because the last thing we want is to miss an opportunity for sale, for them and for us. So I wouldn't characterize the retailer mood as being willing to carry a lot of inventory risk at this point in time. We are not pushing any kind of restocking, it is not something that we see benefits us over the long-term, it might have a short-term impact on the quarter or two, it is not a strategic benefit for us or for the retailer. You know the retailers are at a new lower level that they would like to operate at. We are working with them to try and keep them at that level and not have stockouts get to a level that neither of us can live with. We will – it remains to be seen whether or not we can do that. If consumer demand picks up dramatically, we probably would seem some stockouts, and we would have to ramp up to get more product to the retailers, but that still remains to be seen at this point. Yair Reiner – Oppenheimer & Co.: Great, thank you. That's very clear. The other questions from me is about netbooks. I'm wondering if you have been able to assess out any patterns in terms of attach rates for netbooks, keyboards and mice, and also if there are any patterns emerging in terms of the type and ASP of products that are attaching to netbooks?

Yes, the two – to repeat things we have said before, the two biggest product categories where we see immediate opportunities with netbook and there is plenty of evidence there is a growing body of evidence that we have that in fact netbook owners are very, very excited or very open to attaching mice. We have done some research and now we're seeing in terms of actual consumer behavior. The other product category is PC headsets and this goes back to something I said before which is if you look at how netbooks are being positioned different from notebooks, they are much more, they are being positioned as much more of almost a communication device. You have got several, you have got several factors that sort of point to this. You have got players like Nokia offering a netbook, a branded netbook, and then you have got makers of netbooks like Acer and Asus selling their netbooks in telecom channels at the AT&T store or the Verizon store as an example. So the netbook is more and more positioned as a communication device, and we see a huge opportunity for attaching PC headsets. So those are the two immediate opportunities. We're working on other things that we think we have done a great job creating a line up of products for notebooks and we see similar opportunities in netbooks. But those are the two most immediate opportunities and we are pursuing them aggressively. Yair Reiner – Oppenheimer & Co.: Thank you. I'll get back in the queue.

And our next question will come from the line of Ashish Sinha with Morgan Stanley. Please proceed. Ashish Sinha – Morgan Stanley: Hi there. Just a couple of questions if I may, given your internal plans, the guidance you have given and basically the visibility you give to your supply chain, I just wanted to know how quickly can you adjust your production and your supply if demand kind of bounces back pretty sharply? Secondly can you also talk a little bit about the competition, has the environment changed a little bit, or are you seeing some most of your competitors, are they kind of – what are they kind of going in terms of you have been obviously taking a lot of share for them, are they growing weaker, are they being marginalized? And thirdly, in the context of you guys having started buybacks again, so clearly that kind of demonstrates you are getting a bit more confident, relatively more confident on the macro, so why don't you think about giving guidance for fiscal 2010 together rather than just guidance for one quarter ahead? Thanks a lot.

Okay, there are several things there and I'll try to remember each component of the question. You know relative to guidance, you know, remember that we have historically provided annual targets only, and you know and then occasionally updated them like at the midpoint of the year. We took the step of providing quarterly guidance at the beginning of this year because we felt that given the very limited visibility, it was frankly impossible to guide for the full-year, and we felt that we needed to give the investment community our view of what we sell over the next 90 days. We were uncomfortable like a lot of companies saying a whole lot beyond that timeframe. It was just too – it is still fairly challenging but it is not nearly as bad as it was. That is the reason we have been giving the quarterly updates. I think your second question was about stock buyback. We said on the last call I think I was asked on the last call whether – what would trigger us starting to buy back the stock. And my answer was, you know when we get to the point where we are very confident that things have mostly stabilized, you will see us go back and start using some of our cash to buy back stock, and that is exactly what happened in Q2. So yes and all of our signals have been I think pretty consistent that we see growing evidence that things are stabilizing. I mean the big thing is still out there at this point is just one – and it is a big thing is when consumer demand comes back I think relative to your very first part of your question, you know we have built a very, very flexible…

Thank you.

And our next question will come from the line of John Bright with Avondale Partners. Please proceed. John Bright – Avondale Partners: Thank you. Joe, in your prepared remarks, you talked about the retail audio performance being strong, and the improved cost structure that are helping the gross margins. What took place there to improve the cost structure? And then secondly what was your share count at the end of the quarter? Your buyback, it looks like a big slug of shares during the quarter, what did you come out of the quarter at on a share count?

On the audio side John I think it just gets into the fundamentally the design of the products. You know we looked at each one of those products as we went into the product design cycle going back six and twelve months ago and found ways to reduce costs whilst still coming up with a product that was going to be attractive to the consumer. So I think that from that standpoint it is fundamentally product cost and that goes back to the very start of the design process, it also goes back to the way that we work with our suppliers and our contract manufacturers in that space. And we don't build the audio products ourselves. So I think there are a number of dimensions where we are able to reduce our cost and still have a product that so far has been extremely well received in the market. As far as the share count question, so you're looking for something beyond what we have in our earnings release? John Bright – Avondale Partners: Sure, looking at what was the share count at the end of the quarter, since it looks like you might have purchased some shares, a lot of shares towards the end of the quarter?

I'll have to get back with you a specific number. We have got the number in the release that shows what both the basic and diluted were at quarter end, but I assuming you already have those. John Bright – Avondale Partners: Yes, looking for the end of quarter number, but that is alright. Jerry, a question for you, top line guidance, it does appear cautious, even excluding the OEM for the December quarter. I'm assuming that you're just being conservative here, sounds like you're saying consumer demand coming back, it is really the key variable for you. Maybe you can answer the question this way, directionally, what assumptions are you making for, if you will, promotion behavior during the December quarter or pricing during the quarter?

Yes. So John I think you know relative to you know our view of the guidance is not that it is cautious. I will repeat a little bit of what I said to Johnny Tsang's question. You know if you look at our sell- through, we like the direction it is moving in, it was negative, and it was still negative in all three regions in Q2. We expected to sequentially improve in our biggest region, Europe, but that is from a minus 21%. That is a long way from you know in the channels at the right level, so we expect sell-in and sell-through to move together. So if you look at Europe, which was minus 21% in Q2, Europe has a long way to go to get back to positive territory. The Americas is obviously closer and they should get there sooner and we said that we are not quite done with the reset in APJ. So even if consumer demand picks up in APJ, we have a little bit of work to do to get the channel there complete as we have done in AMR and EMEA. So if you factor those things in, we don't think it is conservative. But I wills say what I said to Johnny's question, if consumer demand is stronger, then we are expecting and most people are expecting, then, yes, there is absolutely upside. I think the other part of your question was… John Bright – Avondale Partners: Regarding promotional activity?

Promotional activity, yes. So you know and I think this gets to the question that was asked earlier, I mean the reason that we don't – we aren't counting on a bigger bump from the 30.5 to 31 gross margin is we do think we will get a nice effect from our new products, that would be helpful. But it is still a weak environment out there and the demand environment and so you know we continue to work with our customers to stimulate demand and we use promotion to do that together. We share the cost and so we have built that in a little bit and that is one of the reasons that our gross margin view is maybe a bit muted. So it does tie directly to what we think the demand environment is going to be like but you won't see really at least in the two big regions any more of that negative impact associated with cleaning the channel, that is behind us. But we do think there is still some impact related to trying to stimulate sales. John Bright – Avondale Partners: Two last ones for you, Jerry, one, webcam adoption, it's been a category that's not been – it hasn't performed maybe as well as we had hoped over the past three years. What is your viewpoint on how that that category is going to perform looking forward? One. And then two, the last we talked, you had mentioned the focus probably moving away from bolt on acquisitions towards transformational acquisitions, potentially for Logitech, maybe order of magnitude or thought process on what something like that might look like?

Well, I think you know just to clarify, one of the things we said early on in the downturn is we wanted to maximize cash for two reasons. It was prudent to do so in such an uncertain environment, most companies were saying the same thing. And for us, John, it was and it still remains, putting ourselves in the position, if there was the transformational opportunity to be able to execute on it. It is not something – it is not necessarily a new thought process. You know we have done mostly bolt-ones as you correctly pointed out, but what we have been looking for, what we would characterize as transformational acquisitions for sometime now. We haven't seen one or we haven't found one that is right and that is why we haven't announced it. And if we find one we will. But we are also still looking at bolt-ons and there is still plenty of those that will help us. You know one of the spaces we continue to think would be a great area for acquisition is trying to find another Harmony that gives us a bigger presence in the digital home, that remains an area that we are incredibly excited about. So you know even though Harmony has had a couple of rough quarters we still remain incredibly bullish on that category. I think your other question was… John Bright – Avondale Partners: Webcams…

Webcams, yes. Sorry. So you know we continue to really believe deeply in video and we think video really will continue to be a great application. There's a lot of things out of there that would suggest that video still has plenty of room to grow despite a few bumpy quarters. Broadband penetration continues to grow and broadband speeds are growing, which means the ability for the pipe to push all that rich content that is associated with video is growing. And that means more users will use video and that is good for us. There is a statistic that the majority of the content on sites like, on social networking sites like Facebook, that about 40% of it is video and user generated video. So all that kind of the majority of that is coming from Webcams or devices like the clip video. So those are all things that to me point to continued opportunity for our video business. We are committed to it for the long-term and also point to the fact as I mentioned in my prepared remarks that we're very pleased with the progress with Logitech Vid, up to 1.5 million users and the webcams that are being – where Vid is being modeled are really just hitting the market now. So we think that will help. But we are very committed to video for the long-term. John Bright – Avondale Partners: Thank you. And Erik, welcome on board.

Thanks.

And our next question will come from the line of Nicolas von Stackelberg with Sal. Oppenheim. Please proceed. Nicolas von Stackelberg – Sal. Oppenheim: Thanks for taking my question. My first one is on net working capital and whether you're ready to provide an outlook on the coming quarter? Is that two quarters in which you have generated cash in Q1 a substantial amounts, what is the view ahead?

Nicolas, we haven't provided that in the past, and I'm sure you would be disappointed to know we're not going to provide it in the future. We are pleased with the cash that we are generating and we have been doing that pretty consistently. And Q3 has traditionally been a good cash quarter for us. We hope that will be the same this time but I'm not going to give you any specifics. Nicolas von Stackelberg – Sal. Oppenheim: Okay. My second question would be on component shortage. Have you experienced any component shortage and if so would you prepare to maybe single out some of the more difficult spots?

Nicolas, I'm not sure that I can think of anything off the top of my head something Joe or Teresa could follow-up on but I don't think – I don't believe so. Nicolas von Stackelberg – Sal. Oppenheim: Okay. And then of course another one on the introduction of Windows 7, in your view will this provide a push to the PC market, and is this an opportunity for you?

You know our overall view of Windows 7 is positive. We share the collective view I'll say of the industry that you know the industry is ready for an upgrade cycle, maybe a bit overdue, that the economic downturn suppressed that or delayed it. But we would also say what we said before which is while we expected to have a positive impact, that will take time. We're not building a huge impact into the second half of the year, but we definitely believe it is a positive because it will stimulate, it will be a catalyst for purchase and that is a good thing for our business. And we hope to see some of that in FY2011. And we are on track to make sure that most of our products support the Windows launch, Windows 7 launch at launch of our product. So our net net on that is that it is a positive. Nicolas von Stackelberg – Sal. Oppenheim: Okay. But I mean to be more specific there are no joint promotions in the pipeline that you would know of?

No. Nicolas von Stackelberg – Sal. Oppenheim: Involving Logitech products?

No. Nicolas von Stackelberg – Sal. Oppenheim: Okay. And then finally, have you, maybe could you comment on online sales versus brick-and-mortar and maybe by region, are there any new trends emerging?

Well, you know, online even before the economic downturn was growing fast for us, and that is both what I would characterize as e-commerce through partners Amazon, TigerDirect, Buy.com, people like that, as well as Logitech.com. During the last few quarters where you know we did see in general a shift in consumer buying patterns towards online, not only Logitech.com, but partners, and you know some of that probably will be permanent. I mean even when economic conditions return to what we would all characterize as more normal, some of those people will probably continue to buy online, and that is fine with us. The majority of people even before the crisis, the majority of people who buy Logitech products come to our site and research the products first and you know and then they fulfill wherever it is most convenient for them. And our attitude has been and remains, our job is to help them learn about Logitech products, find the right one for them, and then make it easy for them to buy it whenever they want to buy it, at brick-and-mortar, at an e-commerce partners site like Amazon or on our own site. Nicolas von Stackelberg – Sal. Oppenheim: How about your own marketing spend, have you – has that shifted from traditional or below the line towards on line?

I wouldn't say in a meaningful way. I wouldn't characterize it as any kind of meaningful shift. Nicolas von Stackelberg – Sal. Oppenheim: All right, thanks very much.

Thank you.

And our next question will come from the line of Andy Hargreaves with Pacific Crest Securities, please proceed. Andy Hargreaves – Pacific Crest Securities:

Andy, we got the first part of your question on the channel and I can answer that, you sort of dropped off after that. Could you repeat the second part? Andy Hargreaves – Pacific Crest Securities: Yes. Just wondering now that we're kind of at equilibrium in the biggest geographies, what should we expect in terms of seasonality there?

Okay. Let me tell you where the channel's at and I will let Joe talk about seasonality. So yes we talked about we expected, we could see as much as 40% year on year reduction September to September. Our estimate is that it's roughly a decline of about 35% with declines in all three regions. So it was a little smaller than what we expected, and keep in mind, we said several times now today that you know we are not all the way there in APJ, but in two biggest regions which are the bulk of it, we are done, and it was substantial and very close to the 40% we originally predicted. Joe, would like to take the seasonality question?

Andy, I don't think we there is any reason we would expect different seasonality. I think that clearly we expect the third quarter to be our biggest of the year with sell in and sell through aligned in our two biggest regions. It is going to be obviously closely linked to what actually happens with the consumer since as Jerry indicated earlier we are not – we don't have any interest in pushing any restocking here. So I think that from that standpoint our expectation is if you look at the totality of the year Q3 should be similar to what it has been in previous years. Andy Hargreaves – Pacific Crest Securities: Okay. And then on your guys' PC attach rate, it seems like both from the unit and dollar perspective that it's probably being a little bit below historical averages for the last few quarters, is that do you think just a symptom of consumer behavior in the downturn or is there something more secular there?

I don't think it is anything secular. I mean if you look at our core products, mice and keyboards, you know I think those have along with probably Harmony, have felt the impact of the channel reset the hardest. They are our biggest volume products and so we felt that there. But I don't – I haven't seen any evidence that there is any kind of fundamental shift going on or secular shift that I would be concerned about. Andy Hargreaves – Pacific Crest Securities: Okay. And then just housekeeping, can you give us total allowances in the quarter?

I would have to get back to you, Andy. I don't have that number handy at the moment. Andy Hargreaves – Pacific Crest Securities: Okay, that is fine. Thanks.

Thanks, Andy.

Thank you. That concludes our conference call for today. You may all now disconnect. Thank you and have a wonderful day.