9:03am -- we're starting. The usual disclaimers are starting. Blah, blah, blah.

9:05am -- Best Buy CEO Brad Anderson is giving an overview of generalities (like that?) before he recaps the quarter. He is going over various general reasons for the outcomes of quarters. In other words, he's covering the various scenarios that will ease in Best Buy's results here for the quarter. BBY earnings, therefore, were below expectations (according to Anderson), although he warns looking at a single metric can be dangerous.

9:10am -- Best Buy's EPS for the quarter was $0.39, which was a penny under expectations and quite a bit under my expectations of $0.49. What happened? Well, Best Buy's miss for the quarter was widely expected, and Anderson is still making sure he is reassuring the audience that Best Buy's core strategy is still very strong. the only thing is that a miss like this was much larger than expected -- it's more than a dime of earnings per share. Ouch.

9:11am -- A recap of Best Buy's Q1 is given by Best Buy's CFO (Darren Jackson) at this time, who makes a point that flat-panel television market penetration is still about 20%. Hmm, are the strategies and results of all quarters based on the sales fo friggin' TVs? I think not. Call is product mix and a consistent focus on diluting that into all areas, right? Jeez.

Ok, here is the recap being discussed:

• For the fiscal 2008 first quarter, Best Buy's revenue increased 14 percent to $7.9 billion, compared with revenue of $7.0 billion for the first quarter of fiscal 2007. The revenue increase reflected the net addition of 230 new stores (including 131 acquired stores) in the past 12 months and a comparable store sales gain of 3.0 percent. The comparable store sales gain was driven by an increase in the average transaction size, as the company's revenue mix continues to reflect a shift toward higher-ticket items. Best Buy also noted that consumers made more purchases online, and the company continued to add features and capabilities to its Web sites. Total first-quarter online revenue grew more than 20 percent as compared with the same quarter of the prior year.
• The gross profit rate for the first quarter was 23.9 percent of revenue, a 150-basis-point decline compared with a gross profit rate of 25.4 percent of revenue for the prior-year first quarter. A significant contributor to the year-over-year decline was the inclusion of the China business acquired last June, which carries a significantly lower gross profit rate. Domestically, the increase of lower-margin products in the revenue mix -- particularly notebook computers and gaming hardware -- also added to the decline. An increase in the products completing model transitions in the home theater area (resulting in markdowns) and lower profitability of computer transactions were also factors in the year-over-year decline in the gross profit rate.
• Best Buy's SG&A rate was 20.5 percent of revenue for the first quarter, unchanged from the prior year's first quarter. The SG&A rate benefited from leverage on strong revenue increases in Canada; the inclusion of the China business, which operates under a lower-cost operating model; and company-wide spending control. These factors were offset by an SG&A rate increase in the United States, as fixed costs (such as wages, occupancy and other costs) grew faster than revenue. Additionally, the company continued to invest in growth drivers for the future, including new store openings and international capabilities.

9:16am -- Darren Jackson, Best Buy's executive vice president of finance and CFO, said, "Early evidence suggests that consumer spending will be more difficult to predict this year--but it appears to be accelerating in lower-margin categories. We are confident that flat-panel TVs, gaming and notebook computers will remain very appealing to our customers. Yet the exact mix of sales could have an impact on our gross profit rate in the short-term. Based on the first-quarter results and trends in revenue mix that we expect to continue, we now anticipate earnings per diluted share of $2.95 to $3.15. This range represents an average increase of approximately 9 percent, compared with the 53-week period of last year. Our earnings guidance continues to assume an annual comparable store sales gain of 3 percent to 5 percent. It also projects a nominal increase in the fiscal year's operating income rate. This guidance includes gross profit rate pressure, driven by the sales mix, offset by SG&A savings and expense leverage."

• "We believe it is prudent to adjust our outlook given what we have seen thus far--but it is early in the fiscal year. We anticipate that the back half of the year will benefit from a reduction in competitive square footage for our industry, expanded product assortment and seasonal interest in flat-panel TVs. In addition, as seen in the first quarter, we anticipate continuing our increased share repurchase activity."

9:25am -- Best Buy's Brian Dunn is wrapping up the quarter with an "unshakable confidence" about Best Buy's future, even as Best Buy is glossing over a pretty bad quarter. Bad? Well, yes -- according to market analysts. Best Buy management is doing its best to ensure the market that this minor blip in a recent quarter is just because customers "hit the pause button" this past quarter. He mentions that this was the first industry-wide disruption in more than six years, but Best Buy is poised to make great strides in the near future.

9:29am -- a Q&A session is now beginning. Here we go. First question: was May 2007 the month in the quarter that was responsible for the bad quarter? CFO Jackson answers by saying "the one thing were positive of is that we're not clairvoyant." What? Best Buy can't turn in some psychic guidance here? C'mon! Jackson is making some comments about there being many debates on what happened to the quarter and what caused results to be so far below what expectations were set to see. What adjustments need to be made? He's just being general here on what financial areas need to be looked at closer.

9:32am -- next question: was the change in mix in the last six weeks (since Memorial Day) responsible for the quarter, or was the mix a problem through the entire quarter? Well, the answer comes in in very general terms, but the product mix during the entire quarter is being pointed to more than problems in mix just since Memorial Day this year.

9:37am -- next question: this question concerns the transition in the HDTV market from 720p to 1080p, and whether manufacturers are "dumping" 720p products into the retail channel -- and has this affected Best Buy's HDTV flat-panel sales? Answer: there are places for both 720p and 1080p in the market right now, and how manufacturers are marketing both HDTV technologies right now, as 1080p is not really (yet) set to replace 720p.

9:41am -- next question: a 3% same-store sales gain came this quarter -- which is the breakeven point for SG&A each quarter. Can Best Buy continually sustain this for the next quarter? What leverage does the company have to do this? Answer: there are benefits in places such as services outsourcing (Speakeasy acquisition maybe?) and others that are allowing Best Buy to leverage SG&A points in the back half of 2007 that will allow 3% or better same-store results coming in near quarters.

9:44am -- next question: how was Best Buy's inventory status this past quarter? Answer: Inventory was inline with store square footage growth, which is a good thing. Notebook computers and flat-panel TVs grew (and that's all that is mentioned).

9:46am -- next question: it sounds like comps (same-store sales comparable sales) are expected to get better -- how? Apple "stores within a store", 1080p HDTV sales? What? Answer: Home theater sales are expected to get better as training newer employees happens and "the pigskin starts flying" this fall (college football). Also, more customers are choosing Best Buy for Windows Vista upgrades, from the "blue shirts" (employees) to the value-added (and profit generating" Geek Squad computer specialists.

9:50am -- next question: in the third quarter, the completion of Best Buy's China market share acquisition will happen.Will Best Buy see improving margins at that time? Answer: the Best Buy store in Shaghai has been changed to improve margins, but other locations are moving a little more slowly. In other words, the product mix and merchandising decisions meant to up margins in Best Buy's Chinese operations needs to happen as soon as possible. Best Buy has been in China not that long, and I get a sense that some analysts need to have immediate success happen here. Yeah, right.

9:55am -- next question: the lower profitability of PC transactions has hampered margins. Are extended warranty problems happening in the PC category or more categories (like HDTVs)? Answer: PC warranties are not any lower in the PC industry, although attach rates for warranties are changing as the product mix changes for these warranties changes at the same time.

9:58am -- last question: how is the "customer-centric service cycle" contributing to profit contribution? In other words, how are services contributing to Best Buy's bottom line? Answer: in terms of home theater installation, this has been in place a little less than a year, and growth since then has been incredible. In terms of Geek Squad, the employee count is about 10,000 and it's helping customer satisfaction as well as speeding along returns and exchanges.

10:03am -- that's it! Best Buy turned in a worse-than-expected quarter but has a solid business plan in place to ensure dips in the market and seasonality (along with product mix price variability) are more easily weathered. Hope you had fun in the last hour!