Earnings improved year over year driven by reductions in product cost and interest expense. The strong performance in these areas was offset, as previously announced, by lower revenues to our largest OEM and to our US distributors principally as a result of their inventory reductions. Also, as previously announced, we believe that revenues were somewhat reduced as a result of call centers upgrading their automatic call distribution systems in prior periods in order to be year 2000 compliant or delaying such upgrades until after the beginning of the year 2000.
People can talk and still have their hands free to use a personal computer or to drive.
One of the fastest growing areas of adoption is in the mobile and cordless phone market segments, and we introduced a complete new line of headsets to address this opportunity in September. Diluted shares outstanding decreased to 17,836,000 from 18,035,000 in the first quarter of fiscal 2000. A publicly held company with more than 1,800 employees, Plantronics is the leading provider of headsets to telephone companies and the business community worldwide. Plantronics, Inc., headquartered in Santa Cruz, CA, was founded in 1961 and maintains offices in 18 countries. Plantronics products are sold and supported through a worldwide network of authorized Plantronics marketing partners.