Margin benefits from greater scale and operating leverage.

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"We are just starting to see the full potential of the global scale and the operating margin benefits through the One Ford plan, " Fields said.

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As a focused directory business, we also believe returns to scale and potential incremental operating margin remain significant.

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As long as growth is sufficient (and it is), there is room to offset video cost pressures in the U.S. with scale benefits below the gross margin line.

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Scale matters in such a low-margin business.

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Example: If General Motors wants to slap down Web juggernauts like AOL, Yahoo, Microsoft, Amazon.com, RealNetworks and MP3.com in the race to own the car portal, it will have to do what a Web company does: price for market share, not margin, and then try hard as heck to scale up rapidly.

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With global demand recovering and increasing chemical demand from emerging markets such as China, we expect that additional capacity expansions and economies of scale advantages should lead to market share and EBITDA margin growth for this division.

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That business is the company's crown jewel: Without it Lenovo doesn't have the cash or clout to expand into other markets and achieve the kind of scale it needs to survive in the low-margin pc business, company insiders say.

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That means he is turning his back on the kinds of large-scale seismic testing used to prospect for elephant fields--a high-margin business dominated by Schlumberger.

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Large companies searching for margin protection in services are branching out into analog businesses (people working with people) that scale poorly.

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