The July 31, 2006, issue of the Wall Street Journal includes an article by Justin Lahart titled “Ahead of the Tape.”

Instructions
Read the article and answer the following questions.
(a) During the period discussed in the article, by what percentage did sales increase? By what percentage did profits increase? What explanation is given for the big difference between the increase in sales and increase in profits?
(b) In what direction were analysts expecting margins to move in the future, and why were they expecting this change? What implications does this have for stock prices?