A loss leader is a product that has a price set below the operating margin.
Typical operating margins are 20 to 30 percent, he said.
In this business the operating margin ranges from 2% to 4%.
A higher operating margin means that the company has less financial risk.
The company hopes to increase the operating margin to $7 billion by the end of this year.
So what if your operating margin is down thirty percent this year.
"Its operating margins are close to 60 percent, which makes them about the highest in the industry."
For 2011, the operating margin will be around 10pc, compared with 7.3pc in 2012.
But the company's operating margin was the lowest in five quarters.
For now, the company's operating margins are less than the industry average.