The correct answer is      (A.)  Microsoft (MSFT)

When it comes to lofty operating margins, software giant Microsoft has long been the standard against which other companies are judged. The company enjoys a monopoly-like hold on its market, and its ubiquitous Windows operating software is installed on more than 90% of all computers around the world.

And while up-front software development costs are high, it costs next to nothing to deliver additional copies -- the very definition of a scaleable business model. Because the variable costs associated with producing additional software disks are minimal, as demand for the firm's software has risen, a larger percentage of revenues have fallen to the bottom line -- boosting profit margins.

In 2006, Microsoft was able to squeeze around $0.37 in operating profits (before interest and taxes) from every $1 of sales, meaning it carries an operating margin of about 37%. By contrast, the average company in the S&P 500 currently sports an operating margin of just 20%.

Over the years, the company's impressive margins have led to strong earnings and soaring share prices. In fact, between 1986 and 2000, MSFT would have turned a mere $5,000 investment into $3 million.

However, a handful of companies have been even more successful at converting revenues to profits. . .

With this in mind, in a recent special report available exclusively to StreetAuthority's Market Advisor subscribers, Editor Paul Tracy set out to identify companies that could claim they are more profitable than Microsoft.

And after an exhaustive search process -- he found three such superior firms.

One requires very little in capital expenditures, enjoys built in demand from over 200,000 customers around the world, and is well-protected from competition. The other two, like Microsoft, have highly scaleable platforms and have delivered rapid annual earnings growth of around +50% in recent years.

And all three of these firms enjoy lofty operating margins north of 50%. As such, these companies stand a better-than-average chance of richly rewarding shareholders in the years ahead.

To learn more about StreetAuthority's Market Advisor newsletter, and to read the complete profiles of the firms mentioned above, please visit this link.