A Valuation Role Reversal for Dell and H-P

Dell also boasts the best operating margins in the hardware space, at 8.3% in the most recent quarter, compared with H-P's 4.9%, Apple's 1.4% and Gateway's 7.2%. Too, Dell's push into higher-margin markets, such as servers, storage, switches and printers, should give those numbers more of a lift.

Meanwhile, Ross thinks H-P won't have an easy time in its bid to ape IBM, modeling itself as a one-stop shop for hardware, services and software. Besides dealing with harsh competition from Big Blue, it will have to contend with other downsides of the services business, such as a much longer selling cycle.

Ross thinks H-P's stock price surge over the past few months was based on its progress in merger-related cost-cutting -- and he gives the company credit for running ahead of schedule on that front. But now the hardest merger integration work remains, he says, and in the meantime, there's little room for more share price gains. "Valuation is a bit rich for a company growing below the growth of its peers, and with much of the easy low-hanging fruit cost reductions of its integration behind it," he writes.