Potts, though, notes that software has the highest margin contribution to HP's bottom line. "It's not necessarily as much about what the revenue of it is," he said. "The actual contribution [of software] to the profit and EPS of the company is significant."
HP's Software operating margin was 17.1% during its most recent quarter, well above other, much larger, divisions such as its Personal Systems Group (PSG), Imaging and Printing Group (IPG) and Enterprise Servers, Storage and Networking (ESSN).
IBM, though, has an even larger software margin. Big Blue's software pre-tax margin, which is similar to operating margin, but includes certain expenses, was 43.7% during the quarter. IBM's Software Group enjoyed a gross profit margin of 89.8%. HP does not provide a gross profit margin for its individual business segments.
HP shares have dipped 9.16% this year, while IBM's stock has gained 11.8%.
Written by James Rogers in New York.
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