Many people still think of IBM as the company that sells Big Ironâ€"mainframes and its enterprise server descendants. Of course, the engine of the company's profits long ago shifted to consulting and software. In a financial slide presentation IBM released today to the SEC as an 8K document, however, you really get a sense of how much IBM has continued to shift its business towards software and services over the past eight years. The result has been a very healthy expansion in its profit margins. As can be seen in the chart above, IBM's pre-tax income margins have more than doubled from a low of 7.2 percent in 2002 to 16.1 percent in 2008. And the slide presentation suggests that IBM has further to go. It cites data showing that the top quartile of companies in the S&P 500, and 30 percent of tech companies, have pre-tax income margins of above 20 percent. IBM makes $90 billion in revenues per year, so each percentage gain in pre-tax profit margins adds up to nearly $1 billion. 
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