IBM Reports 2005 Second-Quarter Results.ARMONK, N.Y. -- IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) : --Total diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. earnings per common share of $1.14, including $.02 per diluted share of non-recurring charges and gains; without these non-recurring actions, IBM diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of were $1.12. --Total revenue of $22.3 billion, down 4 percent versus the second quarter of 2004, but up 6 percent without the impact of the divested PC business. IBM today announced second-quarter 2005 diluted earnings per common share of $1.14 from continuing operations continuing operations Parts of a business that are expected to be maintained as an ongoing segment of an overall business operation. Income and losses from continuing operations are reported separately if any segments have been discontinued during the , including a $.72 per share of incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. charges related to workforce reductions, a $.45 per share gain on the sale of its Personal Computing Refers to users working on their own computers rather than a terminal to a mainframe. Sometimes, the term refers to using computers at home for work and/or entertainment in contrast to business use only. See personal computer. business, and $.29 per share of other income due to a settlement agreement entered into with Microsoft (Microsoft Corporation, Redmond, WA, www.microsoft.com) The most successful and influential software company. Microsoft's software and Intel's hardware pioneered the PC and revolutionized the computer industry. . Without these non-recurring items, diluted earnings per share were $1.12 compared with diluted earnings in the second quarter of 2004 of $1.01 per share. Second-quarter income from continuing operations was $1.85 billion, including the non-recurring pretax pre·tax adj. Existing before tax deductions: pretax income. pretax adj [profit] → vor (Abzug der) Steuern items for incremental restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. of $1.7 billion, offset by a $1.1 billion gain on the sale of the PC business, and a $775 million settlement received from Microsoft. Without these non-recurring items, income from continuing operations was $1.82 billion as compared to $1.74 billion in the second quarter of 2004. Total revenues for the second quarter of 2005 of $22.3 billion, which includes $557 million of PC revenue for April 2005, decreased 4 percent (6 percent, adjusting for currency) from the second quarter of 2004. Excluding the revenue from the divested PC business, second-quarter revenues increased 6 percent (4 percent, adjusting for currency) compared with the second quarter of 2004. Samuel J. Palmisano Samuel J. Palmisano (born July 29, 1951) is the current Chairman, CEO, and President of IBM, one of the world's largest IT companies. He was elected Chairman in October 2002, effective January 1, 2003, and has served as Chief Executive Officer since March 2002. , IBM chairman and chief executive officer, said: "IBM made several strategic and important transitions in the second quarter. We seamlessly moved our PC business to Lenovo (Lenovo, Purchase, NY, www.lenovo.com) Asia's largest PC manufacturer, founded in China in 1984 by Liu Chuanzhi from the Chinese Academy of Sciences. In the late 1980s, the company, first known as Legend, introduced a circuit board that generated Chinese characters on Western-made PCs and , implemented a streamlined management system in Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). , and restructured
important parts of the company for future growth. I am proud of how the
IBM team managed these transitions while, at the same time, delivering a
solid quarter.
"IBM returned to form in this quarter. In particular, strategic, high-growth businesses -- in Business Performance Transformation Services, software and in key industry sectors and emerging markets -- were among our best-performing operations, achieving double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. revenue growth. In addition, IBM Business Consulting Services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" posted an outstanding quarter, with strong revenue growth and a 30 percent increase in signings. This performance reinforces our confidence in our business model, and in our mission to apply unique, high-value skills and solutions to transform our clients' businesses." As previously announced, IBM completed an agreement on April 30, 2005 to sell its PC business. As a result, the company's second-quarter 2005 results include the operational performance of the PC business for the month of April 2005 only. The segment results included in the press release reflect the new segment structure under which the company will operate as of the second quarter of 2005. PC results are identified on a standalone stand·a·lone adj. Self-contained and usually independently operating: a standalone computer terminal. basis. In the second quarter of 2005, external PC revenue was $557 million and the pretax loss pretax loss A loss reported before tax benefits are considered. was $149 million, including a loss on intercompany sales and charges of $13 million. Additional detail regarding the incremental restructuring charges, the gain on the PC sale, the Microsoft settlement, and the PC operation performance in the company's second-quarter results will be provided during IBM's regular quarterly earnings conference call. Second-quarter revenue growth of 6 percent (4 percent, adjusting for currency) excluding the divested PC business was driven by growth across all geographies. In the Americas A·mer·i·cas , the See America. , second-quarter revenues were $9.4 billion, down 3 percent as reported (up 5 percent, adjusting for currency and PCs) from the 2004 period. Revenues from Europe/Middle East/Africa were $7.5 billion, flat (up 4 percent, adjusting for currency and PCs). Asia-Pacific The term Asia-Pacific generally applies to littoral East Asia, Southeast Asia and Australasia near the Pacific Ocean, plus the states in the ocean itself (Oceania). revenues decreased 10 percent (up 2 percent, adjusting for currency and PCs) to $4.6 billion. OEM (Original Equipment Manufacturer) The rebranding of equipment and selling it. The term initially referred to the company that made the products (the "original" manufacturer), but eventually became widely used to refer to the organization that buys the products and revenues were $702 million, flat compared with the 2004 second quarter. Without the PC business, revenues increased in all of IBM's five industry sectors in the second-quarter 2005 led by double-digit growth in the Public and Distribution sectors, as well as in sales to Small and Medium Businesses. Revenues from Global Services, including maintenance, increased 6 percent (4 percent, adjusting for currency) to $12.0 billion in the second quarter. Global Services revenues, excluding maintenance, increased 6 percent (4 percent, adjusting for currency) as well. IBM signed services contracts totaling $14.6 billion and ended the quarter with an estimated services backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. , including Strategic Outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. , Business Consulting Services, Integrated Technology Services and Maintenance, of $113 billion. IBM's revenues for Business Performance Transformation Services grew over 25 percent in the quarter (and are up over 30 percent year to date), and in addition to the Global Services signings and backlog figures, there were approximately $250 million of Engineering and Technology Services signings to provide BPTS BPTS Business Performance Transformation Services customers with design skill and technical capabilities. Hardware revenues decreased 25 percent (27 percent, adjusting for currency) to $5.6 billion in the second-quarter 2005 versus the year-ago period. Hardware revenues excluding the divested PC business were $5.0 billion, an increase of 5 percent (4 percent, adjusting for currency). Hardware revenues for the Systems and Technology Group, which was newly realigned to include Retail Stores Solutions and Printing Systems, totaled $4.9 billion for the quarter, up 5 percent. Revenue growth from S&TG eServer See IBM server series. products was driven by pSeries A family of Unix-based servers from IBM that are based on IBM's POWER CPUs and run under the AIX and Linux operating systems. Officially known as the eServer pSeries, the pSeries is IBM's server family for computation-intensive applications in graphics, scientific and industrial fields. UNIX servers A medium to large-scale computer system in a network that runs under Unix. Unix servers are widely used as application servers and database servers and are available from a variety of vendors, including Sun, IBM, HP and others. , which increased 36 percent, and xSeries The renaming of IBM's Intel-based servers under the eServer brand. A Linux or Windows-based server is an xSeries eServer. Prices for the xSeries ranged from $10,000 to $50,000 in 2000, when the name change occurred. See IBM server series and Netfinity. servers and iSeries A family of midrange servers from IBM that are based on IBM's POWER CPUs and run under the i5/OS, OS/400 and AIX operating systems. Windows and Linux can also be run in an attached x86-based server (see IXS). midrange midrange Epidemiology The halfway point or midpoint in a set of observations; for most data, MR is calculated as the sum of the smallest observation and the largest observation, divided by 2; for age data, one is added to the numerator; a midrange is usually servers, which increased 11 percent and 10 percent, respectively. Revenues from the zSeries A family of IBM mainframes introduced in 2000. It uses the z/Architecture, a major upgrade to the ESA/390 architecture. The zSeries is a departure in naming for IBM, which had used the System/360, 370 and 390 designations for decades. mainframe product decreased 24 percent compared with the year-ago period. Total delivery of zSeries computing computing - computer power, which is measured in MIPS (Million Instructions Per Second) The execution speed of a computer. For example, .5 MIPS is 500,000 instructions per second; 100 MIPS is a hundred million instructions per second. (millions of instructions per second Instructions per second (IPS) is a measure of a computer's processor speed. Many reported IPS values have represented "peak" execution rates on artificial instruction sequences with few branches, whereas realistic workloads consist of a mix of instructions and even applications, ), decreased 19 percent. In addition to eServers, revenues from Storage Systems increased 19 percent and Microelectronics microelectronics, branch of electronic technology devoted to the design and development of extremely small electronic devices that consume very little electric power. decreased 5 percent. Revenues from Software were $3.8 billion, an increase of 10 percent (7 percent, adjusting for currency) compared with the second quarter of 2004. Revenues from IBM's middleware Software that functions as a conversion or translation layer. It is also a consolidator and integrator. Custom-programmed middleware solutions have been developed for decades to enable one application to communicate with another that either runs on a different platform or comes from a brands, which include WebSphere A family of Java development and Web application server products from IBM that run in an open, Eclipse-technology based environment on OS/390, OS/400, NT/2000, Linux and various Unix platforms. , DB2, Tivoli, Lotus and Rational products, were $3.0 billion, up 11 percent versus the second quarter of 2004. Operating systems Operating systems can be categorized by technology, ownership, licensing, working state, usage, and by many other characteristics. In practice, many of these groupings may overlap. revenues increased 3 percent to $592 million compared with the prior-year quarter. Revenues for the WebSphere family of software products, which facilitates customers' ability to manage a wide variety of business processes using open standards Specifications for hardware and software that are developed by a standards organization or a consortium involved in supporting a standard. Available to the public for developing compliant products, open standards imply "open systems;" that an existing component in a system can be replaced to interconnect (1) To attach one device to another. (2) A physical port (plug, socket) or wireless port (transmitter, receiver) used to attach one device to another. applications, data and operating systems, increased 18 percent. Revenues for Information Management software increased 15 percent with revenue growth of 14 percent in the DB2 database family of software offerings, which enables clients to leverage information on demand. Revenues from Tivoli software Tivoli Software is the systems management brand of the IBM Software Group. IBM purchased Austin-based Tivoli Systems, Inc. in 1996[1] and allowed it to operate as a wholly owned subsidiary for a few years before forming the Software Group. (infrastructure software that enables customers to centrally manage networks and storage) increased 28 percent, and revenues for Lotus software Lotus Software (called Lotus Development Corporation before its acquisition by IBM) is an American software company with its headquarters in Cambridge, Massachusetts. , which allows collaborating and messaging by customers in real-time 1. real-time - Describes an application which requires a program to respond to stimuli within some small upper limit of response time (typically milli- or microseconds). Process control at a chemical plant is the classic example. communication and knowledge management, increased 17 percent. Revenues from Rational software (integrated development tools) increased 8 percent compared with the year-ago quarter. As a result, IBM expects to gain market share for the second quarter in the collaborative software This is a list of collaborative software (or list of groupware) applications. Wiki software is on a list of wiki software. Open source or free software The following are open source or free software applications. , systems management and security software, Web services (1) Loosely, any online service delivered over the Web. Such usage appears in articles from non-technical sources, but not in IT-oriented publications, because definition #2 below describes the correct use of the term. and data management categories. Global Financing revenues declined 4 percent (7 percent, adjusting for currency) in the second quarter to $622 million. Revenues from the Enterprise Investments/Other area, which includes industry-specific IT solutions such as product life-cycle management software, decreased 3 percent (5 percent, adjusting for currency) to $286 million versus the prior-year second quarter. The company's total gross profit margin Gross profit margin Gross profit divided by sales, which is equal to each sales dollar left over after paying for the cost of goods sold. gross profit margin A measure calculated by dividing gross profit by net sales. was 39.4 percent in the 2005 second quarter compared with 36.4 percent in the 2004 period. Excluding the PC business, gross profit margin is 40.6 percent versus 39.7 percent in the prior-year quarter. The effect of the company's second-quarter actions is included in several components of total expense and other income. Overall, 2005 second quarter's total expense and other income increased 2 percent to $6.0 billion. SG&A expense increased 35 percent to $6.5 billion primarily due to the incremental restructuring charges of $1.5 billion. RD&E expense was $1.5 billion, essentially the same as the year-ago period. Intellectual property and custom development income decreased to $288 million compared with $432 million a year ago. Other (income) and expense was $1.7 billion of income in the second quarter of 2005, reflecting the $775 million benefit for the Microsoft settlement and the $1.1 billion gain from the sale of the PC business offset by incremental charges of $236 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). , versus $23 million of expense in the same period last year. IBM's effective tax rate, including the second-quarter actions, in the second-quarter 2005 was 32.3 percent, compared with 30.1 percent in the second quarter of 2004. The company's tax rate increased 2.2 points due to the effect of the second-quarter non-recurring actions. Share repurchases Share Repurchase A program by which a company buys back its own shares from the marketplace, reducing the number of outstanding shares. This is usually an indication that the company's management thinks the shares are undervalued. totaled approximately $1.6 billion in the second quarter. The weighted-average number of diluted common shares outstanding in the second-quarter 2005 was 1.63 billion compared with 1.71 billion shares in the same period of 2004. As of June 30, 2005, there were 1.60 billion basic common shares outstanding. IBM ended the second quarter of 2005 with $8.7 billion of cash on hand. The balance sheet remains strong, and the company is well positioned to take advantage of opportunities. Debt, including Global Financing, totaled $23.7 billion, compared with $22.9 billion at year-end 2004. From a management segment view, the non-global financing debt-to-capitalization ratio was 9.5 percent at the end of June 30, 2005, and Global Financing debt declined $1.4 billion from year-end 2004 to a total of $20.9 billion, resulting in a debt-to-equity ratio debt-to-equity ratio The relationship between long-term funds provided by creditors and funds provided by owners. A firm's debt-to-equity ratio is calculated by dividing long-term debt by owners' equity. Both items are shown on the balance sheet. of 6.7 to 1. Year-To-Date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. 2005 Results Income from continuing operations for the six months ended June 30, 2005 was $3.26 billion, including non-recurring pretax items for incremental restructuring charges of $1.7 billion, offset by the $1.1 billion gain on the sale of the PC business, and the $775 million settlement received from Microsoft. Diluted earnings per share from continuing operations were $1.98 compared with $1.80 per diluted share for the 2004 period. Revenues from continuing operations for the six- month period, which includes PC revenues of $2.9 billion for the first four months of 2005 only, totaled $45.2 billion, essentially flat (down 3 percent, adjusting for currency) compared with $45.3 billion for the six months of 2004. Without the revenues from the divested PC business, revenues totaled $42.3 billion, up 5 percent (3 percent, adjusting for currency) compared with the six-month period of 2004. For total operations, net income for the first six months of 2005, including a loss from discontinued operations Discontinued operations Divisions of a business that have been sold or written off and that no longer are maintained by the business. of $27 million, was $3.23 billion, or $1.96 per diluted share, compared with the six months of 2004 net income of $3.10 billion, or $1.80 per diluted share, which included a loss from discontinued operations of $3 million. Forward-Looking and Cautionary Statements Except for the historical information and discussions contained herein, statements contained in this release may constitute forward- looking statements within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in the company's filings with the U.S. Securities and Exchange Commission (SEC). Presentation of Information in this Press Release In an effort to provide investors with additional information regarding the company's results as determined by generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), the company has also disclosed in this press release the following non-GAAP information which management believes provides useful information to investors: - non-recurring items - IBM results without PC business - adjusting for currency The rationale rationale (rash´  nal´),n the fundamental reasons used as the basis for a decision or action. for management's use of non-GAAP measures is included as part of the supplementary materials presented within the second- quarter earnings materials. These materials are available on the IBM investor relations Investor relations The process by which the corporation communicates with its investors. Web site at www.ibm.com/investor and will be included in a subsequent Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. . Conference Call and Webcast IBM's regular quarterly earnings conference call is scheduled to begin at 4:30 p.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT , today. Investors may participate by viewing the Webcast at www.ibm.com/investor/2q05. Presentation charts will be available on the Web site prior to the Webcast. Financial Results Attached
INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Unaudited; Dollars in millions except per share amounts)
Three Months Six Months
Ended June 30, Ended June 30,
Percent Percent
2005 2004* Change 2005 2004* Change
------- ------- ------- ------- ------- -------
REVENUE
Global Services $11,985 $11,272 6.3% $23,681 $22,296 6.2%
Gross margin 26.1% 24.4% 25.2% 24.1%
Hardware 5,556 7,423 -25.2% 12,305 14,158 -13.1%
Gross margin 33.9% 29.0% 30.4% 27.8%
Software 3,821 3,458 10.5% 7,372 6,924 6.5%
Gross margin 86.7% 86.2% 86.6% 86.1%
Global Financing 622 651 -4.3% 1,202 1,313 -8.4%
Gross margin 52.6% 59.4% 53.4% 59.9%
Enterprise Investments/
Other 286 294 -2.5% 618 582 6.2%
Gross margin 43.8% 46.4% 48.5% 43.0%
TOTAL REVENUE 22,270 23,098 -3.6% 45,178 45,273 -0.2%
GROSS PROFIT 8,775 8,406 4.4% 17,029 16,298 4.5%
Gross margin 39.4% 36.4% 37.7% 36.0%
EXPENSE AND OTHER INCOME
S,G&A 6,497 4,820 34.8% 11,430 9,478 20.6%
% of revenue 29.2% 20.9% 25.3% 20.9%
R,D&E 1,477 1,476 0.1% 2,936 2,892 1.5%
% of revenue 6.6% 6.4% 6.5% 6.4%
Intellectual property
and custom development
income (288) (432) -33.5% (507) (612) -17.3%
Other (income)
and expense (1,711) 23 nm (1,689) 36 nm
Interest expense 67 33 104.4% 116 68 71.3%
TOTAL EXPENSE AND
OTHER INCOME 6,042 5,920 2.0% 12,286 11,862 3.6%
% of revenue 27.1% 25.6% 27.2% 26.2%
INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES 2,733 2,486 9.9% 4,743 4,436 6.9%
Pre-tax margin 12.3% 10.8% 10.5% 9.8%
Provision for
income taxes 882 749 17.7% 1,485 1,335 11.2%
Effective tax
rate 32.3% 30.1% 31.3% 30.1%
INCOME FROM CONTINUING
OPERATIONS $1,851 $1,737 6.6% $3,258 $3,101 5.1%
Net margin 8.3% 7.5% 7.2% 6.8%
DISCONTINUED OPERATIONS
Loss from discontinued
operations 22 2 27 3
NET INCOME $1,829 $1,735 5.4% $3,231 $3,098 4.3%
====== ====== ====== ======
EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:
ASSUMING DILUTION
CONTINUING
OPERATIONS $1.14 $1.01 12.9% $1.98 $1.80 10.0%
DISCONTINUED
OPERATIONS (0.01) (0.00) (0.02) (0.00)
------ ------ ------ ------
TOTAL $1.12** $1.01 10.9% $1.96 $1.80 8.9%
====== ====== ====== ======
BASIC
CONTINUING
OPERATIONS $1.15 $1.03 11.7% $2.02 $1.84 9.8%
DISCONTINUED
OPERATIONS (0.01) (0.00) (0.02) (0.00)
------ ------ ------ ------
TOTAL $1.14 $1.03 10.7% $2.00 $1.84 8.7%
====== ====== ====== ======
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's)
ASSUMING DILUTION 1,627.9 1,711.3 1,644.2 1,719.4
BASIC 1,603.9 1,679.6 1,616.3 1,685.6
nm - not meaningful
* Restated 2004 financial results to include the impact of share-based
compensation expense.
** Does not total due to rounding.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Unaudited)
At At
(Dollars in millions) June 30, December 31, Percent
2005 2004* Change
----------- ----------- -------
ASSETS
Cash, cash equivalents,
and marketable securities $8,659 $10,570 -18.1%
Receivables - net, inventories,
prepaid expenses 31,851 36,573 -12.9%
Plant, rental machines,
and other property - net 14,212 15,175 -6.3%
Investments and other assets 48,666 48,685 --
-------- --------
TOTAL ASSETS $103,388 $111,003 -6.9%
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $6,134 $8,099 -24.3%
Long-term debt 17,584 14,828 18.6%
-------- --------
Total debt 23,718 22,927 3.5%
Accounts payable, taxes,
and accruals 26,063 31,687 -17.7%
Other liabilities 23,482 24,701 -4.9%
-------- --------
TOTAL LIABILITIES 73,263 79,315 -7.6%
STOCKHOLDERS' EQUITY 30,125 31,688 -4.9%
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $103,388 $111,003 -6.9%
======== ========
* Restated 2004 financial position to include the impact of
share-based compensation expense.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
SECOND QUARTER 2005
---------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
-------- -------- ------- ---------- -------
SEGMENTS
Global Services $11,985 $775 $12,760 ($93) -0.7%
% change 6.3% 2.1% 6.1% -110.1%
Systems and Technology
Group* 4,855 254 5,109 290 5.7%
% change 4.6% -10.9% 3.7% -48.4%
Software 3,821 471 4,292 953 22.2%
% change 10.5% 3.1% 9.6% 11.9%
Global Financing 620 275 895 338 37.8%
% change -4.9% -3.8% -4.6% -0.3%
Enterprise Investments 261 3 264 (58) -22.0%
% change -3.0% 50.0% -2.6% -18.4%
Personal Computing
Division 557 7 564 (149) -26.4%
% change nm nm nm nm
TOTAL SEGMENTS 22,099 1,785 23,884 1,281 5.4%
% change -3.8% -1.9% -3.7% -51.0%
Eliminations / Other 171 (1,785) (1,614) 1,452
TOTAL IBM $22,270 $0 $22,270 $2,733 12.3%
% change -3.6% -3.6% 9.9%
SECOND QUARTER 2004**
---------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
-------- -------- ------- ---------- -------
SEGMENTS
Global Services $11,272 $759 $12,031 $921 7.7%
Systems and Technology
Group * 4,640 285 4,925 562 11.4%
Software 3,458 457 3,915 852 21.8%
Global Financing 652 286 938 339 36.1%
Enterprise Investments 269 2 271 (49) -18.1%
Personal Computing
Division 2,679 31 2,710 (10) -0.4%
TOTAL SEGMENTS 22,970 1,820 24,790 2,615 10.5%
Eliminations / Other 128 (1,820) (1,692) (129)
TOTAL IBM $23,098 $0 $23,098 $2,486 10.8%
nm - not meaningful
* Systems and Technology Group segment results have been reclassified
to conform with current reporting structure.
** Restated 2004 financial results to include the impact of
share-based compensation expense.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
(Unaudited)
SIX MONTHS 2005
---------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
-------- -------- ------- ---------- -------
SEGMENTS
Global Services $23,681 $1,520 $25,201 $723 2.9%
% change 6.2% -0.1% 5.8% -58.7%
Systems and Technology
Group* 9,144 495 9,639 352 3.7%
% change 3.1% -5.7% 2.7% -48.8%
Software 7,372 932 8,304 1,775 21.4%
% change 6.5% 8.6% 6.7% 10.6%
Global Financing 1,199 724 1,923 729 37.9%
% change -9.0% 27.9% 2.1% 3.6%
Enterprise Investments 553 5 558 (92) -16.5%
% change 1.7% 25.0% 1.8% 12.4%
Personal Computing
Division 2,876 33 2,909 (165) -5.7%
% change nm nm nm nm
TOTAL SEGMENTS 44,825 3,709 48,534 3,322 6.8%
% change -0.4% 5.2% 0.0% -27.7%
Eliminations / Other 353 (3,709) (3,356) 1,421
TOTAL IBM $45,178 $0 $45,178 $4,743 10.5%
% change -0.2% -0.2% 6.9%
SIX MONTHS 2004**
---------------------------------------------
Pre-tax
Income
(Loss)
From
(Dollars in millions) --------- Revenue -------- Continuing Pre-tax
External Internal Total Operations Margin
-------- -------- ------- ---------- -------
SEGMENTS
Global Services $22,296 $1,521 $23,817 $1,752 7.4%
Systems and Technology
Group* 8,865 525 9,390 687 7.3%
Software 6,924 858 7,782 1,605 20.6%
Global Financing 1,317 566 1,883 704 37.4%
Enterprise Investments 544 4 548 (105) -19.2%
Personal Computing
Division 5,056 50 5,106 (48) -0.9%
TOTAL SEGMENTS 45,002 3,524 48,526 4,595 9.5%
Eliminations / Other 271 (3,524) (3,253) (159)
TOTAL IBM $45,273 $0 $45,273 $4,436 9.8%
nm - not meaningful
* Systems and Technology Group segment results have been reclassified
to conform with current reporting structure.
** Restated 2004 financial results to include the impact of
share-based compensation expense.
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