IBM Reports 2007 First-Quarter Results

--  Total revenues of $22.0 billion, up 7 percent as reported;

    --  Diluted earnings of $1.21 per share from continuing operations, up 12
        percent;

    --  Gross profit margin increased year to year for the 11th consecutive
        quarter.
                  IBM
                  
    --  Total revenues of $22.0 billion, up 7 percent as reported;

    --  Diluted earnings of $1.21 per share from continuing operations, up 12
        percent;

    --  Gross profit margin increased year to year for the 11th consecutive
        quarter.IBM (NYSE: IBM) today announced first-quarter 2007 diluted
        earnings of $1.21 per share from continuing operations, an increase of
        12 percent as reported, compared with diluted earnings of $1.08 per
        share in the first quarter of 2006. First-quarter income from continuing
        operations was $1.8 billion compared with $1.7 billion in the first
        quarter of 2006, an increase of 8 percent. Total revenues for the first
        quarter of 2007 of $22.0 billion increased 7 percent (4 percent,
        adjusting for currency) from the first quarter of 2006.

'IBM's good results in the quarter demonstrate the breadth of our global
capabilities, the advantages of our business model and our focus on profitable
growth,' said Samuel J. Palmisano, IBM chairman, president and chief executive
officer. 'We continued to grow in the higher-value products and services that
help our clients transform their businesses. We again grew gross profit margins
and earnings, and continued to generate significant cash from operations. This
gives us considerable financial capability to strengthen our position in the
profitable growth segments and create further value for our investors.'

From a geographic perspective, the Americas first-quarter revenues were $9.1
billion, an increase of 1 percent as reported (1 percent, adjusting for
currency) from the 2006 period. Revenues from Europe/Middle East/Africa were
$7.6 billion, up 13 percent (5 percent, adjusting for currency). Asia-Pacific
revenues increased 10 percent (9 percent, adjusting for currency) to $4.5
billion. OEM revenues were $828 million, down 5 percent compared with the 2006
first quarter.

Total Global Services revenues grew 8 percent (4 percent, adjusting for
currency). Segment revenues from Global Business Services increased 9 percent (6
percent, adjusting for currency) to $4.2 billion, and segment revenues from
Global Technology Services increased 7 percent (4 percent, adjusting for
currency) to $8.3 billion. IBM signed services contracts totaling $11.1 billion,
down 2 percent year over year, and ended the first quarter with an estimated
services backlog, including Strategic Outsourcing, Business Transformation
Outsourcing, Global Business Services, Integrated Technology Services and
Maintenance, of $115 billion.

Revenues from the Systems and Technology (S&T) segment totaled $4.5 billion for
the quarter, up 2 percent (flat, adjusting for currency). S&T revenues from
System z server products increased 12 percent compared with the year-ago period.
Total delivery of System z computing power, which is measured in MIPS (millions
of instructions per second), increased 9 percent. Revenues from the System p
UNIX server products increased 14 percent compared with the 2006 period.
Revenues from the System x servers increased 7 percent, and revenues from the
System i servers decreased 13 percent. Revenues from Microelectronics decreased
7 percent and revenues from System Storage decreased 1 percent.

Revenues from the Software segment were $4.3 billion, an increase of 9 percent
(5 percent, adjusting for currency) compared with the first quarter of 2006.
Revenues from IBM's middleware products, which primarily include WebSphere,
Information Management, Tivoli, Lotus and Rational products, were $3.2 billion,
up 10 percent versus the first quarter of 2006. Operating systems revenues of
$522 million were flat compared with the prior-year quarter. Revenues from other
software and services increased, which includes the Product Lifecycle Management
portfolio of products.

For the WebSphere family of software products, which facilitate customers'
ability to manage a wide variety of business processes using open standards to
interconnect applications, data and operating systems, revenues increased 14
percent. Revenues for Information Management software, which enables clients to
leverage information on demand, increased 20 percent. Revenues from Tivoli
software, infrastructure software that enables customers to centrally manage
networks including security and storage capability, increased 18 percent, and
revenues for Lotus software, which allows collaborating and messaging by
customers in real-time communication and knowledge management, increased 7
percent year over year. Revenues from Rational software, integrated tools to
improve the processes of software development, increased 15 percent compared
with the year-ago quarter.

Global Financing segment revenues increased 6 percent (3 percent, adjusting for
currency) in the first quarter to $614 million.

The company's total gross profit margin was 40.2 percent in the 2007 first
quarter compared with 39.1 percent in the 2006 period -- the 11th consecutive
quarter of year-to-year increase.

Total expense and other income increased 11 percent to $6.3 billion compared
with the prior-year period. SG&A expense increased 11 percent to $5.1 billion.
RD&E expense increased 4 percent compared with the year-ago period. Intellectual
property and custom development income decreased to $205 million compared with
$229 million a year ago. Other (income) and expense contributed income of $180
million in the first quarter of 2007 versus income of $246 million in the first
quarter of 2006.

IBM's effective tax rate in the first-quarter 2007 was 28.5 percent compared
with 30.0 percent in the first quarter of 2006.

Shares repurchased totaled approximately $3.5 billion in the first quarter. The
weighted-average number of diluted common shares outstanding in the
first-quarter 2007 was 1.52 billion compared with 1.59 billion shares in the
same period of 2006. As of March 31, 2007, there were 1.48 billion basic common
shares outstanding.

Debt, including Global Financing, totaled $23.9 billion, compared with $22.7
billion at year-end 2006. From a management segment view, the non-global
financing debt-to-capitalization ratio was 2.8 percent at the end of March 31,
2007, and Global Financing debt increased $1.0 billion from year-end 2006 to a
total of $23.2 billion, resulting in a debt-to-equity ratio of 6.9 to 1.

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 of 1995.
These statements involve a number of risks, uncertainties and other factors that
could cause actual results to differ materially, including the company's failure
to continue to develop and market new and innovative products and services and
to keep pace with technological change; competitive pressures; failure to obtain
or protect intellectual property rights; quarterly fluctuations in revenues and
volatility of stock prices; the company's ability to attract and retain key
personnel; adverse affects from tax matters; currency fluctuations and customer
financing risks; customer credit risk on trade receivables; the company's
failure to maintain the adequacy of its internal controls; the company's use of
certain estimates and assumptions; dependence on certain suppliers; changes in
the financial or business condition of the company's distributors or resellers;
the company's ability to successfully manage acquisitions and alliances; failure
to have sufficient insurance; legal, political, health and economic conditions;
risk factors related to IBM securities; and other risks, uncertainties and
factors discussed in the company's Form 10-Q, Form 10-K and in the company's
other filings with the U.S. Securities and Exchange Commission (SEC) or in
materials incorporated therein by reference. The company assumes no obligation
to update or revise any forward- looking statements.

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
(GAAP), the company has also disclosed in this press release the following
non-GAAP information which management believes provides useful information to
investors:

IBM Results --

    --  adjusting for currency (i.e., at constant currency).

The rationale for management's use of non-GAAP measures is included as part of
the supplementary materials presented within the first-quarter earnings
materials. These materials are available on the IBM investor relations Web site
at www.ibm.com/investor and are being included in Attachment II ('Non- GAAP
Supplementary Materials') to the Form 8-K that includes this press release and
is being submitted today to the SEC.

Conference Call and Webcast

IBM's regular quarterly earnings conference call is scheduled to begin at 4:30
p.m. EDT, today. Investors may participate by viewing the Webcast at
www.ibm.com/investor/1q07. Presentation charts will be available on the Web site
prior to the Webcast.

Financial Results Attached (amounts may not total due to rounding)

-0-
*T
          INTERNATIONAL BUSINESS MACHINES CORPORATION
                 COMPARATIVE FINANCIAL RESULTS
   (Unaudited; Dollars in millions except per share amounts)


                              Three Months Ended March 31,
                                                  Percent
                                 2007      2006    Change
                              -------   -------   -------
REVENUE

 Global Technology Services    $8,258    $7,719      7.0%
  Gross profit margin            29.2%     29.2%

 Global Business Services       4,183     3,848      8.7%
  Gross profit margin            23.8%     21.4%

 Systems and Technology         4,520     4,419      2.3%
  Gross profit margin            34.8%     32.0%

 Software                       4,251     3,907      8.8%
  Gross profit margin            83.6%     84.2%

 Global Financing                 614       582      5.6%
  Gross profit margin            50.9%     52.8%

 Other                            203       184     10.1%
  Gross profit margin            12.0%      1.2%

TOTAL REVENUE                  22,029    20,659      6.6%


GROSS PROFIT                    8,866     8,088      9.6%
  Gross profit margin            40.2%     39.1%


EXPENSE AND OTHER INCOME

 S,G&A                          5,089     4,602     10.6%
  Expense to revenue             23.1%     22.3%

 R,D&E                          1,509     1,456      3.7%
  Expense to revenue              6.9%      7.0%

 Intellectual property
  and custom development
  income                         (205)     (229)   -10.6%
 Other (income) and expense      (180)     (246)   -27.0%
 Interest expense                  73        66      9.7%

TOTAL EXPENSE AND
OTHER INCOME                    6,287     5,648     11.3%
  Expense to revenue             28.5%     27.3%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES                    2,579     2,440      5.7%
  Pre-tax margin                 11.7%     11.8%

Provision for
income taxes                      735       732      0.4%
  Effective tax rate             28.5%     30.0%

INCOME FROM CONTINUING
OPERATIONS                      1,844     1,708      8.0%
  Net margin                      8.4%      8.3%

DISCONTINUED OPERATIONS
Loss from discontinued
operations                          0         0

NET INCOME                     $1,844    $1,708      8.0%
                               ======    ======

EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS                   $1.21     $1.08     12.0%
  DISCONTINUED
   OPERATIONS                    0.00      0.00
                               ------    ------
  TOTAL                         $1.21     $1.08     12.0%
                               ======    ======
 BASIC
  CONTINUING
   OPERATIONS                   $1.23     $1.09     12.8%
  DISCONTINUED
   OPERATIONS                    0.00      0.00
                               ------    ------
  TOTAL                         $1.23     $1.09     12.8%
                               ======    ======
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's)
  ASSUMING DILUTION           1,522.8   1,587.2
  BASIC                       1,499.5   1,564.5



               INTERNATIONAL BUSINESS MACHINES CORPORATION
              CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                              (Unaudited)

                                          At          At
(Dollars in millions)               March 31 December 31   Percent
                                        2007        2006    Change
                                   --------- -----------   -------
ASSETS

 Cash, cash equivalents,
 and marketable securities          $10,781      $10,657      1.2%

 Receivables - net, inventories,
 prepaid expenses                    31,665       34,003     -6.9%

 Plant, rental machines,
 and other property - net            14,414       14,440     -0.2%

 Investments and other assets        44,760       44,134      1.4%
                                   --------     --------

TOTAL ASSETS                       $101,619     $103,234     -1.6%
                                   ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                     $9,661       $8,902      8.5%
 Long-term debt                      14,285       13,780      3.7%
                                   --------     --------
 Total debt                          23,946       22,682      5.6%

 Accounts payable, taxes,
 and accruals                        27,102       31,189    -13.1%

 Other liabilities                   22,763       20,857      9.1%
                                   --------     --------
TOTAL LIABILITIES                    73,811       74,728     -1.2%

STOCKHOLDERS' EQUITY                 27,809       28,506     -2.4%
                                   --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $101,619     $103,234     -1.6%
                                   ========     ========



          INTERNATIONAL BUSINESS MACHINES CORPORATION
                          SEGMENT DATA
                          (Unaudited)

(Dollars in millions)
                                FIRST QUARTER 2007
                   ----------------------------------------------
                                                Pre-tax
                                                Income
                                                (Loss)
                                                 From
                   --------- Revenue --------  Continuing Pre-tax
                   External  Internal   Total  Operations  Margin
                   ----------------------------------------------
Global Technology
Services             $8,258      $425  $8,683        $681   7.8%
     Y-T-Y Change      7.0%     -5.8%    6.3%      -19.3%

Global Business
Services              4,183       301   4,485         470  10.5%
     Y-T-Y Change      8.7%    -10.4%    7.2%       32.1%

Systems and
Technology            4,520       267   4,787          96   2.0%
     Y-T-Y Change      2.3%     -4.6%    1.9%          nm

Software              4,251       585   4,836       1,036  21.4%
     Y-T-Y Change      8.8%     13.8%    9.4%        1.5%

Global Financing        614       349     963         374  38.8%
     Y-T-Y Change      5.6%     -4.3%    1.8%       -9.7%

Total Reportable
Segments             21,826     1,927  23,753       2,657  11.2%
     Y-T-Y Change      6.6%     -1.0%    5.9%        1.5%

Eliminations /
Other                   203   (1,927)  (1,724)       (78)

Total IBM
Consolidated        $22,029        $0 $22,029      $2,579  11.7%
     Y-T-Y Change      6.6%              6.6%        5.7%

nm - not meaningful


(Dollars in millions)
                                FIRST QUARTER 2006
                   ----------------------------------------------
                                                Pre-tax
                                                Income
                                                (Loss)
                                                 From
                   --------- Revenue --------  Continuing Pre-tax
                   External  Internal   Total  Operations  Margin
                   ----------------------------------------------
Global Technology
Services             $7,719      $451  $8,171        $844  10.3%

Global Business
Services              3,848       336   4,184         356   8.5%

Systems and
Technology            4,419       280   4,699        (18)  -0.4%

Software              3,907       514   4,421       1,021  23.1%

Global Financing        582       364     946         414  43.8%

Total Reportable
Segments             20,475     1,946  22,421       2,616  11.7%

Eliminations /
Other                   184    (1,946) (1,762)       (177)

Total IBM
Consolidated        $20,659        $0 $20,659      $2,440  11.8%

*T

IBM
John Bukovinsky, 914-499-6212
[e-mail]