IBM Reports 2007 Fourth-Quarter and Full-Year R...

--  Diluted earnings of $2.80 per share, up 24 percent as reported;

    --  Total revenues of $28.9 billion, up 10 percent;

    --  Global Technology Services revenues up 16 percent; pre-tax income up 26
        percent;

    --  Global Business Services revenues up 17 percent; pre-tax income up 9
        percent;

    --  Services signings of $15.4 billion; short-term signings up 8 percent;

    --  Software revenues up 12 percent; pre-tax income up 21 percent;

    --  65 percent of revenues from outside the U.S.; E/ME/A revenues up 16
        percent; Asia Pacific up 15 percent.
                  IBM
                  IBM (NYSE: IBM) today announced fourth-quarter 2007 diluted earnings of $2.80
per share from continuing operations compared with diluted earnings of $2.26 per
share in the fourth quarter of 2006, an increase of 24 percent as reported.
Fourth-quarter income from continuing operations was $4.0 billion compared with
$3.5 billion in the fourth quarter of 2006, an increase of 14 percent. Total
revenues for the fourth quarter of 2007 of $28.9 billion increased 10 percent (4
percent, adjusting for currency) from the fourth quarter of 2006.

'IBM had a terrific fourth quarter and full year with record revenue, profit and
cash. The broad scope of our global business --- led by strong operational
performance in Asia, Europe and emerging countries --- as well as continued
growth in services and software drove these outstanding results,' said Samuel J.
Palmisano, IBM chairman, president and chief executive officer. 'As we begin
2008, IBM is well-positioned as a result of our global business reach, solid
recurring revenue and profit streams, and strong financial position. We are on
track to achieve our long-term earnings-per-share roadmap objective in 2010.'

From a geographic perspective, the Americas' fourth-quarter revenues were $11.7
billion, an increase of 5 percent as reported (2 percent, adjusting for
currency) from the 2006 period. Revenues from Europe/Middle East/Africa were
$10.8 billion, up 16 percent (6 percent, adjusting for currency). Asia-Pacific
revenues increased 15 percent (9 percent, adjusting for currency) to $5.5
billion. OEM revenues were $894 million, down 13 percent compared with the 2006
fourth quarter.

Total Global Services revenues grew 17 percent (10 percent, adjusting for
currency) and pre-tax income increased 19 percent. Global Technology Services
segment revenues increased 16 percent (10 percent, adjusting for currency) to
$10.0 billion, with strong performance in all geographic regions and business
sectors. Global Business Services segment revenues, marked by significant growth
in core consulting and application management services, increased 17 percent (10
percent, adjusting for currency) to $4.9 billion. IBM signed services contracts
totaling $15.4 billion, down 13 percent year over year versus a strong
fourth-quarter 2006; short-term signings increased 8 percent. The full-year
estimated services backlog, including Strategic Outsourcing, Business
Transformation Outsourcing, Integrated Technology Services, Global Business
Services and Maintenance, was $118 billion, an increase of $2 billion from the
prior-year period.

Revenues from the Systems and Technology segment totaled $6.8 billion for the
quarter, down 4 percent (8 percent, adjusting for currency). Revenues were flat
excluding the year-to-year impact of the Printing Systems Division divestiture
in June 2007. Pre-tax income increased 18 percent. Systems and Technology
revenues from the System p UNIX server products increased 9 percent compared
with the 2006 period and revenues from System x servers increased 6 percent.
Revenues from System z server products decreased 15 percent versus the year-ago
period. Total delivery of System z computing power, which is measured in MIPS
(millions of instructions per second), decreased 4 percent. Revenues from System
i servers increased 2 percent. Revenues from System Storage increased 11 percent
and revenues from Microelectronics decreased 15 percent.

Revenues from the Software segment were $6.3 billion, an increase of 12 percent
(6 percent, adjusting for currency) compared with the fourth quarter of 2006;
pre-tax income increased 21 percent. Revenues from IBM's middleware products,
which primarily include WebSphere, Information Management, Tivoli, Lotus and
Rational products, were $5.0 billion, up 13 percent versus the fourth quarter of
2006. Operating systems revenues of $664 million increased 3 percent compared
with the prior-year quarter.

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 23
percent. Revenues from Information Management software, which enables clients to
leverage information on demand, increased 11 percent. Revenues from Tivoli
software, infrastructure software that enables clients to centrally manage
networks including security and storage capability, increased 19 percent, and
revenues from Lotus software, which allows collaborating and messaging by
clients 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 22 percent compared
with the year-ago quarter.

Global Financing segment revenues increased 8 percent (2 percent, adjusting for
currency) in the fourth quarter to $668 million.

The company's total gross profit margin was 44.9 percent in the 2007 fourth
quarter compared with 44.6 percent in the 2006 period.

Total expense and other income increased 9 percent to $7.5 billion compared to
$6.9 billion in the prior-year period. Total SG&A expense increased 7 percent to
$6.0 billion. RD&E expense was $1.6 billion, flat compared with the year-ago
period. Intellectual property and custom development income decreased to $236
million compared with $241 million a year ago. Other (income) and expense
contributed income of $98 million in the fourth quarter of 2007 versus income of
$150 million in the fourth quarter of 2006. Interest expense increased to $214
million compared with $71 million in the prior-year period, primarily due to the
increase in debt to finance the company's accelerated share repurchase
agreements executed in the second quarter.

IBM's effective tax rate in the fourth-quarter 2007 was 28.0 percent, flat
compared with the fourth quarter of 2006.

The weighted-average number of diluted common shares outstanding in the
fourth-quarter 2007 was 1.41 billion compared with 1.53 billion shares in the
same period of 2006.

Full-Year 2007 Results

    --  Diluted earnings of $7.18 per share, up 18 percent as reported;

    --  Total revenues of $98.8 billion, up 8 percent;

    --  Global Technology Services revenues up 12 percent; pre-tax income up 8
        percent;

    --  Global Business Services revenues up 13 percent; pre-tax income up 21
        percent;

    --  Software revenues up 10 percent; pre-tax income up 9 percent.

Income from continuing operations for the year ended December 31, 2007 was $10.4
billion compared with $9.4 billion in the year-ago period, an increase of 11
percent. Diluted earnings per share from continuing operations were $7.18,
including a gain from the sale of the Printing Systems Division in the second
quarter, an increase of 18 percent, compared with $6.06 per diluted share in
2006. Revenues from continuing operations for 2007 totaled $98.8 billion, an
increase of 8 percent (4 percent, adjusting for currency), compared with $91.4
billion in 2006.

From a geographic perspective, the Americas' full-year revenues were $41.1
billion, an increase of 4 percent as reported (3 percent, adjusting for
currency) from the 2006 period. Revenues from Europe/Middle East/Africa were
$34.7 billion, an increase of 14 percent (5 percent, adjusting for currency).
Asia-Pacific revenues increased 11 percent (8 percent, adjusting for currency)
to $19.5 billion. OEM revenues were $3.5 billion, down 10 percent compared with
2006.

Revenues from the Global Technology Services segment totaled $36.1 billion, an
increase of 12 percent (7 percent, adjusting for currency) compared with 2006.
Revenues from the Global Business Services segment were $18.0 billion, up 13
percent (9 percent, adjusting for currency). Systems and Technology segment
revenues were $21.3 billion, a decrease of 3 percent (6 percent, adjusting for
currency). Software segment revenues in 2007 totaled $20.0 billion, an increase
of 10 percent (6 percent, adjusting for currency). Global Financing segment
revenues totaled $2.5 billion, an increase of 6 percent (2 percent, adjusting
for currency).

For total operations, net income for 2007 was $10.4 billion, or $7.18 per
diluted share, compared with the 2006 net income of $9.5 billion, or $6.11 per
diluted share, which included a gain from discontinued operations related to
country tax settlements of $76 million.

IBM ended 2007 with $16.1 billion of cash on hand and free cash flow of $12.4
billion, up 1.9 billion year over year. The balance sheet remains strong, and
the company is well positioned to take advantage of opportunities.

Share repurchases totaled approximately $18.8 billion in 2007, including $12.5
billion executed through accelerated share repurchase agreements in May. The
repurchases are part of the $15 billion authorization for the company's stock
repurchase program approved by the IBM board of directors on April 24.

The weighted-average number of diluted common shares outstanding in 2007 was
1.45 billion compared with 1.55 billion shares in 2006. As of December 31, 2007,
there were 1.39 billion basic common shares outstanding.

Debt, including Global Financing, totaled $35.3 billion, compared with $22.7
billion at year-end 2006. From a management segment view, Global Financing debt
increased $2.2 billion from year-end 2006 to a total of $24.5 billion, resulting
in a debt-to-equity ratio of 7.1 to 1. The non- global financing
debt-to-capitalization ratio was 30.0 percent at the end of 2007, which reflects
increased financial leverage associated with the accelerated share repurchase
agreements.

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; fluctuations in revenues and purchases,
and volatility of stock prices; the company's ability to attract and retain key
personnel; adverse affects from tax matters; environmental matters; currency
fluctuations and customer financing risks; customer credit risk on trade
receivables; risks from investing in growth opportunities; 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 revenues relating to the sale of the Printing System
        Division;

    --  adjusting for free cash flow;

    --  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 fourth-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. EST, today. Investors may participate by viewing the Webcast at
www.ibm.com/investor/4q07. Presentation charts will be available on the Web site
prior to the Webcast.

Financial Results Below (certain amounts may not add due to use of rounded
numbers; percentages presented are calculated from the underlying whole- dollar
amounts).

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             INTERNATIONAL BUSINESS MACHINES CORPORATION
                    COMPARATIVE FINANCIAL RESULTS
            (Dollars in millions except per share amounts)

                            Three Months            Twelve Months
                         Ended December 31,      Ended December 31,

                                       Percent                 Percent
                          2007    2006  Change    2007    2006  Change
                       ------- ------- ------- ------- ------- -------
REVENUE

 Global Technology
 Services               $9,997  $8,590   16.4% $36,103 $32,322   11.7%
  Gross margin           30.1%   29.9%           29.9%   29.8%

 Global Business
 Services                4,933   4,223   16.8%  18,041  15,969   13.0%
  Gross margin           23.1%   24.7%           23.5%   23.1%

 Systems and
 Technology              6,796   7,070   -3.9%  21,317  21,970   -3.0%
  Gross margin           45.7%   41.8%           39.7%   37.7%

 Software                6,259   5,607   11.6%  19,982  18,161   10.0%
  Gross margin           87.1%   86.5%           85.2%   85.2%

 Global Financing          668     620    7.7%   2,502   2,365    5.8%
  Gross margin           45.5%   48.6%           46.7%   50.3%

 Other                     212     147   44.8%     842     637   32.1%
  Gross margin          -15.8%   -6.9%            4.4%    5.7%

TOTAL REVENUE           28,866  26,257    9.9%  98,786  91,424    8.1%


GROSS PROFIT            12,970  11,701   10.8%  41,729  38,295    9.0%
  Gross margin           44.9%   44.6%           42.2%   41.9%


EXPENSE AND OTHER
INCOME

 S,G&A                   6,016   5,620    7.0%  22,060  20,259    8.9%
  % of revenue           20.8%   21.4%           22.3%   22.2%

 R,D&E                   1,586   1,587   -0.1%   6,153   6,107    0.8%
  % of revenue            5.5%    6.0%            6.2%    6.7%

 Intellectual
  property
  and custom
  development
  income                 (236)   (241)   -1.7%   (958)   (900)    6.4%
 Other (income)
   and expense            (98)   (150)  -34.5%   (626)   (766)  -18.3%
 Interest expense          214      71  203.6%     611     278  119.6%

TOTAL EXPENSE AND
OTHER INCOME             7,481   6,887    8.6%  27,240  24,978    9.1%
  % of revenue           25.9%   26.2%           27.6%   27.3%

INCOME FROM
CONTINUING
OPERATIONS BEFORE
INCOME TAXES             5,489   4,814   14.0%  14,489  13,317    8.8%
  Pre-tax margin         19.0%   18.3%           14.7%   14.6%

Provision for
income taxes             1,537   1,350   13.9%   4,071   3,901    4.4%
  Effective tax
  rate                   28.0%   28.0%           28.1%   29.3%


INCOME FROM
CONTINUING
OPERATIONS               3,951   3,464   14.1%  10,418   9,416   10.6%
  Net margin             13.7%   13.2%           10.5%   10.3%


DISCONTINUED
OPERATIONS
Income/(loss) from
discontinued opera-
tions                        1      76             (0)      76

NET INCOME              $3,952  $3,541   11.6% $10,418  $9,492    9.7%
                       ======= =======         ======= =======

EARNINGS/(LOSS)PER
SHARE OF
COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS            $2.80   $2.26   23.9%   $7.18   $6.06   18.5%
  DISCONTINUED
   OPERATIONS             0.00    0.05          (0.00)    0.05
                       ------- -------         ------- -------
  TOTAL                  $2.80   $2.31   21.2%   $7.18   $6.11   17.5%
                       ======= =======         ======= =======
 BASIC
  CONTINUING
   OPERATIONS            $2.85   $2.30   23.9%   $7.32   $6.15   19.0%
  DISCONTINUED
   OPERATIONS             0.00    0.05          (0.00)    0.05
                       ------- -------         ------- -------
  TOTAL                  $2.86   $2.35   21.7%   $7.32   $6.20   18.1%
                       ======= =======         ======= =======

WEIGHTED-AVERAGE
NUMBER COMMON
SHARES OUT-
STANDING (M's)
  ASSUMING DILUTION    1,412.9 1,532.5         1,450.6 1,553.5
  BASIC                1,384.1 1,507.3         1,423.0 1,530.8
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           INTERNATIONAL BUSINESS MACHINES CORPORATION
           CONSOLIDATED STATEMENT OF FINANCIAL POSITION


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

 Cash, cash equivalents,
 and marketable securities           $16,146      $10,657    51.5%

 Receivables - net, inventories,
 prepaid expenses                     37,031       34,003     8.9%

 Plant, rental machines,
 and other property - net             15,081       14,440     4.4%

 Investments and other assets         52,172       44,134    18.2%
                                ------------ ------------

TOTAL ASSETS                        $120,431     $103,234    16.7%
                                ============ ============


LIABILITIES AND STOCKHOLDERS'
EQUITY

 Short-term debt                     $15,735       $8,902    76.8%
 Long-term debt                       19,539       13,780    41.8%
                                ------------ ------------
 Total debt                           35,274       22,682    55.5%

 Accounts payable, taxes,
 and accruals                         32,076       31,189     2.8%

 Other liabilities                    24,612       20,857    18.0%
                                ------------ ------------
TOTAL LIABILITIES                     91,962       74,728    23.1%

STOCKHOLDERS' EQUITY                  28,470       28,506    -0.1%
                                ------------ ------------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY                $120,431     $103,234    16.7%
                                ============ ============
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             INTERNATIONAL BUSINESS MACHINES CORPORATION
                             SEGMENT DATA

                                     FOURTH QUARTER 2007
                       -----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)  ---------  Revenue -------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                       --------- -------- -------- ---------- --------
SEGMENTS

Global Technology
 Services                 $9,997     $393  $10,390     $1,061    10.2%
  Y-T-Y Change             16.4%    -9.6%    15.1%      25.8%

Global Business
 Services                  4,933      287    5,220        588    11.3%
  Y-T-Y Change             16.8%   -17.8%    14.2%       9.2%

Systems and Technology     6,796      240    7,036      1,364    19.4%
  Y-T-Y Change             -3.9%   -33.6%    -5.3%      17.8%

Software                   6,259      712    6,971      2,433    34.9%
  Y-T-Y Change             11.6%    12.7%    11.7%      20.8%

Global Financing             668      445    1,113        341    30.7%
  Y-T-Y Change              7.7%    -8.8%     0.4%     -11.8%

TOTAL REPORTABLE
 SEGMENTS                 28,654    2,077   30,731      5,787    18.8%
  Y-T-Y Change              9.7%    -8.3%     8.3%      17.1%

Eliminations / Other         212  (2,077)  (1,865)      (298)

TOTAL IBM CONSOLIDATED   $28,866       $0  $28,866     $5,489    19.0%
  Y-T-Y Change              9.9%              9.9%      14.0%


                                     FOURTH QUARTER 2006
                       -----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)  ---------  Revenue -------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                       --------- -------- -------- ---------- --------
SEGMENTS

Global Technology
 Services                 $8,590     $435   $9,025       $843     9.3%

Global Business
 Services                  4,223      349    4,572        538    11.8%

Systems and Technology     7,070      362    7,432      1,158    15.6%

Software                   5,607      632    6,239      2,015    32.3%

Global Financing             620      488    1,108        387    34.9%

TOTAL REPORTABLE
 SEGMENTS                 26,111    2,266   28,377      4,940    17.4%

Eliminations / Other         147  (2,266)  (2,120)      (126)

TOTAL IBM CONSOLIDATED   $26,257       $0  $26,257     $4,814    18.3%
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             INTERNATIONAL BUSINESS MACHINES CORPORATION
                             SEGMENT DATA

                                     TWELVE MONTHS 2007
                       -----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)  ---------  Revenue -------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                       --------- -------- -------- ---------- --------
SEGMENTS

Global Technology
 Services                $36,103   $1,636  $37,739     $3,557     9.4%
  Y-T-Y Change             11.7%    -7.2%    10.7%       8.2%

Global Business
 Services                 18,041    1,193   19,234      2,064    10.7%
  Y-T-Y Change             13.0%   -13.1%    10.9%      21.0%

Systems and Technology    21,317      998   22,315      2,153     9.6%
  Y-T-Y Change             -3.0%   -14.5%    -3.6%      23.8%

Software                  19,982    2,416   22,398      6,002    26.8%
  Y-T-Y Change             10.0%     7.5%     9.7%       9.3%

Global Financing           2,502    1,482    3,984      1,386    34.8%
  Y-T-Y Change              5.8%    -3.0%     2.4%      -4.7%

TOTAL REPORTABLE
 SEGMENTS                 97,944    7,726  105,670     15,163    14.3%
  Y-T-Y Change              7.9%    -4.4%     6.9%      10.8%

Eliminations / Other         842  (7,726)  (6,884)      (674)

TOTAL IBM CONSOLIDATED   $98,786       $0  $98,786    $14,489    14.7%
  Y-T-Y Change              8.1%              8.1%       8.8%


                                     TWELVE MONTHS 2006
                       -----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)  ---------  Revenue -------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                       --------- -------- -------- ---------- --------
SEGMENTS

Global Technology
 Services                $32,322   $1,763  $34,086     $3,288     9.6%

Global Business
 Services                 15,969    1,373   17,341      1,706     9.8%

Systems and Technology    21,970    1,168   23,138      1,739     7.5%

Software                  18,161    2,249   20,409      5,493    26.9%

Global Financing           2,365    1,527    3,892      1,455    37.4%

TOTAL REPORTABLE
 SEGMENTS                 90,787    8,080   98,867     13,682    13.8%

Eliminations / Other         637  (8,080)  (7,443)      (365)

TOTAL IBM CONSOLIDATED   $91,424       $0  $91,424    $13,317    14.6%
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IBM
Edward Barbini, 914-499-6565
[e-mail]
or
John Bukovinsky, 732-618-3531
[e-mail]
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