IBM Reports 2007 Third-Quarter Results

--  Diluted earnings of $1.68 per share, up 16 percent as reported;

    --  Total revenues of $24.1 billion, up 7 percent;

    --  Global Business Services revenues up 16 percent; pre-tax income up 29
        percent;

    --  Global Technology Services revenues up 13 percent; pre-tax income up 26
        percent;

    --  Highest overall Global Services revenue growth in four years.
                  IBM
Edward Barbini, 914/499-6565
[e-mail]
                  IBM (NYSE: IBM) today announced third-quarter 2007 diluted earnings of $1.68 per
share from continuing operations compared with diluted earnings of $1.45 per
share in the third quarter of 2006, an increase of 16 percent as reported.
Third- quarter income from continuing operations was $2.4 billion compared with
$2.2 billion in the third quarter of 2006, an increase of 6 percent. Total
revenues for the third quarter of 2007 of $24.1 billion increased 7 percent (3
percent, adjusting for currency) from the third quarter of 2006.

'Our outstanding services results this quarter enabled us to stay on track
toward our objective of accelerated earnings per share growth through 2010,
while we work through a transition in our hardware business,' said Samuel J.
Palmisano, IBM chairman, president and chief executive officer. 'Our
year-to-date performance underscores the strength of major elements of our
long-term roadmap, including revenue growth, margin expansion, and continued
success in emerging market countries and in the integration of our
acquisitions.'

From a geographic perspective, the Americas' third-quarter revenues were $10.2
billion, an increase of 4 percent as reported (3 percent, adjusting for
currency) from the 2006 period. Revenues from Europe/Middle East/Africa were
$8.1 billion, up 11 percent (4 percent, adjusting for currency). Asia-Pacific
revenues increased 9 percent (6 percent, adjusting for currency) to $4.9
billion. OEM revenues were $890 million, down 12 percent compared with the 2006
third quarter.

Total Global Services revenues grew 14 percent (10 percent, adjusting for
currency) -- the highest growth since third quarter of 2003 -- 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 16 percent (12 percent, adjusting for
currency) to $4.6 billion. Global Technology Services segment revenues increased
13 percent (9 percent, adjusting for currency) to $9.1 billion, benefiting from
sales of new business to existing clients. IBM signed services contracts
totaling $11.8 billion, up 12 percent year over year, and ended the third
quarter with an estimated services backlog, including Strategic Outsourcing,
Business Transformation Outsourcing, Integrated Technology Services, Global
Business Services and Maintenance, of $116 billion, an increase of $7 billion
year to year.

Revenues from the Systems and Technology segment totaled $4.9 billion for the
quarter, down 10 percent (13 percent, adjusting for currency). Revenues
decreased 6 percent excluding the year-to-year impact of the Printing System
Division divestiture in June 2007. Systems and Technology revenues from the
System p UNIX server products increased 6 percent compared with the 2006 period
and revenues from the System x servers increased 6 percent. Faced with a
difficult comparison, revenues from System z server products decreased 31
percent versus the year-ago period. Total delivery of System z computing power,
which is measured in MIPS (millions of instructions per second), decreased 21
percent. Revenues from the System i servers decreased 21 percent. Revenues from
System Storage increased 1 percent and revenues from Microelectronics decreased
15 percent.

Revenues from the Software segment were $4.7 billion, an increase of 7 percent
(3 percent, adjusting for currency) compared with the third quarter of 2006.
Revenues from IBM's middleware products, which primarily include WebSphere,
Information Management, Tivoli, Lotus and Rational products, were $3.6 billion,
up 6 percent versus the third quarter of 2006. Operating systems revenues of
$564 million increased 2 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 10
percent. Revenues for Information Management software, which enables clients to
leverage information on demand, increased 9 percent. Revenues from Tivoli
software, infrastructure software that enables clients to centrally manage
networks including security and storage capability, increased 5 percent, and
revenues for Lotus software, which allows collaborating and messaging by clients
in real-time communication and knowledge management, increased 9 percent year
over year. Revenues from Rational software, integrated tools to improve the
processes of software development, increased 3 percent compared with the
year-ago quarter.

Global Financing segment revenues increased 6 percent (2 percent, adjusting for
currency) in the third quarter to $623 million.

The company's total gross profit margin was 41.3 percent in the 2007 third
quarter compared with 42.0 percent in the 2006 period.

Total expense and other income increased 6 percent to $6.7 billion compared to
$6.3 billion in the prior-year period. SG&A expense increased 4 percent to $5.3
billion. RD&E expense decreased 1 percent to $1.5 billion compared with the
year-ago period. Intellectual property and custom development income increased
to $270 million compared with $242 million a year ago. Other (income) and
expense contributed income of $95 million in the third quarter of 2007 versus
income of $174 million in the third quarter of 2006. Interest expense increased
to $193 million compared with $70 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 prior quarter.

IBM's effective tax rate in the third-quarter 2007 was 28.0 percent compared
with 30.0 percent in the third quarter of 2006.

The weighted-average number of diluted common shares outstanding in the
third-quarter 2007 was 1.41 billion compared with 1.53 billion shares in the
same period of 2006. As of September 30, 2007, there were 1.38 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 $1.5 billion from year-end 2006 to a total of $23.8 billion, resulting
in a debt-to-equity ratio of 6.8 to 1. The non-global financing
debt-to-capitalization ratio was 40.3 percent at the end of September 30, 2007
compared with 46.7 percent at the end of the second quarter, which reflects
increased financial leverage associated with the accelerated share repurchase
agreements. The cash balance was $13.8 billion at the end of the third quarter.

Year-To-Date 2007 Results

Income from continuing operations for the nine months ended September 30, 2007
was $6.5 billion compared with $6.0 billion in the year-ago period. Diluted
earnings per share from continuing operations were $4.42 compared with $3.81 per
diluted share for the 2006 period. Revenues from continuing operations for the
nine-month period totaled $69.9 billion, an increase of 7 percent (4 percent,
adjusting for currency) compared with $65.2 billion for the nine months of 2006.

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 from the Printing System Division divestiture;

    --  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 third-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/3q07. Presentation charts will be available on the Web site
prior to the Webcast.

Financial Results Attached (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
      (Unaudited; Dollars in millions except per share amounts)

                        Three Months               Nine Months
                     Ended September 30,       Ended September 30,
                                     Percent                   Percent
                      2007     2006  Change     2007     2006  Change
                    ------   ------ -------  -------  ------- -------
REVENUE


 Global Technology
 Services           $9,093   $8,058    12.8% $26,106  $23,732    10.0%
  Gross margin        30.6%    30.2%            29.9%    29.7%

 Global Business
 Services            4,586    3,959    15.9%  13,108   11,746    11.6%
  Gross margin        22.9%    22.8%            23.7%    22.6%

 Systems and
 Technology          4,898    5,466   -10.4%  14,520   14,900    -2.5%
  Gross margin        38.5%    38.2%            36.9%    35.8%

 Software            4,694    4,406     6.5%  13,723   12,554     9.3%
  Gross margin        84.2%    85.3%            84.3%    84.6%

 Global Financing      623      587     6.1%   1,834    1,744     5.1%
  Gross margin        44.6%    48.6%            47.2%    50.8%

 Other                 225      141    59.3%     630      491    28.4%
  Gross margin         2.7%    13.6%            11.2%     9.4%

TOTAL REVENUE       24,119   22,617     6.6%  69,920   65,166     7.3%


GROSS PROFIT         9,956    9,492     4.9%  28,760   26,594     8.1%
  Gross margin        41.3%    42.0%            41.1%    40.8%


EXPENSE AND OTHER INCOME

 S,G&A               5,324    5,121     4.0%  16,044   14,639     9.6%
  % of revenue        22.1%    22.6%            22.9%    22.5%

 R,D&E               1,524    1,543    -1.2%   4,568    4,520     1.1%
  % of revenue         6.3%     6.8%             6.5%     6.9%

 Intellectual property
  and custom development
  income              (270)    (242)   11.7%    (721)    (659)    9.4%
 Other (income)
   and expense         (95)    (174)  -45.2%    (528)    (616)  -14.3%
 Interest expense      193       70   177.9%     396      207    91.1%

TOTAL EXPENSE AND
OTHER INCOME         6,676    6,317     5.7%  19,759   18,091     9.2%
  % of revenue        27.7%    27.9%            28.3%    27.8%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES         3,280    3,174     3.3%   9,001    8,503     5.9%
  Pre-tax margin      13.6%    14.0%            12.9%    13.0%

Provision for
income taxes           918      952    -3.6%   2,534    2,551    -0.7%
  Effective tax
  rate                28.0%    30.0%            28.2%    30.0%

INCOME FROM CONTINUING
OPERATIONS          $2,362   $2,222     6.3%  $6,467   $5,952     8.7%
  Net margin           9.8%     9.8%             9.2%     9.1%

DISCONTINUED OPERATIONS
Loss from discontinued
operations              (1)      (0)              (1)      (0)
 NET INCOME         $2,361   $2,222     6.3%  $6,466   $5,952     8.6%
                    ======   ======           ======   ======


EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS        $1.68    $1.45    15.9%   $4.42    $3.81    16.0%
  DISCONTINUED
   OPERATIONS        (0.00)   (0.00)           (0.00)   (0.00)
                    ------   ------           ------   ------
  TOTAL              $1.68    $1.45    15.9%   $4.42    $3.81    16.0%
                    ======   ======           ======   ======
 BASIC
  CONTINUING
   OPERATIONS        $1.72    $1.47    17.0%   $4.50    $3.87    16.3%
  DISCONTINUED
   OPERATIONS        (0.00)   (0.00)           (0.00)   (0.00)
                    ------   ------           ------   ------
  TOTAL              $1.72    $1.47    17.0%   $4.50    $3.87    16.3%
                    ======   ======           ======   ======

WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's)
 ASSUMING DILUTION 1,405.8  1,534.3          1,463.1  1,560.5
 BASIC             1,371.4  1,513.2          1,436.0  1,538.6


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

                                         At           At
(Dollars in millions)          September 30, December 31,  Percent
                                       2007         2006    Change
                                -----------  -----------   -------
ASSETS

 Cash, cash equivalents,
 and marketable securities          $13,822      $10,657     29.7%

 Receivables - net, inventories,
 prepaid expenses                    32,766       34,003     -3.6%

 Plant, rental machines,
 and other property - net            14,836       14,440      2.7%

 Investments and other assets        47,184       44,134      6.9%
                                   --------     --------

TOTAL ASSETS                       $108,609     $103,234      5.2%
                                   ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                    $16,546       $8,902     85.9%
 Long-term debt                      18,775       13,780     36.2%
                                   --------     --------
 Total debt                          35,322       22,682     55.7%

 Accounts payable, taxes,
 and accruals                        28,464       31,189     -8.7%

 Other liabilities                   24,277       20,857     16.4%
                                   --------     --------
TOTAL LIABILITIES                    88,063       74,728     17.8%

STOCKHOLDERS' EQUITY                 20,546       28,506    -27.9%
                                   --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $108,609     $103,234      5.2%
                                   ========     ========


                 INTERNATIONAL BUSINESS MACHINES CORPORATION
                               SEGMENT DATA
                                (Unaudited)

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

Global Technology
 Services                $9,093     $408    $9,501    $1,028     10.8%
  Y-T-Y Change             12.8%    -4.6%     12.0%     26.3%

Global Business Services  4,586      276     4,862       521     10.7%
  Y-T-Y Change             15.9%   -18.0%     13.2%     28.6%

Systems and Technology    4,898      236     5,134       361      7.0%
  Y-T-Y Change            -10.4%    -7.5%    -10.3%    -12.4%

Software                  4,694      571     5,265     1,283     24.4%
  Y-T-Y Change              6.5%     2.0%      6.0%     -1.5%

Global Financing            623      348       970       339     34.9%
  Y-T-Y Change              6.1%     3.2%      5.1%      1.1%

TOTAL REPORTABLE
 SEGMENTS                23,894    1,838    25,732     3,532     13.7%
  Y-T-Y Change              6.3%    -4.1%      5.5%      8.1%

Eliminations / Other        225   (1,838)   (1,613)     (252)

TOTAL IBM CONSOLIDATED  $24,119       $0   $24,119    $3,280     13.6%
  Y-T-Y Change              6.6%               6.6%      3.3%


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

Global Technology
 Services                $8,058     $428    $8,486      $814      9.6%

Global Business Services  3,959      337     4,295       405      9.4%

Systems and Technology    5,466      255     5,721       413      7.2%

Software                  4,406      559     4,965     1,302     26.2%

Global Financing            587      337       924       335     36.2%

TOTAL REPORTABLE
 SEGMENTS                22,476    1,916    24,391     3,268     13.4%

Eliminations / Other        141   (1,916)   (1,774)      (94)

TOTAL IBM CONSOLIDATED  $22,617       $0   $22,617    $3,174     14.0%


              INTERNATIONAL BUSINESS MACHINES CORPORATION
                             SEGMENT DATA
                               (Unaudited)

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

Global Technology
 Services               $26,106   $1,243   $27,348    $2,497      9.1%
  Y-T-Y Change             10.0%    -6.5%      9.1%      2.1%

Global Business Services 13,108      906    14,014     1,477     10.5%
  Y-T-Y Change             11.6%   -11.5%      9.7%     26.4%

Systems and Technology   14,520      758    15,279       789      5.2%
  Y-T-Y Change             -2.5%    -6.0%     -2.7%     35.7%

Software                 13,723    1,704    15,427     3,569     23.1%
  Y-T-Y Change              9.3%     5.4%      8.9%      2.6%

Global Financing          1,834    1,037     2,871     1,045     36.4%
  Y-T-Y Change              5.1%    -0.2%      3.1%     -2.2%

TOTAL REPORTABLE
 SEGMENTS                69,291    5,648    74,939     9,376     12.5%
  Y-T-Y Change              7.1%    -2.8%      6.3%      7.3%

Eliminations / Other        630   (5,648)   (5,018)     (375)

TOTAL IBM CONSOLIDATED  $69,920       $0   $69,920    $9,001     12.9%
  Y-T-Y Change              7.3%               7.3%      5.9%


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

Global Technology
 Services               $23,732   $1,328   $25,061    $2,445      9.8%

Global Business
 Services                11,746    1,023    12,769     1,168      9.1%

Systems and Technology   14,900      807    15,706       582      3.7%

Software                 12,554    1,616    14,170     3,478     24.5%

Global Financing          1,744    1,039     2,784     1,068     38.4%

TOTAL REPORTABLE
 SEGMENTS                64,676    5,814    70,490     8,741     12.4%

Eliminations / Other        491   (5,814)   (5,323)     (239)

TOTAL IBM CONSOLIDATED  $65,166       $0   $65,166    $8,503     13.0%
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IBM
Edward Barbini, 914/499-6565
[e-mail]
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