Final Results
International Bus Mach Corp
17 January 2001
( BW)(NY-IBM)(IBM) IBM Announces 2000 Fourth-Quarter, Full-Year
Results; 4Q00 EPS Increased 32%
Business & Technology Editors
ARMONK, N.Y.--(BUSINESS WIRE)--Jan. 17, 2001--IBM today announced
fourth-quarter 2000 diluted earnings per common share of $1.48, a 32
percent increase over diluted earnings per common share of $1.12 in
the fourth quarter of 1999.
Fourth-quarter 2000 net income was $2.7 billion, a 28 percent
increase from the year-earlier period. IBM's fourth-quarter 2000
revenues totaled $25.6 billion, an increase of 6 percent (12 percent
at constant currency) compared with the fourth quarter of 1999. For
full-year 2000, IBM's diluted earnings per common share grew 19
percent, to $4.44, while net income increased 16 percent to $8.1
billion compared with full-year 1999 (after excluding an after-tax net
benefit from the sale of the IBM Global Network and other 1999
actions).
Louis V. Gerstner, Jr., IBM chairman and chief executive officer,
said: 'We had a very solid fourth quarter which, in many respects,
reflects momentum that was building steadily all year. On one level,
this momentum is due to strong execution, and we have increased our
market share in many of our most strategic product areas. More
significantly, this momentum is a strong affirmation of the strategies
we put in place three years ago. Those strategies start with three
premises: the marketplace is increasingly driven by services and
solutions, not products; the marketplace is now driven by powerful,
scalable servers, not PCs; and success will require open,
heterogeneous platforms.
'The power of these strategies is very apparent in our results.
For example, in services we started the year with external skepticism
fueled by dot-com mania and the boutique services companies. We were
not distracted. IBM Global Services ended the year with a backlog of
$85 billion, up from $60 billion at year-end 1999. The marketplace has
moved clearly to our strengths: building serious applications and
serious infrastructure. Similar strategic gains are evident in our
server and software businesses, which are now leading the industry in
technical excellence and relevance to an Internet world.
'As we look to 2001,' Mr. Gerstner said, 'there is uncertainty
about the economic climate in the U.S. However, IBM's broad portfolio
should position us well relative to our competitors. In addition to
our strong product portfolio, our very large businesses in Asia and
Europe should counterbalance short-term disruptions in the U.S. We
look forward to another good year for IBM.'
In the Americas, fourth-quarter revenues were $10.8 billion, an
increase of 3 percent (4 percent at constant currency) from the 1999
period. Revenues from Europe/Middle East/Africa were $7.4 billion, up
3 percent (18 percent at constant currency). Asia-Pacific revenues
increased 13 percent (20 percent at constant currency) to $5.0
billion. OEM revenues increased 13 percent (14 percent at constant
currency) to $2.4 billion compared with the fourth quarter of 1999.
Hardware revenues increased 10 percent (15 percent at constant
currency) to $11.4 billion from the fourth quarter of 1999, with
revenue growth across all server, storage and technology hardware
categories. The company began shipping its new z900 server in
mid-December, contributing to a 100 percent increase in shipments of
mainframe computing capacity in the fourth quarter, as measured in
MIPS (millions of instructions per second). Revenues grew strongly for
the pSeries UNIX servers, with particular strength in the mid-range
and high-end Web server models. Revenues for the mid-range iSeries
servers also increased, with growth across all geographic areas.
Personal computer revenues grew significantly and the unit was
profitable in the quarter. Microelectronics revenues also increased
strongly, principally due to continued acceleration in growth for
sophisticated, leading-edge custom chips. Storage revenues increased
for both the advanced Shark product line as well as for hard disk
drives.
Revenues from IBM Global Services, including maintenance, grew 5
percent (12 percent at constant currency) in the fourth quarter to
$9.2 billion, reflecting revenue growth across all services
categories. E-business services revenues grew more than 70 percent
year over year. Revenue comparisons for IBM Global Services were
adversely affected by a year-over-year decline in the Y2K services
business and the sale of the IBM Global Network to AT&T in 1999. After
adjusting for these factors, Global Services revenues (excluding
maintenance) increased 10 percent (17 percent at constant currency).
IBM signed more than $12.5 billion in services contracts in the fourth
quarter.
Software revenues totaled $3.6 billion, down 1 percent (up 6
percent at constant currency) over the prior year's final quarter.
Revenues continued to grow strongly in the company's middleware
segment, with significant growth in database and Web-management
software. For example, revenues from IBM's premier Web-management
software, WebSphere, nearly tripled year over year. Tivoli revenues
declined in the quarter, reflecting an ongoing transition in this
product area.
IBM Global Financing revenues increased 6 percent (10 percent at
constant currency) in the fourth quarter to $1.0 billion.
Revenues from the Enterprise Investments/Other area, which
includes custom hardware and software products for specialized
customer uses, declined 11 percent (3 percent at constant currency)
year over year to $425 million.
The company's total gross profit margin was 37.7 percent in the
2000 fourth quarter compared with 36.7 percent in the 1999 fourth
quarter.
Fourth-quarter expenses were $5.9 billion. The company's
expense-to-revenue ratio improved by 1.4 points year over year to 23.0
percent.
IBM's tax rate in the fourth quarter was 29.5 percent compared
with 30.0 percent in the fourth quarter of last year.
IBM spent approximately $1.4 billion on share repurchases in the
fourth quarter. The average number of basic common shares outstanding
in the quarter was 1.75 billion compared with 1.79 billion in the same
period of 1999.
Full-year 2000 Results
Net income for the year ended December 31, 2000 was $8.1 billion,
or $4.44 per diluted common share, compared with net income of $7.7
billion, or $4.12 per diluted common share, in 1999 (or net income of
$7.0 billion, or $3.72 per diluted share, in 1999 after excluding the
after-tax net benefit from the sale of the Global Network and other
1999 actions). Revenues in 2000 totaled $88.4 billion, an increase of
1 percent (4 percent at constant currency), versus revenues of $87.5
billion in 1999.
In the Americas, full-year revenues were $38.6 billion, down 1
percent (flat at constant currency) from the 1999 period. Revenues
from Europe/Middle East/Africa were $24.3 billion, a decrease of 5
percent (up 6 percent at constant currency). Asia-Pacific revenues
grew 16 percent (15 percent at constant currency) to $17.7 billion.
OEM revenues decreased 1 percent (1 percent at constant currency) to
$7.8 billion.
Hardware revenues in 2000 were $37.8 billion, essentially flat
year over year (up 2 percent at constant currency). Global Services
revenues totaled $33.2 billion, an increase of 3 percent (6 percent at
constant currency). Software revenues totaled $12.6 billion, a
decrease of 1 percent (up 4 percent at constant currency). Global
Financing revenues totaled $3.4 billion, an increase of 10 percent (13
percent at constant currency). Revenues from the Enterprise
Investments/Other area declined 17 percent (13 percent at constant
currency) year over year to $1.4 billion.
Common share repurchases totaled approximately $6.7 billion in
2000. The average number of basic shares outstanding was 1.76 billion
in 2000 compared with 1.81 billion in 1999. There were 1.74 billion
basic common shares outstanding at December 31, 2000.
IBM completed 2000 with $3.7 billion in cash, after major
expenditures which included the share repurchases, capital investments
of $5.6 billion and an 8 percent dividend increase.
The company's debt in support of operations, excluding global
financing, decreased $493 million from year-end 1999 to $1.1 billion,
resulting in a debt-to-capitalization ratio of 6 percent at year-end
2000. Global financing debt grew $715 million from year-end 1999 to a
total of $27.5 billion, resulting in a debt-to-equity ratio of 6.6 to
1.
Effective in the first quarter of 2000, results reflect changes
the company made in the organization of its business segments,
including the transfer of the system-level product businesses from the
Technology segment to the Enterprise Systems segment and the transfer
of point-of-sale products from the Enterprise Investments segment to
the Personal Systems segment. Also reflected are changes the company
made in its expense allocation methodology, allocating expense items
previously unallocated and enhancing shared expense allocation.
Fourth-quarter and full-year 1999 results have been reclassified to
conform with the 2000 presentation.
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, as discussed in the company's
filings with the Securities and Exchange Commission.
-0-
*T
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
2000 1999(a) Change 2000 1999(a) Change
------- ------- ------- ------- ------- -------
REVENUE
Hardware $11,463 $10,450 9.7% $37,777 $37,888 -0.3%
Gross margin 30.4% 26.9% 28.4% 27.2%
Global Services 9,186 8,736 5.2% 33,152 32,172 3.0%
Gross margin 27.0% 27.9% 26.7% 27.6%
Software 3,571 3,606 -1.0% 12,598 12,662 -0.5%
Gross margin 83.4% 83.4% 81.9% 82.3%
Global Financing 971 915 6.2% 3,465 3,137 10.4%
Gross margin 54.9% 48.8% 54.0% 53.9%
Enterprise Investments/
Other 425 475 -10.7% 1,404 1,689 -16.9%
Gross margin 44.9% 38.3% 46.8% 38.5%
TOTAL REVENUE 25,616 24,182 5.9% 88,396 87,548 1.0%
GROSS PROFIT 9,669 8,883 8.9% 32,424 31,929 1.6%
Gross margin 37.7% 36.7% 36.7% 36.4%
EXPENSE
S,G&A 4,340 4,445 -2.4% 15,639 14,729 6.2%
% of revenue 16.9% 18.4% 17.7% 16.8%
R,D&E 1,449 1,416 2.4% 5,151 5,273 -2.3%
% of revenue 5.7% 5.9% 5.8% 6.0%
Other income 125 134 -6.2% 617 557 10.9%
Interest expense 218 171 27.4% 717 727 -1.4%
TOTAL EXPENSE 5,882 5,898 -0.3% 20,890 20,172 3.6%
% of revenue 23.0% 24.4% 23.6% 23.0%
INCOME BEFORE
INCOME TAXES (1) 3,787 2,985 26.9% 11,534 11,757 -1.9%
Pre-tax margin 14.8% 12.3% 13.0% 13.4%
Provision for
income taxes 1,117 896 24.7% 3,441 4,045 -14.9%
Effective tax
rate 29.5% 30.0% 29.8% 34.4%
NET INCOME (1) $2,670 $2,089 27.9% $8,093 $7,712 4.9%
Net margin 10.4% 8.6% 9.2% 8.8%
Preferred stock
dividends 5 5 20 20
NET INCOME
APPLICABLE TO COMMON
STOCKHOLDERS $2,665 $2,084 27.9% $8,073 $7,692 5.0%
====== ====== ====== ======
EARNINGS PER SHARE
OF COMMON STOCK -
ASSUMING DILUTION $1.48 $1.12 32.1% $4.44 $4.12 7.8%
====== ====== ====== ======
EARNINGS PER SHARE
OF COMMON STOCK -
BASIC $1.52 $1.16 31.0% $4.58 $4.25 7.8%
====== ====== ====== ======
AVERAGE NUMBER OF
COMMON SHARES OUT-
STANDING (M's)
DILUTED 1,790.6 1,847.8 1,812.1 1,871.1
BASIC 1,749.2 1,793.0 1,763.0 1,808.5
(a) Reclassified to conform with 2000 presentation.
(1) Twelve-months 1999 results include a pre-tax benefit of $1.8
billion (after-tax benefit of $750 million, or $.40 per diluted
common share) due to a gain from the sale of the IBM Global
Network, charges for acquired in-process research and development
related to acquisitions, a charge for other actions, as well as
a change in PC depreciable lives.
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(Dollars in millions)
At At
December 31, December 31, Percent
2000 1999 Change
----------- ----------- -------
ASSETS
Cash, cash equivalents,
and marketable securities $3,722 $5,831 -36.2%
Receivables - net, inventories,
and prepaid expenses 38,985 37,324 4.5%
Plant, rental machines,
and other property - net 16,714 17,590 -5.0%
Investments and other assets 28,928 26,750 8.1%
-------- --------
TOTAL ASSETS $88,349 $87,495 1.0%
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Short-term debt $10,205 $14,230 -28.3%
Long-term debt 18,371 14,124 30.1%
-------- --------
Total debt 28,576 28,354 0.8%
Accounts payable, taxes,
and accruals 26,201 25,348 3.4%
Other liabilities 12,948 13,282 -2.5%
-------- --------
TOTAL LIABILITIES 67,725 66,984 1.1%
STOCKHOLDERS' EQUITY 20,624 20,511 0.6%
-------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $88,349 $87,495 1.0%
======== ========
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
FOURTH QUARTER 2000
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- ------- ------- -------
SEGMENTS
Technology $3,193 $839 $4,032 $327 8.1%
% change 15.7% -16.9% 6.9% 80.7%
Personal Systems 4,680 30 4,710 34 0.7%
% change 8.4% 57.9% 8.6% 117.6%
Enterprise Systems 3,792 166 3,958 912 23.0%
% change 20.0% 12.2% 19.6% 132.7%
Global Services 9,186 590 9,776 1,303 13.3%
% change 5.2% -9.4% 4.1% 6.1%
Software 3,571 233 3,804 961 25.3%
% change -1.0% 13.1% -0.2% -0.7%
Global Financing 975 249 1,224 288 23.5%
% change 3.2% 5.5% 3.6% 3.6%
Enterprise Investments 430 0 430 (87) -20.2%
% change -6.1% -6.3% 46.0%
TOTAL SEGMENTS 25,827 2,107 27,934 3,738 13.4%
% change 7.7% -7.2% 6.4% 38.8%
Eliminations / Other (211) (2,107) (2,318) 49
TOTAL IBM $25,616 $0 $25,616 $3,787 14.8%
% change 5.9% 5.9% 26.9%
FOURTH QUARTER 1999 (a)
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- ------- ------- -------
SEGMENTS
Technology $2,760 $1,010 $3,770 $181 4.8%
Personal Systems 4,319 19 4,338 (193) -4.4%
Enterprise Systems 3,160 148 3,308 392 11.9%
Global Services 8,736 651 9,387 1,228 13.1%
Software 3,606 206 3,812 968 25.4%
Global Financing 945 236 1,181 278 23.5%
Enterprise Investments 458 1 459 (161) -35.1%
TOTAL SEGMENTS 23,984 2,271 26,255 2,693 10.3%
Eliminations / Other 198 (2,271) (2,073) 292
TOTAL IBM $24,182 $0 $24,182 $2,985 12.3%
(a) Reclassified to conform with 2000 presentation.
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
TWELVE MONTHS 2000
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- -------- ------- -------
SEGMENTS
Technology $10,221 $3,017 $13,238 $758 5.7%
% change 4.0% -20.1% -2.7% 29.4%
Personal Systems 16,250 85 16,335 (148) -0.9%
% change 0.8% 88.9% 1.1% 58.9%
Enterprise Systems 11,340 624 11,964 2,092 17.5%
% change -1.4% 10.4% -0.9% 14.2%
Global Services 33,152 2,439 35,591 4,517 12.7%
% change 3.0% -7.5% 2.2% 1.2%
Software 12,598 828 13,426 2,793 20.8%
% change -0.5% 8.0% -0.0% -9.9%
Global Financing 3,500 944 4,444 1,176 26.5%
% change 8.7% 13.1% 9.6% 12.3%
Enterprise Investments 1,369 3 1,372 (297) -21.6%
% change -17.1% -84.2% -17.8% 57.4%
TOTAL SEGMENTS 88,430 7,940 96,370 10,891 11.3%
% change 1.5% -8.1% 0.6% 9.2%
Eliminations / Other (34) (7,940) (7,974) 643
TOTAL IBM $88,396 $0 $88,396 $11,534 13.0%
% change 1.0% 1.0% -1.9%
TWELVE MONTHS 1999 (a)
-----------------------------------------------
Pre-tax
(Dollars in millions) ---------- Revenue --------- Pre-tax Income
External Internal Total Income Margin
-------- -------- -------- ------- -------
SEGMENTS
Technology $9,832 $3,777 $13,609 $586 4.3%
Personal Systems 16,118 45 16,163 (360) -2.2%
Enterprise Systems 11,503 565 12,068 1,832 15.2%
Global Services 32,172 2,636 34,808 4,464 12.8%
Software 12,662 767 13,429 3,099 23.1%
Global Financing 3,219 835 4,054 1,047 25.8%
Enterprise Investments 1,651 19 1,670 (697) -41.7%
TOTAL SEGMENTS 87,157 8,644 95,801 9,971 10.4%
Eliminations / Other 391 (8,644) (8,253) 1,786 (1)
TOTAL IBM $87,548 $0 $87,548 $11,757 13.4%
(a) Reclassified to conform with 2000 presentation.
(1) Pre-tax income includes a net benefit of $1.8 billion due to a
gain from the sale of the IBM Global Network, charges for acquired
in-process research and development related to acquisitions, a charge
for other actions, as well as a change in PC depreciable lives.
*T
--30--sdg/ny*
CONTACT: IBM, Armonk
Rob Wilson
914/499-6565
wilsonr@us.ibm.com
or
Carol Makovich
914/499-6212
makovich@us.ibm.com
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