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.

    ARMONK, N.Y., April 17 /CNW/ - 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)

    
              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%
    




For further information:

For further information: IBM John Bukovinsky, 914-499-6212
jbuko@us.ibm.com


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