1st Quarter Results

1st Quarter Results 

    LONDON-(BUSINESS WIRE)-April 17, 2002-

               IBM Announces First-Quarter 2002 Results

IBM today announced first-quarter 2002 diluted earnings per common
share of $.68, a 31 percent decrease compared with diluted earnings
per common share of $.98 in the first quarter of 2001. First-quarter
2002 net income was $1.19 billion, a 32 percent decrease from $1.75
billion in the year-earlier period. IBM's first-quarter 2002 revenues
totaled $18.6 billion, a decrease of 12 percent (9 percent at constant
currency) compared with the first quarter of 2001.

Samuel J. Palmisano, IBM president and chief executive officer, said:
"Our first-quarter results, while disappointing, were largely the
result of the continued weak global business environment. As we
indicated in our announcement last week, customers in every part of
the world deferred technology purchases in the first quarter, and
these widespread deferrals hurt us across every one of our major
business segments.

"However, even within this tough climate, we generated $1.7 billion in
pre-tax income, we had very strong services signings of more than $15
billion, and we believe we gained or held share in high-priority
segments of services, software, servers and advanced storage products.
We're pleased that, despite the difficult business conditions, IBM
continued to outpace the competition, and we're committed to
maintaining our leadership.

"While no one can predict the timing of a recovery, we remain
optimistic that business conditions will improve later this year," Mr.
Palmisano said. "Our customers are telling us that information
technology remains critical to the success of their businesses - and
that they will continue to embrace IBM's e-business strategies, our
products and our services. We remain confident about the fundamental
strength of our business and about our prospects for the future."

In the Americas, first-quarter revenues were $8.1 billion, a decrease
of 9 percent (8 percent at constant currency) from the 2001 period.
Revenues from Europe/Middle East/Africa were $5.1 billion, down 8
percent (4 percent at constant currency). Asia- Pacific revenues
declined 9 percent (3 percent at constant currency) to $3.9 billion.
OEM revenues decreased 37 percent (37 percent at constant currency) to
$1.3 billion compared with the first quarter of 2001.

Revenues from Global Services, including maintenance, declined 3
percent (up 1 percent at constant currency) in the first quarter to
$8.2 billion. Global Services revenues, excluding maintenance,
declined 3 percent (up 1 percent at constant currency). IBM signed
more than $15 billion in services contracts, up 50 percent year over
year and a record for a first quarter. The gross profit margin in
services improved by half a point to 26.0 percent year over year.

Hardware revenues decreased 25 percent (23 percent at constant
currency) to $6.4 billion compared with the first quarter of 2001.
Revenues from IBM's zSeries mainframes declined as a result of
deferred purchase decisions and a difficult year-over-year comparison.
Revenues from IBM's pSeries, iSeries and storage products also
declined as a result of price pressures, product transitions and
deferred purchases. However, IBM believes that the company gained or
held share in these product platforms. Personal computer revenues fell
in the first quarter, reflecting continued weak industry demand.
Technology revenues, which include hard disk drives and
microelectronics, decreased substantially from the prior year's
quarter, reflecting ongoing weakness in both product areas.

Software revenues decreased 1 percent (up 3 percent at constant
currency) to $2.9 billion. Middleware products - which comprise 80
percent of IBM's software revenues - grew 6 percent at constant
currency. IBM's leading e-business middleware product, WebSphere, grew
53 percent year over year, for the 12th consecutive quarter of
double-digit growth. DB2, IBM's leading database management software,
grew 12 percent, and Tivoli revenues rebounded. Operating system
revenues declined. The overall software gross profit margin improved
by nearly one point year over year to 81.1 percent.

Global Financing revenues decreased 6 percent (3 percent at constant
currency) in the first quarter to $783 million. Revenues from the
Enterprise Investments/Other area, which includes industry- specific
IT solutions, declined 14 percent (10 percent at constant currency) to
$237 million compared with the first quarter of 2001.

The company's total gross profit margin declined to 34.7 percent in
the first quarter of 2002 from 36.1 percent in the year-ago quarter. A
nearly nine-point reduction in the hardware margin offset improvements
in all other revenue segments.

In the first quarter, total expense and other income improved 7
percent to $4.7 billion. Selling, general and administrative expenses
declined 2 percent and research and development expenses decreased 6
percent, both reflecting a continued reduction in discretionary
spending. SG&A results also include the absorption of higher expenses
for workforce-balancing initiatives and provision for bad debt
expense, and the elimination of the amortization of goodwill. In
addition, the company benefited from a favorable year-to-year impact
of writedowns of equity investments, the sale of personal computer
desktop manufacturing operations to Sanmina-SCI, higher intellectual
property income and lower interest expense.

IBM's tax rate in the first quarter was 29.5 percent compared with
29.7 percent in the first quarter of 2001.

IBM spent approximately $1.8 billion on share repurchases in the first
quarter. The average number of basic common shares outstanding in the
quarter was 1.72 billion compared with 1.74 billion shares in the same
period of 2001. There were 1.71 billion basic common shares
outstanding at March 31, 2002.

The company's debt in support of operations, excluding global
financing, decreased $1.1 billion from year-end 2001 to $531 million,
resulting in a debt-to-capitalization ratio of 3 percent at the end of
the first-quarter 2002. Global financing debt declined $1.2 billion
from year-end 2001 to a total of $24.4 billion, resulting in a
debt-to-equity ratio of 6.6 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, as discussed in the company's
filings with the Securities and Exchange Commission.
              INTERNATIONAL BUSINESS MACHINES CORPORATION
                     COMPARATIVE FINANCIAL RESULTS
      (Unaudited; Dollars in millions except per share amounts)

                              Three months ended March 31
                                                  Percent
                                 2002      2001    Change
                              ----   ----   ----
REVENUE

 Global Services               $8,229    $8,471     -2.9%
  Gross profit margin            26.0%     25.5%

 Hardware                       6,405     8,547    -25.1%
  Gross profit margin            21.5%     30.2%

 Software                       2,897     2,918     -0.7%
  Gross profit margin            81.1%     80.2%

 Global Financing                 783       832     -5.9%
  Gross profit margin            56.6%     47.3%

 Enterprise Investments/
 Other                            237       276    -14.3%
  Gross profit margin            56.2%     49.5%


TOTAL REVENUE                  18,551    21,044    -11.8%


GROSS PROFIT                    6,436     7,608    -15.4%
  Gross profit margin            34.7%     36.1%


EXPENSE AND OTHER INCOME

 S,G&A                          4,053     4,119     -1.6%
  Expense to revenue             21.8%     19.6%

 R,D&E                          1,200     1,281     -6.3%
  Expense to revenue              6.5%      6.1%

 Intellectual property
  and custom development
  income                         (333)     (277)    20.0%
 Other (income) and expense      (205)      (76)   170.8%
 Interest expense                  30        72    -57.9%

TOTAL EXPENSE AND
OTHER INCOME                    4,745     5,119     -7.3%
  Expense to revenue             25.6%     24.3%

INCOME BEFORE
INCOME TAXES                    1,691     2,489    -32.1%
  Pre-tax margin                  9.1%     11.8%

Provision for
income taxes                      499       739    -32.5%
  Effective tax rate             29.5%     29.7%

NET INCOME                     $1,192    $1,750    -31.9%
  Net margin                      6.4%      8.3%

Preferred stock
dividends                           0         5

NET INCOME
APPLICABLE TO COMMON
SHAREHOLDERS                   $1,192    $1,745    -31.7%
                               ======    ======
EARNINGS PER SHARE
OF COMMON STOCK
  - ASSUMING DILUTION           $0.68     $0.98    -30.6%
                               ======    ======
EARNINGS PER SHARE
OF COMMON STOCK
  - BASIC                       $0.69     $1.00    -31.0%
                               ======    ======
AVERAGE NUMBER OF
COMMON SHARES OUT-
STANDING (M's)
  DILUTED                     1,753.0   1,781.2
  BASIC                       1,718.4   1,740.9



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


                                        At           At
(Dollars in millions)             March 31, December 31,  Percent
                                      2002         2001    Change
                                  ----  ------   ----
ASSETS

 Cash, cash equivalents,
 and marketable securities          $3,967       $6,393    -37.9%

 Receivables - net, inventories,
 prepaid expenses                   33,418       36,068     -7.3%

 Plant, rental machines,
 and other property - net           16,629       16,504      0.8%

 Investments and other assets       29,042       29,348     -1.0%
                                  ----     ----

TOTAL ASSETS                       $83,056      $88,313     -6.0%
                                  ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                    $8,243      $11,188    -26.3%
 Long-term debt                     16,665       15,963      4.4%
                                  ----     ----
 Total debt                         24,908       27,151     -8.3%

 Accounts payable, taxes,
 and accruals                       21,841       23,931     -8.7%

 Other liabilities                  13,256       13,617     -2.6%
                                  ----     ----
TOTAL LIABILITIES                   60,005       64,699     -7.3%

STOCKHOLDERS' EQUITY                23,051       23,614     -2.4%
                                  ----     ----
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $83,056      $88,313     -6.0%
                                  ========     ========


            INTERNATIONAL BUSINESS MACHINES CORPORATION
                           SEGMENT DATA
                           (Unaudited)


                                    FIRST QUARTER 2002
                         ----------------------
                                                     Pre-tax  Pre-tax
(Dollars in millions)    ----- Revenue -----  Income   Income
                         External Internal     Total  (Loss)   Margin
                         ---- ----   ---- ----  ----
SEGMENTS



Global Services           $8,229     $640    $8,869  $1,073     12.1%
          % change          -2.9%     8.7%     -2.1%    0.5%
Enterprise Systems         2,484      166     2,650     177      6.7%
          % change         -20.8%    -0.6%    -19.8%  -54.7%
Personal and Printing
Systems                    2,511       13     2,524      65      2.6%
          % change         -20.9%   -27.8%    -21.0%  212.1%
Technology                 1,468      350     1,818    (276)   -15.2%
          % change         -36.6%   -36.2%    -36.6% -310.7%
Software                   2,897      227     3,124     560     17.9%
          % change          -0.7%     6.1%     -0.3%   -4.4%
Global Financing             768      186       954     222     23.3%
          % change          -7.9%   -17.7%    -10.0%  -18.7%
Enterprise Investments       231        1       232     (53)   -22.8%
          % change          -8.7%     0.0%     -8.7%   62.1%

TOTAL SEGMENTS            18,588    1,583    20,171   1,768      8.8%
          % change         -11.9%   -10.3%    -11.8%  -21.5%

Eliminations / Other         (37)  (1,583)   (1,620)    (77)

TOTAL IBM                $18,551       $0   $18,551  $1,691      9.1%
          % change         -11.8%             -11.8%  -32.1%



                                    FIRST QUARTER 2001
                         ----------------------
                                                     Pre-tax  Pre-tax
(Dollars in millions)    ---- Revenue -----  Income    Income
                         External Internal     Total  (Loss)   Margin
                         ---- ----   ---- ----  ----
SEGMENTS

Global Services           $8,471     $589    $9,060  $1,068     11.8%
Enterprise Systems         3,136      167     3,303     391     11.8%
Personal and Printing
Systems                    3,176       18     3,194     (58)    -1.8%
Technology                 2,317      549     2,866     131      4.6%
Software                   2,918      214     3,132     586     18.7%
Global Financing             834      226     1,060     273     25.8%
Enterprise Investments       253        1       254    (140)   -55.1%

TOTAL SEGMENTS            21,105    1,764    22,869   2,251      9.8%

Eliminations / Other         (61)  (1,764)   (1,825)    238

TOTAL IBM                $21,044       $0   $21,044  $2,489     11.8%

*T
   Short Name: Intnl Bus. Mach.
   Category Code: QRF
   Sequence Number: 00000033
   Time of Receipt (in Greenwich Mean Time): 17-APR-2002 08:15 PM GMT