1st Quarter Results

IBM
                  

                IBM Reports 2004 First-Quarter Results

IBM today announced first-quarter 2004 diluted earnings per common share of $.93
from continuing operations compared with diluted earnings of $.79 per share in
the same period of 2003, an increase of 18 percent. First-quarter income from
continuing operations was $1.6 billion compared with $1.4 billion a year ago, an
increase of 16 percent. Revenues from continuing operations for the first
quarter were $22.2 billion, up 11 percent compared with the first quarter of
2003 revenues of $20.1 billion.

Samuel J. Palmisano, IBM chairman and chief executive officer, said: 'The IBM
team entered the first quarter with good momentum and delivered a solid first
quarter. Behind the results, clients are increasingly turning to IBM to help
them become on demand businesses. This is creating demand for integrated
services and high-performance IT infrastructure based on open industry standards
-- areas where we have chosen to lead.

'IBM continued to out-perform the industry in our selected segments and gained
share. We continued our industry-leading work in services with more than $10
billion in signings after a very strong fourth quarter of signings, and we grew
our software and systems businesses, with significant progress in zSeries
servers and WebSphere middleware. We delivered double-digit growth in emerging
markets such as China, Eastern Europe, India and Brazil. Our balance sheet
remains strong, with $8.5 billion of cash on hand.

'Despite the strengthening economic recovery, many of our competitors continue
to struggle with the fundamental, changing dynamics of the IT industry. Because
we anticipated these changes -- in computing and in how enterprises apply
technology -- we made significant investments and repositioned IBM during the
downturn. Those strategic moves are beginning to pay off for our clients and
shareholders. We remain enthusiastic about our prospects for 2004.'

First-quarter revenue growth of 11 percent (3 percent, adjusting for currency)
was driven by growth across all geographies. In the Americas, first-quarter
revenues from continuing operations were $9.1 billion, up 6 percent (4 percent,
adjusting for currency) from the 2003 period. Revenues from Europe/Middle
East/Africa were $7.3 billion, an increase of 15 percent (1 percent, adjusting
for currency). Asia-Pacific revenues grew 16 percent (6 percent, adjusting for
currency) to $5.2 billion. OEM revenues decreased 3 percent to $671 million
compared with the first quarter of 2003.

Revenues grew at double digits in three of IBM's five industry sectors in the
first quarter, as well as sales to Small and Medium businesses, which led the
growth with 15 percent year over year.

Revenues from Global Services, including maintenance, increased 9 percent (1
percent, adjusting for currency) to $11.1 billion in the first quarter. Global
Services revenues, excluding maintenance, increased 9 percent as well (1
percent, adjusting for currency). IBM signed services contracts totaling more
than $10 billion and ended the quarter with an estimated services backlog,
including Strategic Outsourcing, Business Consulting Services, Integrated
Technology Services and Maintenance, of $120 billion.

Hardware revenues from continuing operations increased 16 percent (10 percent,
adjusting for currency) to $6.7 billion in the first quarter versus the year-ago
period. In the quarter, revenues from the new Systems and Technology Group
increased. As a result of a 'one team' approach to collaboration between Systems
Group and Technology Group, the two segments were combined into one reporting
segment in the first quarter of 2004.

First-quarter revenues for this group totaled $3.8 billion, up 14 percent due in
large part to significant eServer revenue increases for xSeries Intel-based
servers, pSeries UNIX servers and zSeries servers. The total delivery of zSeries
computing power as measured in MIPS (millions of instructions per second)
increased nearly 100 percent in the quarter compared with the first quarter of
2003. Revenues for the eServer iSeries midrange servers declined as did
Microelectronics revenues. Storage Systems revenues increased due to strength in
midrange disk and tape products. Personal Systems Group revenues increased 18
percent to $2.8 billion. Revenues from mobile personal computers increased
significantly due to strong demand.

Revenues from Software were $3.5 billion, an increase of 11 percent (3 percent,
adjusting for currency) compared with the first quarter of 2003. Revenues from
IBM's middleware brands, which include WebSphere, DB2, Rational, Tivoli and
Lotus products, increased 13 percent to $2.7 billion in the first quarter of
2004. Operating systems revenues increased 6 percent to $604 million compared
with the first quarter of 2003.

WebSphere revenues in the first quarter increased 24 percent. WebSphere software
facilitates customers' ability to manage a wide variety of business processes
using open standards to interconnect applications, data and operating systems.
Revenues for Data Management increased 10 percent including revenues for DB2
database software, which increased 14 percent. Revenues from Tivoli software
(infrastructure software that enables customers to centrally manage networks and
storage) increased 18 percent, and revenues for Lotus software, which enables
customers to communicate, collaborate and learn effectively, increased 15
percent. Revenues from Rational (comprehensive software development tools)
increased 88 percent, benefiting from the comparison to a partial first quarter
in 2003 when the business was acquired.

Global Financing revenues declined 6 percent (12 percent, adjusting for
currency) in the first quarter to $662 million. Revenues from the Enterprise
Investments/Other area, which includes industry-specific IT solutions such as
product life-cycle management software, increased 13 percent (6 percent,
adjusting for currency) to $288 million compared with the first quarter of 2003.

The company's total gross profit margin from continuing operations was 36.0
percent in the 2004 first quarter, the same as the first quarter of 2003.

In the first quarter of 2004, total expense and other income from continuing
operations of $5.7 billion increased 9 percent over the year-earlier period. The
company's selling, general and administrative expense-to-revenue ratio improved
to 20.2 percent in the quarter compared with 21.0 percent in the first-quarter
2003, while SG&A expense increased 6 percent to $4.5 billion. Research,
development and engineering expense increased 14 percent to $1.4 billion.
Intellectual property and custom development income declined 36 percent. Other
(income) and expense was $13 million of net expense in the first quarter of 2004
versus $84 million of net expense in the same period last year.

IBM's effective tax rate from continuing operations in the first- quarter 2004
was 30.0 percent, the same as the first quarter of 2003.

For total operations, net income for the first quarter of 2004, including a loss
from discontinued operations of $1 million, was $1.6 billion, or $.93 per
diluted common share. Net income for the first quarter of 2003, including a loss
from discontinued operations of $3 million, was $1.4 billion, or $.79 per
diluted share.

Share repurchases totaled approximately $1.8 billion in the first quarter. The
weighted-average number of diluted common shares outstanding in the quarter was
1.73 billion compared with 1.76 billion shares in the same period of 2003. As of
March 31, 2004, there were 1.69 billion basic shares outstanding.

Debt, including Global Financing, totaled $23.7 billion, essentially the same at
year-end 2003. From a management segment view, the non-global financing
debt-to-capitalization ratio was 2.8 percent at the end of March 31, 2004, and
Global Financing debt declined $300 million from year-end 2003 to a total of
$23.0 billion, resulting in a debt-to-equity ratio of 6.7 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 (SEC).

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:

- adjusting for 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.

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/1q04.

Financial Results Attached

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


                             Three Months Ended March 31,
                                                  Percent
                                 2004      2003    Change
                              -------   -------   -------
REVENUE

 Global Services              $11,099   $10,169      9.1%
  Gross profit margin            24.5%     24.9%

 Hardware                       6,735     5,808     16.0%
  Gross profit margin            26.7%     26.6%

 Software                       3,466     3,129     10.8%
  Gross profit margin            86.0%     84.6%

 Global Financing                 662       705     -6.0%
  Gross profit margin            60.5%     58.9%

 Enterprise Investments/
 Other                            288       254     13.2%
  Gross profit margin            39.5%     36.7%


TOTAL REVENUE                  22,250    20,065     10.9%


GROSS PROFIT                    8,009     7,233     10.7%
  Gross profit margin            36.0%     36.0%


EXPENSE AND OTHER INCOME

 S,G&A                          4,484     4,215      6.4%
  Expense to revenue             20.2%     21.0%

 R,D&E                          1,367     1,195     14.4%
  Expense to revenue              6.1%      6.0%

 Intellectual property
  and custom development
  income                         (180)     (282)   -36.4%
 Other (income) and expense        13        84    -84.9%
 Interest expense                  35        40    -12.4%

TOTAL EXPENSE AND
OTHER INCOME                    5,719     5,252      8.9%
  Expense to revenue             25.7%     26.2%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES                    2,290     1,981     15.6%
  Pre-tax margin                 10.3%      9.9%

Provision for
income taxes                      687       594     15.6%
  Effective tax rate             30.0%     30.0%

INCOME FROM CONTINUING
OPERATIONS                     $1,603    $1,387     15.5%
  Net margin                      7.2%      6.9%

DISCONTINUED OPERATIONS
Loss from discontinued
operations                          1         3

NET INCOME                     $1,602    $1,384     15.7%
                               ======    ======

EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS                   $0.93     $0.79     17.7%
  DISCONTINUED
   OPERATIONS                   (0.00)    (0.00)
                               ------    ------
  TOTAL                         $0.93     $0.79     17.7%
                               ======    ======
 BASIC
  CONTINUING
   OPERATIONS                   $0.95     $0.80     18.8%
  DISCONTINUED
   OPERATIONS                   (0.00)    (0.00)
                               ------    ------
  TOTAL                         $0.95     $0.80     18.8%
                               ======    ======
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's)
  ASSUMING DILUTION           1,730.1   1,758.5
  BASIC                       1,691.7   1,725.3




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

                                         At           At
(Dollars in millions)              March 31, December 31,  Percent
                                       2004         2003    Change
                                   --------  -----------   -------
ASSETS

 Cash, cash equivalents,
 and marketable securities           $8,501       $7,647     11.2%

 Receivables - net, inventories,
 prepaid expenses                    34,118       37,351     -8.7%

 Plant, rental machines,
 and other property - net            14,612       14,689     -0.5%

 Investments and other assets        44,594       44,770     -0.4%
                                   --------     --------

TOTAL ASSETS                       $101,825     $104,457     -2.5%
                                   ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                     $7,568       $6,646     13.9%
 Long-term debt                      16,098       16,986     -5.2%
                                   --------     --------
 Total debt                          23,666       23,632      0.1%

 Accounts payable, taxes,
 and accruals                        27,817       31,254    -11.0%

 Other liabilities                   22,157       21,707      2.1%
                                   --------     --------
TOTAL LIABILITIES                    73,640       76,593     -3.9%

STOCKHOLDERS' EQUITY                 28,185       27,864      1.2%
                                   --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $101,825     $104,457     -2.5%
                                   ========     ========


               INTERNATIONAL BUSINESS MACHINES CORPORATION
                             SEGMENT DATA
                              (Unaudited)


                                       FIRST QUARTER 2004
                        ----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)   -------- Revenue --------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                        -------- --------  ------- ----------  -------
SEGMENTS

Global Services          $11,099     $762   $11,861      $991     8.4%
  % change                   9.1%     9.0%      9.1%      0.8%
Systems and Technology
Group                      3,776      236     4,012       170     4.2%
  % change                  14.1%    27.6%     14.9%     -5.0%
Personal Systems Group     2,826       23     2,849       (11)   -0.4%
  % change                  18.2%   -36.1%     17.4%     84.1%
Software                   3,466      401     3,867       854    22.1%
  % change                  10.8%     3.6%     10.0%     33.6%
Global Financing             665      280       945       374    39.6%
  % change                  -5.1%    -5.1%     -5.1%     37.0%
Enterprise Investments       275        2       277       (52)  -18.8%
  % change                  14.1%   100.0%     14.5%     22.4%

TOTAL SEGMENTS             22,107    1,704    23,811     2,326    9.8%
  % change                  10.9%     6.3%     10.5%     20.0%

Eliminations / Other         143   (1,704)   (1,561)      (36)

TOTAL IBM                $22,250       $0   $22,250    $2,290    10.3%
  % change                  10.9%              10.9%     15.6%



                                       FIRST QUARTER 2003
                        ----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)   -------- Revenue --------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                        -------- --------  ------- ----------  -------
SEGMENTS

Global Services          $10,169     $699   $10,868      $983     9.0%
Systems and Technology
Group (a)                  3,308      185     3,493       179     5.1%
Personal Systems Group     2,390       36     2,426       (69)   -2.8%
Software                   3,129      387     3,516       639    18.2%
Global Financing             701      295       996       273    27.4%
Enterprise Investments       241        1       242       (67)  -27.7%

TOTAL SEGMENTS            19,938    1,603    21,541     1,938     9.0%

Eliminations / Other         127   (1,603)   (1,476)       43

TOTAL IBM                $20,065       $0   $20,065    $1,981     9.9%

(a) 2003 Technology Group and Systems Group segment results have been
reclassified to conform with current reporting structure.

    CONTACT: IBM
             Edward Barbini, 914-499-6565
             [e-mail]