1st Quarter Results

IBM
                  

                IBM Reports 2006 First-Quarter Results

    --  Diluted earnings per share of $1.08 from continuing operations, up 27
        percent year to year.

    --  Income from continuing operations of $1.7 billion, up 21 percent from
        first-quarter 2005.

    --  Total revenues of $20.7 billion, down 10 percent as reported, up 4
        percent when adjusting for currency and the impact of the divested PC
        business.

IBM today announced first-quarter 2006 diluted earnings per common share of
$1.08 from continuing operations, compared with diluted earnings of $.85 per
share in the first quarter of 2005, an increase of 27 percent. First-quarter
income from continuing operations was $1.7 billion compared with $1.4 billion in
the first quarter of 2005, an increase of 21 percent. Total revenues for the
first quarter of 2006 of $20.7 billion decreased 10 percent (7 percent,
adjusting for currency) from the first quarter of 2005, which includes revenue
from the divested PC business. Excluding the PC revenue, revenues were flat (up
4 percent, adjusting for currency) compared with the first quarter of 2005.

Samuel J. Palmisano, IBM chairman and chief executive officer, said: 'IBM had a
good quarter with excellent earnings-per-share results. We continued to improve
our profit performance with our strategic focus on higher-value segments of the
marketplace, as well as with our emphasis on productivity and global
integration. Our performance underscores the strength of our business model
across a balanced portfolio of software, services and hardware, and demonstrates
the benefits of the strategic actions we've taken in recent years to reposition
the company.

'We had very strong results in middleware and continued revenue growth in
microelectronics for our 300-millimeter wafer products that serve the major
gaming platforms. Services signings increased, services margins rose for the
seventh straight quarter year to year, and IBM again grew in emerging markets.
Our cash position remains strong. After investing in our business and returning
nearly $3 billion to investors, we ended the quarter with a cash balance of more
than $12 billion, significantly above a year ago. Our clients continued to
demonstrate that they value IBM's ability to help them innovate.'

From a geographic perspective, the Americas first-quarter revenues were $9.0
billion, a decrease of 3 percent as reported (up 6 percent, adjusting for
currency and PCs) from the 2005 period. Revenues from Europe/Middle East/Africa
were $6.7 billion, down 14 percent (up 3 percent, adjusting for currency and
PCs). Asia-Pacific revenues decreased 21 percent (2 percent, adjusting for
currency and PCs) to $4.1 billion. OEM revenues were $873 million, up 26 percent
compared with the 2005 first quarter.

Revenues from Global Services, including maintenance, decreased 1 percent (up 3
percent, adjusting for currency) to $11.6 billion in the first quarter of 2006.
IBM signed services contracts totaling $11.4 billion and ended the quarter with
an estimated services backlog, including Strategic Outsourcing, Business
Transformation Outsourcing, Global Business Services, Integrated Technology
Services and Maintenance, of $111 billion.

IBM's revenues from the emerging growth areas of Business Performance
Transformation Services and emerging countries without the PC business increased
24 percent and 27 percent in the first quarter of 2006, respectively.

Hardware revenues decreased 32 percent (31 percent, adjusting for currency) to
$4.6 billion in the first-quarter 2006 compared to $6.8 billion in the year-ago
period, which includes revenue from the divested PC business. Hardware revenues
without the PC business increased 3 percent (6 percent, adjusting for currency).

Hardware revenues for the Systems and Technology Group totaled $4.4 billion for
the quarter, up 3 percent (6 percent, adjusting for currency). Revenues from the
System x server products increased 10 percent compared with the year-ago period.
Revenues from the System p UNIX servers decreased 9 percent and revenues from
the System i servers decreased 22 percent. Revenues from the System z server
products decreased 6 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 22 percent. Revenues from Microelectronics increased 37
percent and revenues from System Storage increased 6 percent.

Revenues from Software were $3.9 billion, an increase of 2 percent (6 percent,
adjusting for currency) compared with the first quarter of 2005. Revenues from
IBM's middleware brands, which include WebSphere, DB2, Tivoli, Lotus and
Rational products, were $3.0 billion, up 6 percent versus the first quarter of
2005. Operating systems revenues decreased 12 percent to $520 million 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 26
percent. Revenues for Information Management software, which enables clients to
leverage information on demand, increased 6 percent. Revenues from Tivoli
software, infrastructure software that enables customers to centrally manage
networks and storage, increased 24 percent, and revenues for Lotus software,
which allows collaborating and messaging by customers in real-time communication
and knowledge management, were flat year over year. Revenues from Rational
software, integrated tools to improve the processes of software development,
decreased 8 percent compared with the year-ago quarter.

Global Financing revenues increased 1 percent (4 percent, adjusting for
currency) in the first quarter to $583 million.

The company's total gross profit margin was 39.1 percent in the 2006 first
quarter compared with 36.0 percent in the 2005 period, which includes the
divested PC business. Excluding the PC business, the first-quarter 2005 gross
profit margin was 38.7 percent.

Total expense and other income decreased 10 percent to $5.6 billion compared
with the prior-year period. SG&A expense decreased 7 percent principally as a
result of the sale of the PC business. RD&E expense was $1.5 billion, flat
compared with the year-ago period. Intellectual property and custom development
income increased to $229 million compared with $219 million a year ago. Other
(income) and expense was $246 million of income in the first quarter of 2006,
versus $22 million of expense in the same period last year.

IBM's effective tax rate in the first-quarter 2006 was 30.0 percent, compared
with 30.0 percent in the first quarter of 2005.

Share repurchases totaled approximately $2.5 billion in the first quarter. The
weighted-average number of diluted common shares outstanding in the
first-quarter 2006 was 1.59 billion compared with 1.66 billion shares in the
same period of 2005. As of March 31, 2006, there were 1.55 billion basic common
shares outstanding.

IBM ended the first quarter of 2006 with $12.3 billion of cash on hand. The
balance sheet remains strong, and the company is well positioned to take
advantage of opportunities.

Debt, including Global Financing, totaled $22.5 billion, compared with $22.6
billion at year-end 2005. From a management segment view, the non-global
financing debt-to-capitalization ratio was 4.4 percent at the end of March 31,
2006, and Global Financing debt increased $0.6 billion from year-end 2005 to a
total of $21.1 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, as discussed in the company's
filings with the U.S. 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:

IBM results:

    --  without PC business,

    --  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 and will be included in a subsequent Form 8-K.

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/1q06. 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
                                 2006     2005*    Change
                              -------   -------   -------
REVENUE

 Global Services              $11,567   $11,709     -1.2%
  Gross profit margin            26.6%     24.3%

 Hardware                       4,574     6,754    -32.3%
  Gross profit margin            31.1%     27.5%

 Software                       3,907     3,814      2.4%
  Gross profit margin            84.2%     83.8%

 Global Financing                 583       580      0.6%
  Gross profit margin            52.9%     54.2%

 Other                             28        51    -44.2%
  Gross profit margin           -48.6%     86.4%


TOTAL REVENUE                  20,659    22,908     -9.8%


GROSS PROFIT                    8,088     8,254     -2.0%
  Gross profit margin            39.1%     36.0%


EXPENSE AND OTHER INCOME

 S,G&A                          4,602     4,933     -6.7%
  Expense to revenue             22.3%     21.5%

 R,D&E                          1,456     1,459     -0.3%
  Expense to revenue              7.0%      6.4%

 Intellectual property
  and custom development
  income                         (229)     (219)     4.8%
 Other (income) and expense      (246)       22       nm
 Interest expense                  66        49     36.3%

TOTAL EXPENSE AND
OTHER INCOME                    5,648     6,244     -9.5%
  Expense to revenue             27.3%     27.3%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES                    2,440     2,010     21.4%
  Pre-tax margin                 11.8%      8.8%

Provision for
income taxes                      732       603     21.4%
  Effective tax rate             30.0%     30.0%

INCOME FROM CONTINUING
OPERATIONS                      1,708     1,407     21.4%
  Net margin                      8.3%      6.1%

DISCONTINUED OPERATIONS
Loss from discontinued
operations                          0         5

NET INCOME                     $1,708    $1,402     21.9%
                               ======    ======

EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS                   $1.08     $0.85     27.1%
  DISCONTINUED
   OPERATIONS                    0.00      0.00
                               ------    ------
  TOTAL                         $1.08     $0.84     28.6%
                               ======    ======
 BASIC
  CONTINUING
   OPERATIONS                   $1.09     $0.86     26.7%
  DISCONTINUED
   OPERATIONS                    0.00      0.00
                               ------    ------
  TOTAL                         $1.09     $0.86     26.7%
                               ======    ======
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's)
  ASSUMING DILUTION           1,587.2   1,660.6
  BASIC                       1,564.5   1,628.7


nm - not meaningful

* Reclassified to conform with 2006 presentation; prior year
Enterprise Investments reclassified to various segments.


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

                                         At           At
(Dollars in millions)              March 31, December 31,  Percent
                                       2006         2005    Change
                                   --------  -----------   -------
ASSETS

 Cash, cash equivalents,
 and marketable securities          $12,302      $13,686    -10.1%

 Receivables - net, inventories,
 prepaid expenses                    29,281       31,975     -8.4%

 Plant, rental machines,
 and other property - net            13,712       13,756     -0.3%

 Investments and other assets        46,945       46,331      1.3%
                                   --------     --------

TOTAL ASSETS                       $102,240     $105,748     -3.3%
                                   ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                     $7,160       $7,216     -0.8%
 Long-term debt                      15,325       15,425     -0.6%
                                   --------     --------
 Total debt                          22,485       22,641     -0.7%

 Accounts payable, taxes,
 and accruals                        26,108       27,936     -6.5%

 Other liabilities                   21,170       22,073     -4.1%
                                   --------     --------
TOTAL LIABILITIES                    69,763       72,650     -4.0%

STOCKHOLDERS' EQUITY                 32,477       33,098     -1.9%
                                   --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $102,240     $105,748     -3.3%
                                   ========     ========


                   INTERNATIONAL BUSINESS MACHINES CORPORATION
                                SEGMENT DATA
                                 (Unaudited)


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

Global Technology
Services                  $7,719     $451    $8,171      $844    10.3%
  % change                  -1.3%   -21.4%     -2.7%     27.9%

Global Business Services   3,848      336     4,184       356     8.5%
  % change                  -1.0%     4.1%     -0.6%    122.6%

Systems and Technology
Group                      4,419      280     4,699       (18)   -0.4%
  % change                   3.0%    16.1%      3.7%       nm

Software                   3,907      514     4,421     1,021    23.1%
  % change                   2.4%    10.9%      3.3%     26.9%

Global Financing             582      364       946       414    43.8%
  % change                   0.4%   -18.8%     -8.0%      5.9%

Personal Computing
Division                       0        0         0         0     0.0%

TOTAL REPORTABLE SEGMENTS 20,475    1,946    22,421     2,616    11.7%
  % change                  -9.8%    -6.3%     -9.5%     28.3%

Eliminations / Other         184   (1,946)   (1,762)     (177)

TOTAL IBM CONSOLIDATED   $20,659       $0   $20,659    $2,440    11.8%
  % change                  -9.8%              -9.8%     21.4%

nm - not meaningful


                                      FIRST QUARTER 2005*
                         ---------------------------------------------
                                                       Pre-tax
                                                        Income
                                                         (Loss)
                                                          From
(Dollars in millions)    -------- Revenue --------- Continuing Pre-tax
                         External Internal    Total Operations  Margin
                         -------- --------  ------- ---------- -------
SEGMENTS

Global Technology
Services                  $7,822     $574    $8,396      $660     7.9%

Global Business Services   3,887      323     4,210       160     3.8%

Systems and Technology
Group                      4,289      241     4,530        40     0.9%

Software                   3,814      463     4,277       805    18.8%

Global Financing             579      449     1,028       391    38.0%

Personal Computing
Division                   2,319       26     2,345       (16)   -0.7%

TOTAL REPORTABLE SEGMENTS 22,710    2,076    24,786     2,040     8.2%

Eliminations / Other         198   (2,076)   (1,878)      (30)

TOTAL IBM CONSOLIDATED   $22,908       $0   $22,908    $2,010     8.8%

* The company made changes to its management system effective as of
the first quarter of 2006, including the separation of the Global
Services segment into two new reportable segments: Global Technology
Services and Global Business Services, as well as the reclassification
of Enterprise Investments to other reportable segments.

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