Final Results

IBM
                  

IBM Reports 2003 Fourth-Quarter and Full-Year Results

IBM today announced fourth-quarter 2003 diluted earnings per common
share of $1.56 from continuing operations compared with diluted
earnings of $1.11 per share in the same period of 2002, an increase of
41 percent. The prior-year period included $.23 per diluted share for
charges primarily associated with the acquisition of
PricewaterhouseCoopers Consulting (PwCC). Without these charges,
diluted earnings per share from continuing operations improved 16
percent year over year. Income from continuing operations for the same
period of 2003 was $2.7 billion compared with $1.9 billion a year ago,
an increase of 42 percent, including $405 million for the after-tax
charges primarily related to the PwCC acquisition. Fourth-quarter
revenues from continuing operations were $25.9 billion, up 9 percent
compared with revenues of $23.7 billion in the 2002 period.

Samuel J. Palmisano, IBM chairman and chief executive officer, said:
'This was a very good quarter for IBM and an encouraging end to a year
in which we steadily gained momentum and posted record revenues. Our
pretax earnings and earnings per share were up double digits for 2003,
and we ended the year with more than $7.6 billion in cash.

'IBM's product and services portfolio -- fueled by unmatched
innovation capability -- is very strong and getting stronger. With few
exceptions, the company performed well across the board. We had more
than $17 billion in services signings, and good growth in our
industry-leading server and WebSphere businesses. Most encouraging is
that our On Demand strategy is today a reality -- it has entered the
mainstream, and it is increasingly driving our business results.

'The company's performance would not be possible had we not made
investments during the downturn and fundamentally repositioned IBM for
leadership in the high-value enterprise space, which remains our sole
focus. We are gratified that the strategies and investments are paying
off, and that team IBM is executing on behalf of our clients. 'We
enter 2004 with good momentum. The client buying environment is
steadily improving. We are enthusiastic about our prospects for this
year and beyond.'

Fourth-quarter revenue growth of 9 percent (1 percent at constant
currency) was driven by growth in all geographies. In the Americas,
fourth-quarter revenues from continuing operations were $10.6 billion,
up 4 percent (1 percent at constant currency) from the same period
last year. Revenues from Europe/Middle East/Africa were $9.1 billion,
an increase of 17 percent (1 percent at constant currency).
Asia-Pacific revenues rose 13 percent (3 percent at constant currency)
to $5.4 billion. OEM revenues decreased 14 percent (14 percent at
constant currency) to $714 million compared with 2002's fourth
quarter.

Revenues grew at double digits in four of IBM's six industry sectors
in the fourth quarter, led by the largest sector, Financial Services,
which grew at 17 percent year over year.

Revenues from Global Services, including maintenance, increased 8
percent (down 1 percent at constant currency) to $11.4 billion in the
fourth quarter. Global Services revenues, excluding maintenance,
increased 8 percent as well (down 1 percent at constant currency). IBM
signed $17.3 billion in services contracts in the fourth quarter
including three contracts over $1 billion and an additional 18
contracts in excess of $100 million each. The estimated services
backlog, including Strategic Outsourcing, Business Consulting
Services, Integrated Technology Services and maintenance, was $120
billion at December 31, 2003.

Hardware revenues from continuing operations were $9.1 billion, an
increase of 12 percent (4 percent at constant currency) from the 2002
fourth quarter. Total Systems Group revenues were $4.9 billion, up 18
percent. Revenues from zSeries mainframes, benefiting from a full
quarter of new technology availability on the z990 products, increased
significantly as a result of strong deliveries of zSeries computing
power as measured in MIPS (millions of instructions per second), which
increased 62 percent versus the year-ago period. Systems Group's
eServer revenues increased for xSeries Intel processor-based servers
and pSeries UNIX-based servers. Revenues also were higher for iSeries
midrange servers. As a result of growth in tape and DASD FAStT
products, Storage Systems revenues increased year over year as well.

Personal Systems Group revenues increased 16 percent to $3.5 billion
primarily from higher revenues for personal computers, particularly
mobile products, as increased volumes more than offset reductions in
prices. Technology Group revenues decreased 20 percent to $775
million, partially attributable to actions taken in 2002 to refocus
and direct the microelectronics business to the high-end foundry,
ASICs and standard products, while creating a new technology services
business. These actions included the divestiture of multiple non-core
businesses.

Revenues from software were $4.3 billion, an increase of 12 percent (2
percent at constant currency) compared with the fourth quarter of
2002. Revenues from IBM's middleware brands, which include WebSphere,
DB2, Rational, Tivoli and Lotus products, increased 14 percent to $3.4
billion in the fourth quarter of 2003. Operating systems revenues
increased 6 percent to $683 million compared with the year-ago period.

Revenues in the fourth quarter increased 10 percent from WebSphere,
software which facilitates customers' ability to manage a wide variety
of business processes through the Web. Revenues for DB2 database
software increased 3 percent. Revenues from Tivoli software -- which
enables customers to centrally manage networks and storage --
increased 17 percent, and revenues for Lotus software, which enables
customers to communicate, collaborate and learn effectively, increased
2 percent. Revenues from Rational (comprehensive software development
tools) which was acquired during the first quarter of 2003 accounted
for approximately 42 percent of the fourth-quarter 2003 middleware
revenue increase.

Global Financing revenues decreased 12 percent (18 percent at constant
currency) in the fourth quarter to $734 million. Revenues from the
Enterprise Investments/Other area, which includes industry-specific IT
solutions such as product life-cycle management software, increased 5
percent (down 4 percent at constant currency) to $360 million compared
with the fourth quarter of 2002.

The company's total gross profit margin from continuing operations was
38.4 percent in the 2003 fourth quarter, compared to 38.8 percent from
the same period in 2002.

Total expense and other income from continuing operations in the
fourth quarter of 2003 was $6.1 billion, 6 percent lower from the
year-ago period (which included pre-tax charges of about $575 million
primarily associated with the PwCC transaction). Selling, general and
administrative expense was $4.9 billion, a decrease of 10 percent year
over year (last year's expense included the charges related to PwCC),
while research, development and engineering expense increased 12
percent to $1.3 billion compared with the same period of 2002
(fourth-quarter 2003 expense includes the effect of acquisitions by
the Software Group). Intellectual property and custom development
income decreased 15 percent. Other (income) and expense was $124
million of expense in the fourth quarter of 2003 versus $116 million
in the same period last year primarily from higher foreign exchange
losses on hedging contracts.

IBM's effective tax rate from continuing operations in the
fourth-quarter 2003 was 30.0 percent compared with 29.5 percent in the
fourth quarter of 2002.

For total operations, net income for the fourth quarter of 2003,
including discontinued operations, was $2.7 billion, or $1.55 per
diluted common share, compared with fourth-quarter 2002 net income of
$1.0 billion, or $.59 per diluted share, which included $1.0 billion
in after-tax charges associated with 2002 actions, or $.59 per diluted
share for charges.

Share repurchases totaled approximately $3.1 billion in the fourth
quarter. The weighted average number of diluted common shares
outstanding in the quarter was 1.75 billion compared with 1.73 billion
shares in the same period of 2002.

Full-Year 2003 Results

For the year ended December 31, 2003, income from continuing
operations was $7.6 billion compared with $5.3 billion for the same
period of 2002, which included after-tax charges of $433 million
related to the acquisition of PwCC and $1.1 billion associated with
2002 actions. Diluted earnings per common share from continuing
operations was $4.34 compared with $3.07 after the 2002 charges of
$.88 per diluted share, an increase of 41 percent. Without these
charges, diluted earnings per share from continuing operations
improved 10 percent year over year. Revenues from continuing
operations totaled $89.1 billion, up 10 percent compared with 2002
revenues of $81.2 billion.

Full-year revenue growth of 10 percent (3 percent at constant
currency) was driven by growth in all geographies. In the Americas,
full-year revenues were $38.1 billion, up 5 percent (4 percent at
constant currency) from the 2002 period. Revenues from Europe/Middle
East/Africa were $29.1 billion, an increase of 20 percent (3 percent
at constant currency) from the 2002 period. Asia-Pacific revenues were
up 13 percent (5 percent at constant currency) at $19.3 billion. OEM
revenues decreased 21 percent (22 percent at constant currency) to
$2.6 billion.

Revenues in all six of IBM's industry sectors grew for the full year,
with four of the sectors growing by double digits.

Revenues from Global Services in 2003 totaled $42.6 billion, an
increase of 17 percent (9 percent at constant currency). Hardware
revenues were $28.2 billion, an increase of 3 percent (down 3 percent
at constant currency). Software revenues totaled $14.3 billion, an
increase of 9 percent (2 percent at constant currency). Global
Financing revenues totaled $2.8 billion, a decrease of 13 percent (18
percent at constant currency). Revenues from the Enterprise
Investments/Other area increased 5 percent (down 3 percent at constant
currency) to $1.1 billion.

For total operations, net income, including discontinued operations,
was $7.6 billion, or $4.32 per diluted common share, compared with
$3.6 billion, or $2.06 per diluted share, which included $2.5 billion
in after-tax charges associated with 2002 actions, or $1.47 per
diluted share for the charges.

Share repurchases totaled approximately $4.4 billion in 2003. The
weighted average number of diluted common shares outstanding in 2003
was 1.76 billion compared with 1.73 billion shares in the same period
of 2002. As of December 31, 2003, there were 1.69 billion basic common
shares outstanding.

Debt, including Global Financing, totaled $23.6 billion, a decline of
$2.4 billion from year-end 2002. From a management segment view, the
non-global financing debt-to-capitalization ratio was 1.5 percent at
the end of 2003, and Global Financing debt declined $564 million from
year-end 2002 to a total of $23.3 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 Securities and Exchange Commission (SEC).

Presentation of Information in this Press Release

This release includes certain non-GAAP financial measures, as defined
under SEC rules. The company provides a reconciliation of those
measures to the most directly comparable GAAP measures and a list of
the reasons why the company uses these measures, as part of the
supplementary materials being presented within the fourth-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 8:00 a.m. EST, today. Investors may participate by viewing the
Webcast at www.ibm.com/investor/4q03.

Financial Results Attached


             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
                     2003     2002  Change     2003     2002  Change
                  -------  ------- -------  -------  ------- -------
REVENUE

 Global Services  $11,448  $10,575     8.3% $42,635  $36,360    17.3%
  Gross margin       24.8%    26.3%            25.2%    26.3%

 Hardware           9,121    8,136    12.1%  28,239   27,456     2.9%
  Gross margin       31.0%    31.2%            27.8%    27.1%

 Software           4,250    3,801    11.8%  14,311   13,074     9.4%
  Gross margin       88.8%    87.0%            86.5%    84.4%

 Global Financing     734      829   -11.5%   2,826    3,232   -12.6%
  Gross margin       52.2%    55.2%            55.8%    56.2%

 Enterprise Investments/
 Other                360      343     5.0%   1,120    1,064     5.2%
  Gross margin       41.7%    32.9%            43.4%    42.6%


TOTAL REVENUE      25,913   23,684     9.4%  89,131   81,186     9.8%


GROSS PROFIT        9,975    9,191     8.5%  33,018   30,284     9.0%
  Gross margin       38.4%    38.8%            37.0%    37.3%


EXPENSE AND OTHER INCOME

 S,G&A              4,874    5,440   -10.4%  17,852   18,738    -4.7%
  % of revenue       18.8%    23.0%            20.0%    23.1%

 R,D&E              1,349    1,204    12.0%   5,077    4,750     6.9%
  % of revenue        5.2%     5.1%             5.7%     5.9%

 Intellectual property
  and custom development
  income             (281)    (329)  -14.7%  (1,168)  (1,100)    6.1%
 Other (income)
   and expense        124      116     7.5%     238      227     5.0%
 Interest expense      31       48   -36.2%     145      145     0.0%

TOTAL EXPENSE AND
OTHER INCOME        6,097    6,479    -5.9%  22,144   22,760    -2.7%
  % of revenue       23.5%    27.4%            24.8%    28.0%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES        3,878    2,712    43.0%  10,874    7,524    44.5%
  Pre-tax margin     15.0%    11.4%            12.2%     9.3%

Provision for
income taxes        1,162      801    45.0%   3,261    2,190    48.9%
  Effective tax
  rate               30.0%    29.5%            30.0%    29.1%


INCOME FROM CONTINUING
OPERATIONS         $2,716   $1,911    42.2%  $7,613   $5,334    42.7%
  Net margin         10.4%     8.1%             8.5%     6.6%


DISCONTINUED OPERATIONS
Loss from discontinued
operations             (7)    (893)             (30)  (1,755)

NET INCOME         $2,709   $1,018   166.2%  $7,583   $3,579   111.9%
                   ======   ======           ======   ======

EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS       $1.56    $1.11    40.5%   $4.34    $3.07    41.4%
  DISCONTINUED
   OPERATIONS       (0.00)   (0.52)           (0.02)   (1.01)
                   ------   ------           ------   ------
  TOTAL             $1.55*   $0.59    162.7%  $4.32    $2.06   109.7%
                   ======   ======           ======   ======
 BASIC
  CONTINUING
   OPERATIONS       $1.59    $1.12    42.0%   $4.42    $3.13    41.2%
  DISCONTINUED
   OPERATIONS       (0.00)   (0.53)           (0.02)   (1.03)
                   ------   ------           ------   ------
  TOTAL             $1.59    $0.60*  165.0%   $4.40    $2.10   109.5%
                   ======   ======           ======   ======
AVERAGE NUMBER OF
COMMON SHARES OUT-
STANDING (M's)
  ASSUMING
    DILUTION      1,745.7  1,728.7          1,756.1  1,730.9
  BASIC           1,708.5  1,699.1          1,721.6  1,703.2


*  Does not total due to rounding.


               INTERNATIONAL BUSINESS MACHINES CORPORATION
              CONSOLIDATED STATEMENT OF FINANCIAL POSITION



                                         At           At
(Dollars in millions)           December 31, December 31,  Percent
                                       2003         2002    Change
                                -----------  -----------   -------
ASSETS

 Cash, cash equivalents,
 and marketable securities           $7,647       $5,975     28.0%

 Receivables - net, inventories,
 prepaid expenses                    37,232       35,677      4.4%

 Plant, rental machines,
 and other property - net            14,689       14,440      1.7%

 Investments and other assets        44,889       40,392     11.1%
                                   --------     --------

TOTAL ASSETS                       $104,457      $96,484      8.3%
                                   ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                     $6,804       $6,031     12.8%
 Long-term debt                      16,828       19,986    -15.8%
                                   --------     --------
 Total debt                          23,632       26,017     -9.2%

 Accounts payable, taxes,
 and accruals                        31,820       28,519     11.6%

 Other liabilities                   21,141       19,166     10.3%
                                   --------     --------
TOTAL LIABILITIES                    76,593       73,702      3.9%

STOCKHOLDERS' EQUITY                 27,864       22,782     22.3%
                                   --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $104,457      $96,484      8.3%
                                   ========     ========


                 INTERNATIONAL BUSINESS MACHINES CORPORATION
                               SEGMENT DATA

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

Global Services         $11,448     $752   $12,200    $1,138      9.3%
  % change                  8.3%    -1.7%      7.6%     83.8%

Systems Group             4,936      266     5,202     1,068     20.5%
  % change                 17.5%   100.0%     20.1%     30.1%

Personal Systems Group    3,478       48     3,526         9      0.3%
  % change                 15.9%   -20.0%     15.2%    -80.9%

Technology Group            775      207       982       (34)    -3.5%
  % change                -19.5%    -9.2%    -17.5%   -181.0%

Software                  4,250      466     4,716     1,461     31.0%
  % change                 11.8%    22.3%     12.8%     13.8%

Global Financing            732      432     1,164       321     27.6%
  % change                -11.6%    34.2%      1.2%     15.5%

Enterprise Investments      340        1       341       (44)   -12.9%
  % change                  3.7%     0.0%      3.6%     50.6%

TOTAL SEGMENTS           25,959    2,172    28,131     3,919     13.9%
  % change                  9.5%    14.9%      9.9%     30.5%

Eliminations / Other        (46)  (2,172)   (2,218)      (41)

TOTAL IBM               $25,913       $0   $25,913    $3,878     15.0%
  % change                  9.4%               9.4%     43.0%



                                     FOURTH QUARTER 2002
                        ----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)   --------- Revenue -------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                        -------- -------- -------- ----------  -------
SEGMENTS

Global Services         $10,575     $765   $11,340      $619      5.5%

Systems Group             4,200      133     4,333       821     18.9%

Personal Systems Group    3,002       60     3,062        47      1.5%

Technology Group            963      228     1,191        42      3.5%

Software                  3,801      381     4,182     1,284     30.7%

Global Financing            828      322     1,150       278     24.2%

Enterprise Investments      328        1       329       (89)   -27.1%

TOTAL SEGMENTS           23,697    1,890    25,587     3,002     11.7%

Eliminations / Other        (13)  (1,890)   (1,903)     (290)

TOTAL IBM               $23,684       $0   $23,684    $2,712     11.4%





                 INTERNATIONAL BUSINESS MACHINES CORPORATION
                                SEGMENT DATA

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

Global Services         $42,635   $2,837   $45,472    $4,499      9.9%
  % change                 17.3%    -0.6%     16.0%     23.0%

Systems Group            14,002      837    14,839     2,046     13.8%
  % change                 10.7%    27.0%     11.5%     31.1%

Personal Systems Group   11,387      171    11,558      (118)    -1.0%
  % change                  3.1%    23.0%      3.3%   -307.0%

Technology Group          2,871      805     3,676      (252)    -6.9%
  % change                -27.0%    -8.2%    -23.6%     76.2%

Software                 14,311    1,613    15,924     3,808     23.9%
  % change                  9.4%    31.7%     11.4%      7.1%

Global Financing          2,827    1,300     4,127     1,182     28.6%
  % change                -11.7%    38.4%     -0.4%     23.8%

Enterprise Investments    1,065        5     1,070      (252)   -23.6%
  % change                  4.2%    25.0%      4.3%     14.0%

TOTAL SEGMENTS           89,098    7,568    96,666    10,913     11.3%
  % change                  9.6%    13.0%      9.9%     29.4%

Eliminations / Other         33   (7,568)   (7,535)      (39)

TOTAL IBM               $89,131       $0   $89,131   $10,874     12.2%
  % change                  9.8%               9.8%     44.5%




                                      TWELVE MONTHS 2002
                        ----------------------------------------------
                                                      Pre-tax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)   --------- Revenue -------- Continuing  Pre-tax
                        External Internal    Total Operations   Margin
                        -------- -------- -------- ----------  -------
SEGMENTS

Global Services         $36,360   $2,854   $39,214    $3,657      9.3%

Systems Group            12,646      659    13,305     1,561     11.7%

Personal Systems Group   11,049      139    11,188        57      0.5%

Technology Group          3,935      877     4,812    (1,057)   -22.0%

Software                 13,074    1,225    14,299     3,556     24.9%

Global Financing          3,203      939     4,142       955     23.1%

Enterprise Investments    1,022        4     1,026      (293)   -28.6%

TOTAL SEGMENTS           81,289    6,697    87,986     8,436      9.6%

Eliminations / Other       (103)  (6,697)   (6,800)     (912)

TOTAL IBM               $81,186       $0   $81,186    $7,524      9.3%



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