Final Results

IBM
                  

    IBM Reports 2004 Fourth-Quarter and Full-Year Results

IBM today announced fourth-quarter 2004 diluted earnings per common share of
$1.81 from continuing operations as reported, compared with diluted earnings of
$1.56 per share in the same period of 2003, an increase of 16 percent.
Fourth-quarter income from continuing operations was $3.1 billion compared with
$2.7 billion a year ago, an increase of 12 percent. Revenues from continuing
operations for the fourth quarter were $27.7 billion, up 7 percent compared with
the fourth quarter of 2003 revenues of $25.9 billion (and up 18 percent
sequentially from $23.4 billion in the third quarter of this year).

Samuel J. Palmisano, IBM chairman and chief executive officer, said: 'IBM
delivered a powerful fourth quarter, reflecting the strength of our integrated
business model. It was IBM's strongest fourth quarter ever, with earnings
exceeding $3 billion for the first time. Our balance sheet remains strong with
superior cash flow, and we took share in key markets. We also returned $8.3
billion to our shareholders through dividends and stock buyback during 2004, the
most we have done in our history. The strategic actions that IBM took last year
have increased our focus on delivering high value to enterprises. IBM is well
positioned to continue our mission of bringing together the best insight,
expertise and technologies to help our clients transform their businesses.'

Fourth-quarter revenue growth of 7 percent (3 percent, adjusting for currency)
was driven by growth across all geographies. In the Americas, fourth-quarter
revenues from continuing operations were $11.1 billion, up 5 percent (4 percent,
adjusting for currency) from the 2003 period. Revenues from Europe/Middle
East/Africa were $10.0 billion, an increase of 9 percent (1 percent, adjusting
for currency). Asia-Pacific revenues grew 6 percent (3 percent, adjusting for
currency) to $5.8 billion. OEM revenues increased 10 percent to $787 million
compared with the fourth quarter of 2003.

Revenues grew in all of IBM's five industry sectors in the fourth quarter led by
the Communications sector, as well as growth in sales to Small and Medium
Businesses.

Revenues from Global Services, including maintenance, increased 10 percent (6
percent, adjusting for currency) to $12.6 billion in the fourth quarter. Global
Services revenues, excluding maintenance, increased 11 percent (7 percent,
adjusting for currency). IBM signed services contracts totaling $12.7 billion
and ended the quarter with an estimated services backlog, including Strategic
Outsourcing, Business Consulting Services, Integrated Technology Services and
Maintenance, of $111 billion.

Hardware revenues from continuing operations increased 4 percent (1 percent,
adjusting for currency) to $9.5 billion in the fourth quarter versus the fourth
quarter of 2003. Revenues from the Systems and Technology Group totaled $5.9
billion for the quarter, up 5 percent on eServer revenue increases, including a
25 percent increase in xSeries servers and a 15 percent increase in pSeries UNIX
servers. Revenues from the zSeries mainframe product decreased compared with the
prior-year quarter, which was particularly strong, while MIPS (millions of
instructions per second), an indicator of total delivery of zSeries computing
power, increased 6 percent. Revenues for the iSeries midrange servers and
Storage Systems decreased primarily as a result of a transition to new products.
Revenues from OEM Technology increased. Personal Systems Group increased
revenues 2 percent to $3.5 billion. In the quarter, IBM announced an agreement
to sell the Personal Computer Division, a unit of the Personal Systems Group.

Revenues from Software were $4.5 billion, an increase of 7 percent (3 percent,
adjusting for currency) compared with the fourth quarter of 2003. Revenues from
IBM's middleware brands, which include WebSphere, DB2, Rational, Tivoli and
Lotus products, were $3.7 billion, up 8 percent versus the fourth quarter of
2003. Operating systems revenues increased 1 percent to $693 million compared
with the fourth quarter of 2003.

Revenues for WebSphere software, which facilitates customers' ability to manage
a wide variety of business processes using open standards to interconnect
applications, data and operating systems, increased 18 percent. Revenues for
Data Management increased 8 percent including revenues for DB2 database
software, which increased 15 percent. Revenues from Tivoli software
(infrastructure software that enables customers to centrally manage networks and
storage) increased 25 percent, and revenues for Lotus software, which enables
customers to communicate, collaborate and learn effectively, increased 5
percent. Revenues from Rational (comprehensive software development tools)
increased 8 percent compared with the fourth quarter of 2003.

Global Financing revenues declined 10 percent (13 percent, adjusting for
currency) in the fourth quarter to $657 million. Revenues from the Enterprise
Investments/Other area, which includes industry-specific IT solutions such as
product life-cycle management software, increased 1 percent (down 2 percent,
adjusting for currency) to $365 million compared with the fourth quarter of
2003.

The company's total gross profit margin from continuing operations was 39.2
percent in the 2004 fourth quarter, compared with 38.4 percent in the fourth
quarter of 2003.

In the fourth quarter of 2004, total expense and other income from continuing
operations increased 6 percent compared with the prior- year period to $6.5
billion. The company's selling, general and administrative expense increased 9
percent to $5.3 billion. Research, development and engineering expense increased
8 percent to $1.5 billion. Intellectual property and custom development income
increased to $298 million compared with $281 million a year ago. Other (income)
and expense was $4 million of net income in the fourth quarter of 2004 versus
$124 million of net expense in the same period last year.

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

Share repurchases totaled approximately $2.9 billion in the fourth quarter. The
weighted-average number of diluted common shares outstanding in the quarter was
1.69 billion compared with 1.75 billion shares in the same period of 2003.

Full-Year 2004 Results

For the year ended December 31, 2004, income from continuing operations,
including the one-time $320 million pre-tax charge to settle certain pension
claims, was $8.4 billion compared with $7.6 billion for the same period of 2003,
an increase of 11 percent. Diluted earnings per common share from continuing
operations was $4.94 compared with $4.34 per diluted share for the 2003 period,
an increase of 14 percent. Revenues from continuing operations totaled $96.5
billion, up 8 percent compared with 2003 revenues of $89.1 billion.

Full-year revenue growth of 8 percent (4 percent, adjusting for currency) was
driven by growth in all geographies. In the Americas, full-year revenues were
$40.1 billion, up 5 percent (4 percent, adjusting for currency) from the 2003
period. Revenues from Europe/Middle East/Africa were $32.1 billion, an increase
of 10 percent (1 percent, adjusting for currency). Asia-Pacific revenues were up
11 percent (5 percent, adjusting for currency) to $21.5 billion. OEM revenues
increased 10 percent (9 percent, adjusting for currency) to $2.9 billion.

Revenues in all five of IBM's industry sectors grew for the full year, as did
sales to Small and Medium Businesses.

Revenues from Global Services in 2004 totaled $46.4 billion, an increase of 9
percent (4 percent, adjusting for currency) compared with 2003. Hardware
revenues were $31.2 billion, an increase of 10 percent (7 percent, adjusting for
currency). Software revenues totaled $15.1 billion, an increase of 5 percent (1
percent, adjusting for currency). Global Financing revenues totaled $2.6
billion, a decrease of 8 percent (12 percent, adjusting for currency). Revenues
from the Enterprise Investments/Other area increased 9 percent (5 percent,
adjusting for currency) to $1.2 billion.

For total operations, net income, including a loss from discontinued operations
of $18 million, was $8.4 billion, or $4.93 per diluted common share, compared
with 2003 net income of $7.6 billion, or $4.32 per diluted share, which included
a loss from discontinued operations of $30 million.

IBM ended 2004 with over $10 billion of cash on hand and low debt levels for the
non-financing business. The balance sheet remains strong, and the company is
well positioned to take advantage of opportunities.

Share repurchases totaled approximately $7.3 billion in 2004. The
weighted-average number of diluted common shares outstanding in 2004 was 1.71
billion compared with 1.76 billion shares in the same period of 2003. As of
December 31, 2004, there were 1.65 billion basic common shares outstanding.

Debt, including Global Financing, totaled $22.9 billion, compared with $23.6
billion at year-end 2003. From a management segment view, the non-global
financing debt-to-capitalization ratio was 2.2 percent at the end of 2004, and
Global Financing debt declined $944 million from year-end 2003 to a total of
$22.3 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 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:

- adjusting for currency

The rationale for management's use of non-GAAP measures is included as part of
the supplementary materials presented within the fourth-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 filing of a Form
8-K with the SEC.

Conference Call and Webcast

IBM's regular quarterly earnings conference call is scheduled to begin at 4:30
p.m. EST, today. Investors may participate by viewing the Webcast at
www.ibm.com/investor/4q04.

Financial Results Attached


             INTERNATIONAL BUSINESS MACHINES CORPORATION
                    COMPARATIVE FINANCIAL RESULTS
            (Dollars in millions except per share amounts)
                 (Unaudited except full-year 2003)


                       Three Months             Twelve Months
                    Ended December 31,        Ended December 31,

                                   Percent                   Percent
                     2004     2003  Change     2004     2003  Change
                  -------  ------- -------  -------  ------- -------
REVENUE

 Global Services  $12,605  $11,448    10.1% $46,423  $42,635     8.9%
  Gross margin       25.1%    24.8%            24.9%    25.2%

 Hardware           9,495    9,121     4.1%  31,154   28,239    10.3%
  Gross margin       33.0%    31.0%            29.6%    27.8%

 Software           4,549    4,250     7.0%  15,094   14,311     5.5%
  Gross margin       89.0%    88.8%            87.3%    86.5%

 Global Financing     657      734   -10.4%   2,608    2,826    -7.7%
  Gross margin       59.7%    52.2%            60.0%    55.8%

 Enterprise Investments/
 Other                365      360     1.4%   1,224    1,120     9.3%
  Gross margin       32.8%    41.7%            40.3%    43.4%


TOTAL REVENUE      27,671   25,913     6.8%  96,503   89,131     8.3%


GROSS PROFIT       10,852    9,975     8.8%  36,032   33,018     9.1%
  Gross margin       39.2%    38.4%            37.3%    37.0%


EXPENSE AND OTHER INCOME

 S,G&A              5,290    4,874     8.5%  19,384   17,852     8.6%
  % of revenue       19.1%    18.8%            20.1%    20.0%

 R,D&E              1,461    1,349     8.2%   5,673    5,077    11.7%
  % of revenue        5.3%     5.2%             5.9%     5.7%

 Intellectual property
  and custom development
  income             (298)    (281)    6.1%  (1,169)  (1,168)    0.2%
 Other (income)
   and expense         (4)     124      nm      (23)     238      nm
 Interest expense      39       31    25.8%     139      145    -4.6%

TOTAL EXPENSE AND
OTHER INCOME        6,488    6,097     6.4%  24,004   22,144     8.4%
  % of revenue       23.4%    23.5%            24.9%    24.8%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES        4,364    3,878    12.5%  12,028   10,874    10.6%
  Pre-tax margin     15.8%    15.0%            12.5%    12.2%

Provision for
income taxes        1,309    1,162    12.7%   3,580    3,261     9.8%
  Effective tax
  rate               30.0%    30.0%            29.8%    30.0%


INCOME FROM CONTINUING
OPERATIONS         $3,055   $2,716    12.5%  $8,448   $7,613    11.0%
  Net margin         11.0%    10.4%             8.8%     8.5%


DISCONTINUED OPERATIONS
Loss from discontinued
operations             15        7               18       30

NET INCOME         $3,040   $2,709    12.2%  $8,430   $7,583    11.2%
                   ======   ======           ======   ======

EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS       $1.81    $1.56    16.0%   $4.94    $4.34    13.8%
  DISCONTINUED
   OPERATIONS       (0.01)   (0.00)           (0.01)   (0.02)
                   ------   ------           ------   ------
  TOTAL             $1.80    $1.55*   16.1%   $4.93    $4.32    14.1%
                   ======   ======           ======   ======
 BASIC
  CONTINUING
   OPERATIONS       $1.84    $1.59    15.7%   $5.04    $4.42    14.0%
  DISCONTINUED
   OPERATIONS       (0.01)   (0.00)           (0.01)   (0.02)
                   ------   ------           ------   ------
  TOTAL             $1.83    $1.59    15.1%   $5.03    $4.40    14.3%
                   ======   ======           ======   ======
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES
OUTSTANDING (M's)
  ASSUMING
   DILUTION       1,691.6  1,745.7          1,708.9  1,756.1
  BASIC           1,659.0  1,708.5          1,675.0  1,721.6

nm - not meaningful

*  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
                                       2004         2003*   Change
                                (Unaudited)
                                -----------  -----------   -------
ASSETS

 Cash, cash equivalents,
 and marketable securities          $10,570       $7,647     38.2%

 Receivables - net, inventories,
 prepaid expenses                    36,400       37,015     -1.7%

 Plant, rental machines,
 and other property - net            15,175       14,689      3.3%

 Investments and other assets        47,038       45,106      4.3%
                                   --------     --------

TOTAL ASSETS                       $109,183     $104,457      4.5%
                                   ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                     $8,099       $6,646     21.9%
 Long-term debt                      14,828       16,986    -12.7%
                                   --------     --------
 Total debt                          22,927       23,632     -3.0%

 Accounts payable, taxes,
 and accruals                        31,699       31,254      1.4%

 Other liabilities                   24,810       21,707     14.3%
                                   --------     --------
TOTAL LIABILITIES                    79,436       76,593      3.7%

STOCKHOLDERS' EQUITY                 29,747       27,864      6.8%
                                   --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $109,183     $104,457      4.5%
                                   ========     ========

* Reclassified to conform with 2004 presentation.



                 INTERNATIONAL BUSINESS MACHINES CORPORATION
                               SEGMENT DATA

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

Global Services          $12,605     $819   $13,424    $1,420    10.6%
  % change                  10.1%     8.9%     10.0%     24.8%

Systems and Technology
Group                      5,869      274     6,143     1,075    17.5%
  % change                   4.9%    -0.4%      4.7%     -1.7%

Personal Systems Group     3,542       58     3,600        92     2.6%
  % change                   1.8%    20.8%      2.1%       nm

Software                   4,549      514     5,063     1,718    33.9%
  % change                   7.0%    10.3%      7.4%     17.6%

Global Financing             656      412     1,068       421    39.4%
  % change                 -10.4%    -4.6%     -8.2%     31.2%

Enterprise Investments       379        2       381       (34)   -8.9%
  % change                  11.5%   100.0%     11.7%     22.7%

TOTAL REPORTABLE SEGMENTS 27,600    2,079    29,679     4,692    15.8%
  % change                   6.8%     5.3%      6.7%     17.9%

Eliminations / Other          71   (2,079)   (2,008)     (328)

TOTAL IBM CONSOLIDATED   $27,671       $0   $27,671    $4,364    15.8%
  % change                   6.8%               6.8%     12.5%

nm - not meaningful


                                 FOURTH QUARTER 2003 (Unaudited)
                         ---------------------------------------------
                                                       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%

Systems and Technology
Group *                    5,594      275     5,869     1,094    18.6%

Personal Systems Group     3,478       48     3,526         9     0.3%

Software                   4,250      466     4,716     1,461    31.0%

Global Financing             732      432     1,164       321    27.6%

Enterprise Investments       340        1       341       (44)  -12.9%

TOTAL REPORTABLE SEGMENTS 25,842    1,974    27,816     3,979    14.3%

Eliminations / Other          71   (1,974)   (1,903)     (101)

TOTAL IBM CONSOLIDATED   $25,913       $0   $25,913    $3,878    15.0%

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


                 INTERNATIONAL BUSINESS MACHINES CORPORATION
                                SEGMENT DATA

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

Global Services          $46,423   $3,131   $49,554    $4,657     9.4%
  % change                   8.9%    10.4%      9.0%      3.5%

Systems and Technology
Group                     17,916    1,051    18,967     2,265    11.9%
  % change                   8.8%    21.5%      9.4%     23.9%

Personal Systems Group    12,794      173    12,967       162     1.2%
  % change                  12.4%     1.2%     12.2%       nm

Software                  15,094    1,805    16,899     4,541    26.9%
  % change                   5.5%    11.9%      6.1%     19.2%

Global Financing           2,607    1,287     3,894     1,494    38.4%
  % change                  -7.8%    -1.0%     -5.6%     26.4%

Enterprise Investments     1,180        8     1,188      (187)  -15.7%
  % change                  10.8%    60.0%     11.0%     25.8%

TOTAL REPORTABLE SEGMENTS 96,014    7,455   103,469    12,932    12.5%
  % change                   8.3%     9.8%      8.4%     18.1%

Eliminations / Other         489   (7,455)   (6,966)     (904)

TOTAL IBM CONSOLIDATED   $96,503       $0   $96,503   $12,028    12.5%
  % change                   8.3%               8.3%     10.6%

nm - not meaningful


                                      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%

Systems and Technology
Group *                   16,469      865    17,334     1,828    10.5%

Personal Systems Group    11,387      171    11,558      (118)   -1.0%

Software                  14,311    1,613    15,924     3,808    23.9%

Global Financing           2,827    1,300     4,127     1,182    28.6%

Enterprise Investments     1,065        5     1,070      (252)  -23.6%

TOTAL REPORTABLE SEGMENTS 88,694    6,791    95,485    10,947    11.5%

Eliminations / Other         437   (6,791)   (6,354)      (73)

TOTAL IBM CONSOLIDATED   $89,131       $0   $89,131   $10,874    12.2%

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

    --30--SDG/ny*

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