IBM Reports 2006 Fourth-Quarter Results

IBM
                  

    --  Total revenues of $26.3 billion, up 7 percent as reported;

    --  Diluted earnings of $2.26 per share from continuing operations, up 12
        percent as reported, or 7 percent compared with the fourth-quarter 2005,
        excluding pension curtailment charge;

    --  Services signings of $17.8 billion, up 55 percent.

IBM today announced fourth-quarter 2006 diluted earnings of $2.26 per share from
continuing operations, an increase of 12 percent as reported, compared with
diluted earnings of $2.01 per share in the fourth quarter of 2005; the
fourth-quarter 2005 diluted earnings include $0.10 per share for a one- time
pretax curtailment charge of $267 million related to pension changes. Diluted
earnings per share for the fourth-quarter 2006 grew 7 percent compared with the
year-ago quarter of $2.11 per diluted share, without the one-time per share
charge. Fourth-quarter 2006 diluted earnings per share include a $0.06 benefit
as a result of a lower tax rate.

Fourth-quarter income from continuing operations was $3.5 billion compared with
$3.2 billion in the fourth quarter of 2005, an increase of 8 percent. Income
from continuing operations for the fourth quarter grew 2 percent compared with
the fourth-quarter 2005 income from continuing operations of $3.4 billion,
excluding the one-time charge. Total revenues for the fourth quarter of 2006 of
$26.3 billion increased 7 percent (4 percent, adjusting for currency) from the
fourth quarter of 2005.

Samuel J. Palmisano, IBM chairman, president and chief executive officer, said:
'IBM had a terrific quarter and a good year with record cash performance, profit
and EPS, as well as record payouts to shareholders. We are well-positioned in
the growth areas of a changing IT industry, focused on our evolving business
model, and poised for long-term success for our clients and shareholders.'

From a geographic perspective, the Americas fourth-quarter revenues were $11.1
billion, an increase of 6 percent as reported (5 percent, adjusting for
currency) from the 2005 period. Revenues from Europe/Middle East/Africa were
$9.3 billion, up 11 percent (3 percent, adjusting for currency). Asia-Pacific
revenues increased 7 percent (5 percent, adjusting for currency) to $4.8
billion. OEM revenues were $1.0 billion, down 3 percent compared with the 2005
fourth quarter.

Revenues from the Software segment were $5.6 billion, an increase of 14 percent
(11 percent, adjusting for currency) compared with the fourth quarter of 2005.
Revenues from IBM's middleware brands, which include WebSphere, Information
Management, Tivoli, Lotus and Rational products, were $4.4 billion, up 18
percent versus the fourth quarter of 2005. Operating systems revenues decreased
2 percent to $642 million compared with the prior-year quarter. Revenues from
other software and services increased, which includes the Product Lifecycle
Management portfolio of products.

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 22
percent. Revenues for Information Management software, which enables clients to
leverage information on demand, increased 28 percent. Revenues from Tivoli
software, infrastructure software that enables customers to centrally manage
networks including security and storage capability, increased 25 percent, and
revenues for Lotus software, which allows collaborating and messaging by
customers in real-time communication and knowledge management, increased 30
percent year over year. Revenues from Rational software, integrated tools to
improve the processes of software development, increased 12 percent compared
with the year-ago quarter.

For the Global Services business, segment revenues from Global Technology
Services increased 7 percent (4 percent, adjusting for currency) to $8.6
billion, and segment revenues from Global Business Services increased 6 percent
(3 percent, adjusting for currency) to $4.2 billion. IBM signed services
contracts totaling $17.8 billion, up 55 percent year over year, and ended the
full year with an estimated services backlog, including Strategic Outsourcing,
Business Transformation Outsourcing, Global Business Services, Integrated
Technology Services and Maintenance, of $116 billion, an increase of $5 billion
from the prior-year period.

Revenues from the Systems and Technology Group (S&TG) segment totaled $7.1
billion for the quarter, up 3 percent (flat, adjusting for currency). S&TG
revenues from System z server products increased 5 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 6 percent. Revenues
from the System p UNIX server products increased 4 percent compared with the
2005 period. Revenues from the System x servers increased 7 percent, and
revenues from the System i servers decreased 10 percent. Revenues from
Microelectronics decreased 6 percent and revenues from System Storage increased
9 percent.

Global Financing segment revenues increased 3 percent (flat, adjusting for
currency) in the fourth quarter to $620 million.

The company's total gross profit margin was 44.6 percent in the 2006 fourth
quarter compared with 44.1 percent in the 2005 period.

Total expense and other income increased 11 percent to $6.9 billion compared
with the prior-year period. SG&A expense increased 7 percent to $5.6 billion.
RD&E expense increased 9 percent compared with the year-ago period. Intellectual
property and custom development income increased to $241 million compared with
$228 million a year ago. Other (income) and expense contributed income of $150
million in the fourth quarter of 2006 versus income of $334 million in the
fourth quarter of 2005. In the fourth quarter of last year, gains on real estate
transactions were unusually high due to several large transactions compared with
real estate activity in the fourth quarter of this year, resulting in a decrease
of $140 million year to year.

IBM's effective tax rate in the fourth-quarter 2006 was 28.0 percent compared
with 29.5 percent in the fourth quarter of 2005. The decrease in the tax rate
was caused by the favorable effect of several items in the quarter, including
the retroactive reinstatement of the U.S. research tax credit and changes in the
mix of income in various tax jurisdictions.

For total operations, net income for the fourth-quarter 2006 was $3.5 billion,
or $2.31 per diluted share, which included a gain from discontinued operations
related to country tax settlements of $76 million, compared with the fourth
quarter of 2005 net income of $3.2 billion, or $1.99 per diluted share, which
included a gain from discontinued operations of $3 million and a charge for the
cumulative effect of the FASB Interpretation No. 47 accounting change of $36
million.

Share repurchases totaled approximately $1.4 billion in the fourth quarter. The
weighted-average number of diluted common shares outstanding in the
fourth-quarter 2006 was 1.53 billion compared with 1.60 billion shares in the
same period of 2005.

Full-Year 2006 Results

    --  Total revenue of $91.4 billion, up 4 percent excluding the divested PC
        business;

    --  Income from continuing operations of $9.4 billion, up 18 percent as
        reported, or up 9 percent excluding 2005 non-recurring items;

    --  Diluted earnings of $6.06 per share from continuing operations, up 23
        percent as reported, or up 14 percent excluding 2005 non- recurring
        items;

    --  Net cash from operations of $15.3 billion, up $2.2 billion, excluding
        Global Financing receivables.

Diluted earnings per share from continuing operations were $6.06 compared with
$4.91 per diluted share for the 2005 period, including $0.40 per diluted share
for the one-time items, an increase of 23 percent. Without the one-time items in
2005, diluted earnings in 2006 increased $0.74 per share, or 14 percent versus
the comparable period last year.

Income from continuing operations for the year ended December 31, 2006 was $9.4
billion, compared with $8.0 billion in the year-ago period, or up 18 percent,
which includes a charge of $525 million for taxes in connection with the 2005
repatriation of foreign earnings, and non- recurring pretax items for a
curtailment charge of $267 million relating to the pension change and
incremental restructuring charges of $1.7 billion, offset by the $1.1 billion
gain on the sale of the Personal Computing (PC) business, and the $775 million
legal settlement received from Microsoft. Excluding the non-recurring items and
tax charge for 2005, the growth for income from continuing operations was 9
percent year over year.

Revenues from continuing operations for 2006 totaled $91.4 billion, essentially
flat as reported and adjusting for currency compared with $91.1 billion for
2005, which includes PC revenues of $2.9 billion for the first four months of
2005 only. Excluding the divested PC business, revenues increased 4 percent (3
percent, adjusting for currency) compared with the 2005 period.

From a geographic perspective, the Americas full-year revenues were $39.5
billion, an increase of 2 percent as reported (4 percent, adjusting for currency
and PCs) from the 2005 period. Revenues from Europe/Middle East/Africa were
$30.5 billion, essentially flat (up 2 percent, adjusting for currency and PCs).
Asia-Pacific revenues decreased 6 percent (up 2 percent, adjusting for currency
and PCs) to $17.6 billion. OEM revenues were $3.9 billion, up 18 percent
compared with 2005.

Software segment revenues in 2006 totaled $18.2 billion, an increase of 8
percent (7 percent, adjusting for currency). Revenues from the Global Technology
Services segment totaled $32.3 billion, an increase of 3 percent (2 percent,
adjusting for currency) compared with 2005. Revenues from the Global Business
Services segment were $16.0 billion, flat (up 1 percent, adjusting for
currency). S&TG segment revenues were $22.0 billion, an increase of 5 percent (4
percent, adjusting for currency). Global Financing revenues totaled $2.4
billion, a decrease of 2 percent (2 percent, adjusting for currency).

For total operations, net income for 2006 was $9.5 billion, or $6.11 per diluted
share, which included a gain from discontinued operations related to country tax
settlements of $76 million, compared with the 2005 net income of $7.9 billion,
or $4.87 per diluted share, which included a loss from discontinued operations
of $24 million and a charge for the cumulative effect of the FASB Interpretation
No. 47 accounting change of $36 million.

IBM ended 2006 with $10.7 billion of cash on hand and net cash provided from
operations, excluding the year-to-year change in Global Financing receivables,
was $15.3 billion - an increase of $2.2 billion from last year. The balance
sheet remains strong, and the company is well positioned to take advantage of
opportunities.

In December, the company adopted Statement of Financial Accounting Standards No.
158 (SFAS 158), new accounting guidance related to pension and other
postretirement plans released by the Financial Accounting Standards Board in
September 2006. This accounting standard requires companies to recognize the
funded status of their postretirement plans in the statement of financial
position (or balance sheet). The funded status is measured as the difference
between the value of pension plan assets and the company's benefit obligations
to its current and retired employees. The adoption of SFAS 158 at December 31,
2006 reduced the company's assets by $9.2 billion, increased its liabilities by
$0.3 billion and reduced stockholders' equity by $9.5 billion. These changes to
the company's financial statements were non-cash and will have no impact on the
company's existing debt covenants, credit ratings or financial flexibility.

Share repurchases totaled approximately $8.0 billion in 2006. The
weighted-average number of diluted common shares outstanding in 2006 was 1.55
billion compared with 1.63 billion shares in 2005. As of December 31, 2006,
there were 1.51 billion basic common shares outstanding.

Debt, including Global Financing, totaled $22.7 billion, compared with $22.6
billion at year-end 2005. From a management segment view, the non-global
financing debt-to-capitalization ratio was 1.5 percent at the end of 2006, and
Global Financing debt increased $1.8 billion from year-end 2005 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, including the company's failure
to continue to develop and market new and innovative products and services and
to keep pace with technological change; competitive pressures; failure to obtain
or protect intellectual property rights; quarterly fluctuations in revenues and
volatility of stock prices; the company's ability to attract and retain key
personnel; adverse affects from tax matters; currency fluctuations and customer
financing risks; customer credit risk on trade receivables; the company's
failure to maintain the adequacy of its internal controls; the company's use of
certain estimates and assumptions; dependence on certain suppliers; changes in
the financial or business condition of the company's distributors or resellers;
the company's ability to successfully manage acquisitions and alliances; failure
to have sufficient insurance; legal, political, health and economic conditions;
risk factors related to IBM securities; and other risks, uncertainties and
factors discussed in the company's Form 10-Q, Form 10-K and in the company's
other filings with the U.S. Securities and Exchange Commission (SEC) or in
materials incorporated therein by reference. The company assumes no obligation
to update or revise any forward-looking statements.

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 non-recurring and unique items;

    --  without divested PC business;

    --  adjusting for currency (i.e., at constant current);

    --  net cash from operations excluding Global Financing receivables.

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 are being included in Attachment II ('Non-GAAP
Supplementary Materials') to the Form 8-K that includes this press release and
is being submitted today to 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/4q06. Presentation charts will be available on the Web site
prior to the Webcast.

Financial Results Attached (amounts may not total due to rounding)

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             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
                      2006    2005*   Change    2006    2005*   Change
                   -------  -------  ------- -------  -------  -------
REVENUE

 Global Services   $12,769  $12,000     6.4% $48,247  $47,407     1.8%
  Gross margin        27.9%    27.4%            27.5%    26.0%

 Hardware            7,193    6,897     4.3%  22,499   24,343    -7.6%
  Gross margin        41.0%    42.0%            37.0%    35.1%

 Software            5,651    4,901    15.3%  18,204   16,830     8.2%
  Gross margin        86.5%    86.3%            85.2%    84.9%

 Global Financing      625      605     3.3%   2,379    2,407    -1.1%
  Gross margin        48.7%    57.4%            50.3%    54.7%

 Other                  19       24   -18.6%      94      147   -36.4%
  Gross margin       -28.6%    12.6%           -13.2%    45.2%


TOTAL REVENUE       26,257   24,427     7.5%  91,424   91,134     0.3%


GROSS PROFIT        11,701   10,765     8.7%  38,295   36,532     4.8%
  Gross margin        44.6%    44.1%            41.9%    40.1%


EXPENSE AND OTHER INCOME

 S,G&A               5,620    5,252     7.0%  20,259   21,314    -4.9%
  % of revenue        21.4%    21.5%            22.2%    23.4%

 R,D&E               1,587    1,459     8.8%   6,107    5,842     4.5%
  % of revenue         6.0%     6.0%             6.7%     6.4%

 Intellectual property
  and custom development
  income              (241)    (228)    5.8%    (900)    (948)   -5.0%
 Other (income)
   and expense        (150)    (334)  -55.0%    (766)  (2,122)  -63.9%
 Interest expense       71       48    48.0%     278      220    26.6%

TOTAL EXPENSE AND
OTHER INCOME         6,887    6,197    11.1%  24,978   24,306     2.8%
  % of revenue        26.2%    25.4%            27.3%    26.7%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES         4,814    4,568     5.4%  13,317   12,226     8.9%
  Pretax margin       18.3%    18.7%            14.6%    13.4%

Provision for
income taxes         1,350    1,348     0.2%   3,901    4,232    -7.8%
  Effective tax
  rate                28.0%    29.5%            29.3%    34.6%


INCOME FROM CONTINUING
OPERATIONS           3,464    3,220     7.6%   9,416    7,994    17.8%
  Net margin          13.2%    13.2%            10.3%     8.8%


DISCONTINUED OPERATIONS
Income/(loss) from
discontinued opera-
tions                   76        3               76      (24)

CUMULATIVE EFFECT OF
CHANGE IN ACCOUNTING
PRINCIPLE**             --      (36)              --      (36)

NET INCOME          $3,541   $3,187    11.1%  $9,492   $7,934    19.6%
                    ======   ======           ======   ======

EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS        $2.26    $2.01    12.4%   $6.06    $4.91    23.4%
  DISCONTINUED
   OPERATIONS         0.05     0.00             0.05    (0.01)
  CUMULATIVE EFFECT OF
   CHANGE IN ACCOUNTING
   PRINCIPLE            --    (0.02)              --    (0.02)

                    ------   ------           ------   ------
  TOTAL              $2.31    $1.99    16.1%   $6.11    $4.87    25.5%
                    ======   ======           ======   ======
 BASIC
  CONTINUING
   OPERATIONS        $2.30    $2.04    12.7%   $6.15    $4.99    23.2%
  DISCONTINUED
   OPERATIONS         0.05     0.00             0.05    (0.02)
  CUMULATIVE EFFECT OF
   CHANGE IN ACCOUNTING
   PRINCIPLE            --    (0.02)              --    (0.02)
                    ------   ------           ------   ------
  TOTAL              $2.35    $2.02    16.4%   $6.20    $4.96    25.0%
                    ======   ======           ======   ======
WEIGHTED-AVERAGE NUMBER
COMMON SHARES OUT-
STANDING (M's)
 ASSUMING DILUTION 1,532.5  1,604.8          1,553.5  1,627.6
 BASIC             1,507.3  1,578.5          1,530.8  1,600.6

*  The company filed a Form 8-K with the U.S. SEC on June 13, 2006 to
reclassify its historical financial statements and related footnotes
to reflect changes to its management system in the first quarter of
2006.

**  Change in accounting principle related to the adoption of FASB
Interpretation No. 47,'Accounting for Conditional Asset Retirement
Obligations - an interpretation of FASB Statement No. 143.'


               INTERNATIONAL BUSINESS MACHINES CORPORATION
              CONSOLIDATED STATEMENT OF FINANCIAL POSITION


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

 Cash, cash equivalents,
 and marketable securities          $10,657      $13,686    -22.1%

 Receivables - net, inventories,
 prepaid expenses                    34,003       31,975      6.3%

 Plant, rental machines,
 and other property - net            14,440       13,756      5.0%

 Investments and other assets        44,134       46,331     -4.7%
                                   --------     --------

TOTAL ASSETS                       $103,234     $105,748     -2.4%
                                   ========     ========


LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                     $8,902       $7,216     23.4%
 Long-term debt                      13,780       15,425    -10.7%
                                   --------     --------
 Total debt                          22,682       22,641      0.2%

 Accounts payable, taxes,
 and accruals                        31,189       27,936     11.6%

 Other liabilities                   20,857       22,073     -5.5%
                                   --------     --------
TOTAL LIABILITIES                    74,728       72,650      2.9%

STOCKHOLDERS' EQUITY                 28,506       33,098    -13.9%
                                   --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $103,234     $105,748     -2.4%
                                   ========     ========

* In December, the company adopted FASB Statement of Financial
Accounting Standards No. 158, a new accounting guidance related to
pension and other postretirement plans, resulting in the reduction of
assets by $9,240 million, increased liabilities by $257 million and
reduced stockholders' equity by $9,498 million.


                 INTERNATIONAL BUSINESS MACHINES CORPORATION
                               SEGMENT DATA

                                     FOURTH QUARTER 2006
                       -----------------------------------------------
                                                       Pretax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)   --------- Revenue -------- Continuing   Pretax
                        External Internal    Total Operations   Margin
                        -------- --------   ------ ----------  -------
SEGMENTS

Global Technology
Services*                $8,590     $435    $9,025      $843      9.3%
  % change                  7.1%    -6.6%      6.3%    -23.7%

Global Business Services  4,223      349     4,572       538     11.8%
  % change                  6.1%    13.6%      6.6%     32.2%

Systems and Technology
Group                     7,070      362     7,432     1,158     15.6%
  % change                  3.2%     2.1%      3.2%     -4.2%

Software**                5,607      632     6,239     2,015     32.3%
  % change                 14.4%    13.6%     14.3%      4.1%

Global Financing            620      488     1,108       387     34.9%
  % change                  2.9%    -1.0%      1.1%    -21.0%

Personal Computing
Division                      0        0         0         0      0.0%

TOTAL REPORTABLE
SEGMENTS                 26,111    2,266    28,377     4,940     17.4%
  % change                  7.2%     4.1%      7.0%     -4.0%

Eliminations / Other        147   (2,266)   (2,120)     (126)

TOTAL IBM CONSOLIDATED  $26,257       $0   $26,257    $4,814     18.3%
  % change                  7.5%               7.5%      5.4%


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

Global Technology
Services                 $8,020     $467    $8,487    $1,104     13.0%

Global Business Services  3,980      307     4,287       406      9.5%

Systems and Technology
Group                     6,849      355     7,204     1,209     16.8%

Software                  4,901      556     5,457     1,935     35.5%

Global Financing            603      493     1,096       491     44.8%

Personal Computing
Division                      0        0         0         0      0.0%

TOTAL REPORTABLE
 SEGMENTS                24,353    2,178    26,531     5,145     19.4%

Eliminations / Other         74   (2,178)   (2,103)     (578)

TOTAL IBM CONSOLIDATED  $24,427       $0   $24,427    $4,568     18.7%


*  Includes revenue for acquisitions managed by the Global Technology
Services segment but reported as Software revenue in the comparative
financial results exhibit.

**  Excludes revenue from acquisitions reported as Software revenue in
the comparative financial results exhibit but managed by the Global
Technology Services segment.

*** The company filed a Form 8-K with the U.S. SEC on June 13, 2006 to
reclassify its financial statements and related footnotes to reflect
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.


               INTERNATIONAL BUSINESS MACHINES CORPORATION
                             SEGMENT DATA

                                      TWELVE MONTHS 2006
                       -----------------------------------------------
                                                       Pretax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)   --------- Revenue -------- Continuing   Pretax
                        External Internal    Total Operations   Margin
                        -------- --------   ------ ----------  -------
SEGMENTS

Global Technology
Services*               $32,322   $1,763   $34,086    $3,288      9.6%
  % change                  2.6%   -16.1%      1.4%     25.6%

Global Business Services 15,969    1,373    17,341     1,706      9.8%
  % change                  0.4%     2.5%      0.6%    116.9%

Systems and Technology
Group                    21,970    1,168    23,138     1,739      7.5%
  % change                  4.7%     4.5%      4.7%     -7.6%

Software**               18,161    2,249    20,409     5,493     26.9%
  % change                  7.9%    13.6%      8.5%     14.9%

Global Financing          2,365    1,527     3,892     1,455     37.4%
  % change                 -1.5%     1.4%     -0.4%     -8.1%

Personal Computing
Division                      0        0         0         0      nm
  % change                   nm       nm        nm        nm

TOTAL REPORTABLE
 SEGMENTS                90,787    8,080    98,867    13,682     13.8%
  % change                  0.3%     0.0%      0.3%     19.1%

Eliminations / Other        637   (8,080)   (7,443)     (365)

TOTAL IBM CONSOLIDATED  $91,424       $0   $91,424   $13,317     14.6%
  % change                  0.3%               0.3%      8.9%

nm - not meaningful


                                      TWELVE MONTHS 2005***
                       -----------------------------------------------
                                                       Pretax
                                                       Income
                                                       (Loss)
                                                         From
(Dollars in millions)   --------- Revenue -------- Continuing   Pretax
                        External Internal    Total Operations   Margin
                        -------- --------   ------ ----------  -------
SEGMENTS

Global Technology
Services                $31,501   $2,102   $33,603    $2,619      7.8%

Global Business Services 15,906    1,339    17,245       786      4.6%

Systems and Technology
Group                    20,981    1,118    22,099     1,883      8.5%

Software                 16,830    1,979    18,809     4,779     25.4%

Global Financing          2,401    1,506     3,907     1,583     40.5%

Personal Computing
Division                  2,876       33     2,909      (165)      nm

TOTAL REPORTABLE
 SEGMENTS                90,495    8,077    98,572    11,485     11.7%

Eliminations / Other        639   (8,077)   (7,438)      741

TOTAL IBM CONSOLIDATED  $91,134       $0   $91,134   $12,226     13.4%

nm - not meaningful


*  Includes revenue for acquisitions managed by the Global Technology
Services segment but reported as Software revenue in the comparative
financial results exhibit.

**  Excludes revenue from acquisitions reported as Software revenue in
the comparative financial results exhibit but managed by the Global
Technology Services segment.

*** The company filed a Form 8-K with the U.S. SEC on June 13, 2006 to
reclassify its financial statements and related footnotes to reflect
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.
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IBM
John Bukovinsky, 914/499-6212
[e-mail]
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