1st Quarter Results to 31 March 2000

International Bus Mach Corp
18 April 2000


( BW)(NY-IBM)(IBM) IBM Announces First-quarter 2000 Results
    
    Business Editors

    ARMONK, N.Y.--(BUSINESS WIRE)--April 18, 2000--IBM today announced
first-quarter 2000 diluted earnings per common share of $.83 compared
with diluted earnings per common share of $.78 in the first quarter of
last year. First-quarter 2000 net income was $1.52 billion compared
with net income of $1.47 billion in the first quarter of 1999. IBM's
first-quarter 2000 revenues totaled $19.3 billion, a decline of 5
percent (3 percent at constant currency) compared with the
year-earlier period.
     Louis V. Gerstner, Jr., IBM chairman and chief executive officer,
said: 'This was a transitional quarter, as we expected, with Y2K
lockdowns continuing until late in the quarter in many of our large
enterprise accounts. In addition, a series of previously announced
actions -- which are improving our business structure over the long
term -- hurt our revenues in the first quarter. Nevertheless, we had
good earnings per share, improving results in our server business, and
strong performance in such growth areas as e-business services,
database and Web application software, and custom chips.
     'We believe that IBM is uniquely positioned to benefit from the
many changes that are occurring in our industry. Our significant
investments in e-business are beginning to pay off in exciting new
growth prospects for us. In the first quarter, for example, we made
several major announcements in B2B commerce, Web hosting and wireless
technologies. We're pleased that we've been able to deliver solid
earnings performance during a time of substantial transition in IBM's
business portfolio. Looking forward, we continue to believe that 2000
will be a good year for IBM,' Mr. Gerstner said.
     In the Americas, first-quarter revenues totaled $8.4 billion,
down 4 percent (4 percent at constant currency) from the same period
of 1999. Revenues from Europe/Middle East/Africa were $5.4 billion,
down 13 percent (4 percent at constant currency). Asia-Pacific
revenues increased 15 percent (8 percent at constant currency) to $4.0
billion. OEM revenues declined 19 percent to $1.4 billion, primarily
due to a year-over-year decline in hard disk drive revenues.
     Hardware revenues totaled $7.7 billion in the first quarter, a
decrease of 12 percent (11 percent at constant currency) compared with
the year-earlier period. Personal computer revenues fell, as the
company continued to take actions to improve long-term profitability
in this area. These steps included bringing dealer inventories to
record low levels while reducing low-profitability special bid
activity. Despite the overall decline in personal computer revenues,
Netfinity server and ThinkPad revenues increased in the quarter.
Revenues also grew in IBM's Web server product line, which includes
the RS/6000 and NUMA-Q products, with particularly strong demand for
the advanced RS/6000 S80 model. AS/400 revenues increased year over
year, led by growth in mid-range and high-end models. System/390
revenues declined, although in the first quarter customers absorbed
most of their remaining excess Y2K test capacity. Microelectronics
revenues increased, with continued significant acceleration in
shipments of custom logic chips. Total storage revenues declined,
principally due to unanticipated weakness in the company's hard disk
drive product line.
     Revenues from IBM Global Services were adversely affected by two
transitional events: the sale of the IBM Global Network last year to
AT&T and a sharp year-over-year decline in Y2K services activity.
After adjusting for these factors, Global Services revenues (excluding
maintenance) increased 9 percent (10 percent at constant currency)
compared with the same period of last year. On an as-reported basis,
revenues from Global Services totaled $7.6 billion, flat year over
year (up 1 percent at constant currency). IBM signed $8.6 billion in
services contracts in the quarter, and e-business services revenues
grew 70 percent.
     Software revenues totaled $2.9 billion, flat year over year (up 3
percent at constant currency). Revenues grew strongly in the company's
database and Lotus Notes product lines, while operating system
revenues declined. Revenues from WebSphere, the company's leading Web
application server product, more than doubled year over year.
     Global Financing revenues increased 16 percent (17 percent at
constant currency) in the first quarter to $816 million.
     Revenues from the Enterprise Investments/Other category, which
comprises customized hardware and software products for specialized
customer uses, declined 13 percent (10 percent at constant currency)
to $341 million.
     IBM's total gross profit margin was 36.2 percent in the first
quarter compared with 35.7 percent in the first quarter a year ago.
     Total first-quarter expenses declined 6 percent, and the company
improved its expense-to-revenue ratio by 0.4 points year over year to
25.0 percent.
     IBM spent approximately $2.1 billion on common share repurchases
in the first quarter. The average number of basic common shares
outstanding in the quarter was 1.78 billion compared with 1.82 billion
in the same period of last year. There were 1.77 billion basic common
shares outstanding at March 31, 2000.
     The company's debt in support of operations, excluding global
financing, increased $618 million from year-end 1999 to $2.2 billion,
with a debt-to-capitalization ratio of 13 percent. Global financing
debt decreased $834 million from year-end 1999 to $26.0 billion,
resulting in a debt-to-equity ratio of 5.2 to 1.
    Effective in the first quarter, results reflect changes the
company made in the organization of its business segments, including
the transfer of the system-level product business from the Technology
segment to the Enterprise Systems group and the transfer of
point-of-sale terminals from Enterprise Investments to the Personal
Systems Group. Also reflected are changes the company made in its
expense allocation methodology, allocating expense items previously
unallocated and enhancing shared expense allocation. First-quarter
1999 results have been reclassified to conform with the 2000
presentation.

    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.

Financial Results Attached


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

                              Three months ended March 31
                                                 Percent
                               2000     1999(a)   Change
                              -------   -------   -------
REVENUE

 Hardware                      $7,712    $8,751    -11.9%
  Gross profit margin            27.4%     27.4%

 Global Services                7,552     7,550      0.0%
  Gross profit margin            25.9%     26.3%

 Software                       2,927     2,920      0.2%
  Gross profit margin            80.0%     81.0%

 Global Financing                 816       705     15.8%
  Gross profit margin            52.9%     55.9%

 Enterprise Investments /
 Other                            341       391    -12.6%
  Gross profit margin            47.6%     29.7%


TOTAL REVENUE                  19,348    20,317     -4.8%


GROSS PROFIT                    7,011     7,258     -3.4%
  Gross profit margin            36.2%     35.7%


EXPENSE

 S,G&A                          3,706     3,937     -5.9%
  Expense of revenue           19.2%     19.4%

 R,D&E                          1,172     1,181     -0.8%
  Expense of revenue             6.1%      5.8%

Other income                      189       134     40.3%
Interest expense                  152       174    -12.4%

TOTAL EXPENSE                   4,841     5,158     -6.1%
  Expense of revenue             25.0%     25.4%

INCOME BEFORE
INCOME TAXES                    2,170     2,100      3.3%
  Pre-tax margin                 11.2%     10.3%

Provision for income taxes        651       630      3.3%
  Effective tax rate             30.0%     30.0%

NET INCOME                     $1,519    $1,470      3.3%
  Net margin                      7.8%      7.2%

Preferred stock
dividends                           5         5

NET INCOME
APPLICABLE TO COMMON
SHAREHOLDERS                   $1,514    $1,465      3.3%
                               ======    ======
EARNINGS PER SHARE
OF COMMON STOCK
  - ASSUMING DILUTION           $0.83     $0.78      6.4%
                               ======    ======
EARNINGS PER SHARE
OF COMMON STOCK
  - BASIC                       $0.85     $0.80      6.3%
                               ======    ======
AVERAGE NUMBER OF
COMMON SHARES OUT-
STANDING (M's)
  DILUTED                      1830.0    1882.9
  BASIC                        1777.2    1823.8

(a) Reclassified to conform with 2000 presentation.

            INTERNATIONAL BUSINESS MACHINES CORPORATION
            CONSOLIDATED STATEMENT OF FINANCIAL POSITION
                  (Unaudited; Dollars in millions)

                                        At           At
                                  March 31, December 31,  Percent
                                      2000         1999    Change
                                 ---------  -----------   -------
ASSETS

 Cash, cash equivalents,
 and marketable securities          $3,606       $5,831    -38.2%

 Receivables - net, inventories,
 and prepaid expenses               35,533       37,324     -4.8%

 Plant, rental machines,
 and other property - net           16,959       17,590     -3.6%

 Investments and other assets       26,666       26,750     -0.3%
                                  --------     --------

TOTAL ASSETS                       $82,764      $87,495     -5.4%
                                  ========     ========

LIABILITIES AND STOCKHOLDERS' EQUITY

 Short-term debt                   $13,844      $14,230     -2.7%
 Long-term debt                     14,295       14,124      1.2%
                                  --------     --------
 Total debt                         28,139       28,354     -0.8%

 Accounts payable, taxes,
 and accruals                       21,767       25,348    -14.1%

 Other liabilities                  13,340       13,282      0.4%
                                  --------     --------
TOTAL LIABILITIES                   63,246       66,984     -5.6%

STOCKHOLDERS' EQUITY                19,518       20,511     -4.8%
                                  --------     --------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY               $82,764      $87,495     -5.4%
                                  ========     ========

                 INTERNATIONAL BUSINESS MACHINES CORPORATION
                               SEGMENT DATA

                                      FIRST QUARTER 2000
                        ---------------------------------------------
(Dollars in millions)
                                                               Pre-tax
                        ------- Revenue ----------   Pre-tax    Income
                        External Internal      Total  Income    Margin
                        -------- --------    ------- -------   -------
SEGMENTS

Technology               $1,940     $793     $2,733     $20       0.7%
          % change        -12.2%    -6.6%     -10.7%   11.1%
Personal Systems          3,261       10      3,271    (178)     -5.4%
          % change        -13.1%    42.9%     -13.0% -223.6%
Enterprise Systems        2,416      163      2,579     439      17.0%
          % change        -11.8%    14.0%     -10.5%  -19.7%
Global Services           7,552      595      8,147     998      12.2%
          % change          0.0%   -11.1%      -0.9%    6.2%
Software                  2,927      175      3,102     581      18.7%
          % change          0.2%   -17.1%      -0.9%  -17.7%
Global Financing            828      206      1,034     288      27.9%
          % change         14.4%    -0.5%      11.1%   20.5%
Enterprise Investments      341        1        342     (43)    -12.6%
          % change        -10.7%   -90.9%     -13.0%   68.1%

TOTAL SEGMENTS           19,265    1,943     21,208   2,105       9.9%
          % change         -5.0%    -7.3%      -5.2%   -6.9%

Eliminations / Other         83   (1,943)    (1,860)     65

TOTAL IBM               $19,348       $0    $19,348  $2,170      11.2%
          % change         -4.8%               -4.8%    3.3%

                                      FIRST QUARTER 1999(a)
                        ---------------------------------------------
(Dollars in millions)
                                                               Pre-tax
                        ------- Revenue ----------   Pre-tax    Income
                        External Internal      Total  Income    Margin
                        -------- --------    ------- -------   -------
SEGMENTS

Technology               $2,210     $849     $3,059     $18       0.6%
Personal Systems          3,751        7      3,758     (55)     -1.5%
Enterprise Systems        2,738      143      2,881     547      19.0%
Global Services           7,550      669      8,219     940      11.4%
Software                  2,920      211      3,131     706      22.5%
Global Financing            724      207        931     239      25.7%
Enterprise Investments      382       11        393    (135)    -34.4%

TOTAL SEGMENTS           20,275    2,097     22,372   2,260      10.1%

Eliminations / Other         42   (2,097)    (2,055)   (160)

TOTAL IBM               $20,317       $0    $20,317  $2,100      10.3%

(a) Reclassified to conform with 2000 presentation.

             PRE-TAX INCOME - THE EFFECT OF ORGANIZATION
                CHANGES AND EXPENSE ALLOCATION CHANGES

                                 FIRST QUARTER 1999
                       ---------------------------------------
                       Previously
                       Reported Organiza-    Expense
(Dollars in millions)   Pre-tax     tion  Allocation Pre-tax
                         Income   Change      Change  Income
                        -------- --------   -------- -------
SEGMENTS

Technology                  $70     ($60)        $8     $18
Personal Systems            (89)      32          2     (55)
Enterprise Systems          498       43          6     547
Global Services             973        0        (33)    940
Software                    657       42          7     706
Global Financing            297        0        (58)    239
Enterprise Investments      (72)     (64)         1    (135)

TOTAL SEGMENTS           $2,334      ($7)      ($67) $2,260

*T
    --30--MEM/ny*

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