Click here to close now.

Welcome!

Linux Authors: Tim Hinds, Elizabeth White, Carmen Gonzalez, Roger Strukhoff, Hovhannes Avoyan

News Feed Item

IBM Reports 2012 Fourth-Quarter and Full-Year Results

IBM (NYSE: IBM)

Fourth-Quarter 2012:

  • Diluted EPS:
    • GAAP: $5.13, up 11 percent;
    • Operating (non-GAAP): $5.39, up 14 percent;
  • Net income:
    • GAAP: $5.8 billion, up 6 percent;
    • Operating (non-GAAP): $6.1 billion, up 10 percent;
  • Gross profit margin:
    • GAAP: 51.8 percent, up 1.8 points;
    • Operating (non-GAAP): 52.3 percent, up 2.1 points;
  • Revenue of $29.3 billion, down 1 percent, flat adjusting for currency:
    • Up 1 percent excluding divested RSS business adjusting for currency;
  • Free cash flow of $9.5 billion, up $0.6 billion;
  • Software revenue up 3 percent, up 4 percent adjusting for currency;
  • Services revenue down 2 percent, down 1 percent adjusting for currency;
  • Services backlog of $140 billion, flat, up $1 billion adjusting for currency;
  • Systems and Technology revenue down 1 percent, up 4 percent excluding RSS:
    • System z mainframe up 56 percent.

Full-Year 2012:

  • Diluted EPS, up double-digits for 10th consecutive year:
    • GAAP: $14.37, up 10 percent;
    • Operating (non-GAAP): $15.25, up 13 percent;
  • Net income:
    • GAAP: $16.6 billion, up 5 percent;
    • Operating (non-GAAP): $17.6 billion, up 8 percent;
  • Revenue of $104.5 billion, down 2 percent, flat adjusting for currency;
  • Free cash flow of $18.2 billion, up $1.6 billion;
  • Growth markets revenue up 4 percent, up 7 percent adjusting for currency:
    • BRIC countries up 7 percent, up 12 percent adjusting for currency;
  • Business analytics revenue up 13 percent;
  • Smarter Planet revenue up more than 25 percent;
  • Cloud revenue up 80 percent.

Full-Year 2013 Expectation:

  • GAAP EPS of at least $15.53 and operating (non-GAAP) EPS of at least $16.70.

IBM (NYSE: IBM) today announced fourth-quarter 2012 diluted earnings of $5.13 per share, compared with diluted earnings of $4.62 per share in the fourth quarter of 2011, an increase of 11 percent. Operating (non-GAAP) diluted earnings were $5.39 per share, compared with operating diluted earnings of $4.71 per share in the fourth quarter of 2011, an increase of 14 percent.

Fourth-quarter net income was $5.8 billion compared with $5.5 billion in the fourth quarter of 2011, an increase of 6 percent. Operating (non-GAAP) net income was $6.1 billion compared with $5.6 billion in the fourth quarter of 2011, an increase of 10 percent.

Total revenues for the fourth quarter of 2012 of $29.3 billion decreased 1 percent (flat adjusting for currency) from the fourth quarter of 2011. Without the impact of the divested Retail Store Solutions (RSS) business, revenue increased 1 percent, adjusting for currency.

"We achieved record profit, earnings per share and free cash flow in 2012. Our performance in the fourth quarter and for the full year was driven by our strategic growth initiatives -- growth markets, analytics, cloud computing, Smarter Planet solutions -- which support our continued shift to higher-value businesses,” said Ginni Rometty, IBM chairman, president and chief executive officer.

”Looking ahead, we continue to invest to deliver innovations for the enterprise in key areas such as big data, mobile solutions, social business and security, while expanding into new markets and reaching new clients. We are well on track toward our long-term roadmap for operating EPS of at least $20 in 2015.”

Fourth-Quarter GAAP - Operating (non-GAAP) Reconciliation

Fourth-quarter operating (non-GAAP) diluted earnings exclude $0.26 per share of net charges: $0.21 per share for the amortization of purchased intangible assets and other acquisition-related charges, and $0.05 per share for retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

Full-Year 2013 Expectation

IBM said that it expects to deliver full-year 2013 GAAP earnings per share of at least $15.53; and operating (non-GAAP) earnings per share of at least $16.70. The 2013 operating (non-GAAP) earnings exclude $1.17 per share of charges for amortization of purchased intangible assets, other acquisition-related charges, and retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

Geographic Regions

The Americas’ fourth-quarter revenues were $12.5 billion, flat (up 1 percent, adjusting for currency) from the 2011 period. Revenues from Europe/Middle East/Africa were $9.1 billion, down 5 percent (down 3 percent, adjusting for currency). Asia-Pacific revenues increased 4 percent (up 5 percent, adjusting for currency) to $7.0 billion. OEM revenues were $679 million, down 5 percent compared with the 2011 fourth quarter.

Growth Markets

Revenues from the company’s growth markets increased 7 percent. Revenues in the BRIC countries — Brazil, Russia, India and China — increased 11 percent (up 14 percent, adjusting for currency).

Services

Global Technology Services segment revenues decreased 2 percent (flat adjusting for currency) to $10.3 billion. Global Business Services segment revenues were down 3 percent (down 2 percent, adjusting for currency) at $4.7 billion.

Pre-tax income from Global Technology Services increased 5 percent; pre-tax margin increased to 19.2 percent. Global Business Services pre-tax income was flat; pre-tax margin increased to 17.2 percent.

The estimated services backlog at December 31 was $140 billion, flat (up $1 billion, adjusting for currency).

Software

Revenues from the Software segment were $7.9 billion, an increase of 3 percent (up 4 percent, adjusting for currency) from the fourth quarter of 2011. Software pre-tax income of $4.0 billion increased 8 percent year over year.

Revenues from IBM’s key middleware products, which include WebSphere, Information Management, Tivoli, Lotus and Rational products, were $5.5 billion, an increase of 5 percent (up 6 percent, adjusting for currency) versus the fourth quarter of 2011. Operating systems revenues of $709 million were flat (up 1 percent, adjusting for currency) compared with the prior-year quarter.

Revenues from the WebSphere family of software products increased 11 percent year over year. Information Management software revenues increased 2 percent. Revenues from Tivoli software increased 4 percent. Revenues from Lotus software increased 9 percent, and Rational software increased 12 percent.

Hardware

Revenues from the Systems and Technology segment totaled $5.8 billion for the quarter, down 1 percent from the fourth quarter of 2011. Excluding Retail Store Solutions (RSS), revenues were up 4 percent. Systems and Technology pre-tax income was $1.0 billion, an increase of 23 percent.

Total systems revenues, excluding RSS, increased 4 percent. Revenues from System z mainframe server products increased 56 percent compared with the year-ago period; revenue in the growth markets increased 68 percent. Total delivery of System z computing power, as measured in MIPS (millions of instructions per second), increased 66 percent versus the prior year and represented the largest MIPS shipment quarter in the company’s history. New workload specialty engines, including Linux, represented one-half of the MIPS shipped. Revenues from Power Systems decreased 19 percent compared with the 2011 period. Revenues from System x decreased 2 percent. Revenues from System Storage decreased 5 percent. Revenues from Retail Store Solutions decreased $239 million year over year as a result of the divestiture in the third quarter. Revenues from Microelectronics OEM increased 4 percent.

Financing

Global Financing segment revenues were down 2 percent (down 1 percent, adjusting for currency) in the fourth quarter to $535 million. Pre-tax income for the segment increased 1 percent to $518 million.

Gross Profit

The company’s total gross profit margin was 51.8 percent in the 2012 fourth quarter compared with 49.9 percent in the 2011 fourth-quarter period. Total operating (non-GAAP) gross profit margin was 52.3 percent in the 2012 fourth quarter compared with 50.2 percent in the 2011 fourth-quarter period, with increases in Services, Software and Hardware.

Expense

Total expense and other income decreased 2 percent to $7.3 billion compared with the prior-year period. S,G&A expense of $5.9 billion decreased 3 percent year over year compared with prior-year expense. R,D&E expense of $1.6 billion increased 2 percent compared with the year-ago period. Intellectual property and custom development income decreased to $227 million compared with $253 million a year ago. Other (income) and expense was income of $47 million compared with prior-year income of $44 million. Interest expense decreased to $109 million compared with $113 million in the prior year.

Total operating (non-GAAP) expense and other income decreased 2 percent to $7.2 billion compared with the prior-year period. Operating (non-GAAP) S,G&A expense of $5.8 billion decreased 3 percent year over year compared with prior-year expense. Operating (non-GAAP) R,D&E expense of $1.6 billion increased 1 percent compared with the year-ago period.

***

Pre-tax income increased 8 percent to $7.8 billion; total operating (non-GAAP) pre-tax income increased 10 percent to $8.1 billion. Pre-tax margin was 26.7 percent, up 2.1 points; total operating (non-GAAP) pre-tax margin was 27.7 percent, up 2.6 points.

IBM’s tax rate was 25.5 percent, up 1.0 points year over year; total operating (non-GAAP) tax rate was 24.4 percent, flat compared to the year-ago period.

Net income margin increased 1.3 points to 19.9 percent; total operating (non-GAAP) net income margin was 20.9 percent, an increase of 1.9 points.

The weighted-average number of diluted common shares outstanding in the fourth-quarter 2012 was 1.14 billion compared with 1.19 billion shares in the same period of 2011.

In the quarter, IBM generated free cash flow of $9.5 billion excluding Global Financing receivables, up $0.6 billion year over year.

Full-Year 2012 Results

Net income for the year ended December 31, 2012 was $16.6 billion compared with $15.9 billion in the prior year, an increase of 5 percent. Operating (non-GAAP) net income was $17.6 billion compared with $16.3 billion in 2011, an increase of 8 percent.

Diluted earnings were $14.37 per share compared with $13.06 per diluted share in 2011, an increase of 10 percent. Operating (non-GAAP) diluted earnings were $15.25 per share, compared with operating diluted earnings of $13.44 per share in 2011, an increase of 13 percent. This was the company’s 10th consecutive year of double-digit EPS growth.

Revenues for 2012 totaled $104.5 billion, a decrease of 2 percent (flat adjusting for currency), compared with $106.9 billion in 2011.

GAAP - Operating (non-GAAP) Reconciliation

Operating (non-GAAP) diluted earnings for the year exclude $0.88 per share of net charges: $0.55 per share for the amortization of purchased intangible assets and other acquisition-related charges, and $0.33 per share for retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.

Geographic Regions

From a geographic perspective, the Americas’ full-year revenues were $44.6 billion, a decrease of 1 percent (flat adjusting for currency) from the 2011 period. Revenues from Europe/Middle East/Africa were $31.8 billion, a decrease of 6 percent (down 1 percent, adjusting for currency). Asia-Pacific revenues increased 3 percent to $25.9 billion. OEM revenues were $2.2 billion, down 18 percent compared with 2011.

Growth Markets

Revenues from the company’s growth markets increased 4 percent (up 7 percent, adjusting for currency), and represents 24 percent of IBM’s total geographic revenue. Revenues in the BRIC countries — Brazil, Russia, India and China — increased 7 percent (up 12 percent, adjusting for currency).

Segments

Total Global Services revenues decreased 2 percent (flat adjusting for currency). Revenues from the Global Technology Services segment totaled $40.2 billion, a decrease of 2 percent (up 1 percent, adjusting for currency) compared with 2011. Revenues from the Global Business Services segment were $18.6 billion, down 4 percent (down 2 percent, adjusting for currency). Software segment revenues in 2012 totaled $25.4 billion, an increase of 2 percent (up 4 percent, adjusting for currency). Systems and Technology segment revenues were $17.7 billion, a decrease of 7 percent (down 6 percent, adjusting for currency); excluding Retail Store Solutions, revenues were down 5 percent (down 4 percent adjusting for currency). Global Financing segment revenues totaled $2.0 billion, a decrease of 4 percent (down 1 percent, adjusting for currency).

***

The company’s total gross profit margin was 48.1 percent in 2012 compared with 46.9 percent in 2011. Overall gross profit margins improved year over year for the 9th consecutive year. Total operating (non-GAAP) gross profit margin was 48.7 percent in the 2012 period compared with 47.2 percent in the 2011 period, with increases in Services and Software.

The weighted-average number of diluted common shares outstanding in 2012 was 1.16 billion compared with 1.21 billion shares in 2011. As of December 31, 2012, there were 1.12 billion basic common shares outstanding.

Debt, including Global Financing, totaled $33.3 billion, compared with $31.3 billion at year-end 2011. From a management segment view, Global Financing debt totaled $24.5 billion versus $23.3 billion at year-end 2011, resulting in a debt-to-equity ratio of 7.0 to 1. Non-global financing debt totaled $8.8 billion, an increase of $0.8 billion since year-end 2011, resulting in a debt-to-capitalization ratio of 36.1 percent from 32.0 percent.

IBM ended 2012 with $11.1 billion of cash on hand and generated free cash flow of $18.2 billion excluding Global Financing receivables, up approximately $1.6 billion year over year. The company returned $15.8 billion to shareholders through $3.8 billion in dividends and $12.0 billion of share repurchases. The company’s balance sheet remains strong and is well positioned to support the business over the long term.

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. Forward-looking statements are based on the company’s current assumptions regarding future business and financial performance. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, including the following: a downturn in economic environment and corporate IT spending budgets; the company’s failure to meet growth and productivity objectives, a failure of the company’s innovation initiatives; risks from investing in growth opportunities; failure of the company’s intellectual property portfolio to prevent competitive offerings and the failure of the company to obtain necessary licenses; cybersecurity and data privacy considerations; fluctuations in financial results and purchases, impact of local legal, economic, political and health conditions; adverse effects from environmental matters, tax matters and the company’s pension plans; ineffective internal controls; the company’s use of accounting estimates; the company’s ability to attract and retain key personnel and its reliance on critical skills; impacts of relationships with critical suppliers and business with government clients; currency fluctuations and customer financing risks; impact of changes in market liquidity conditions and customer credit risk on receivables; reliance on third party distribution channels; the company’s ability to successfully manage acquisitions and alliances; 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. Any forward-looking statement in this release speaks only as of the date on which it is made. 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 and expectations –

  • presenting operating (non-GAAP) earnings per share amounts and related income statement items;
  • presenting non-global financing debt-to-capitalization ratio;
  • adjusting for free cash flow;
  • adjusting for currency (i.e., at constant currency);
  • adjusting for the divestiture of RSS.

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. The Webcast may be viewed at www.ibm.com/investor/4q12. Presentation charts will be available on the Web site shortly before the Webcast.

Financial Results Below (certain amounts may not add due to use of rounded numbers; percentages presented are calculated from the underlying whole-dollar amounts).

INTERNATIONAL BUSINESS MACHINES CORPORATION
COMPARATIVE FINANCIAL RESULTS
(Dollars in millions except per share amounts)
 
  Three Months Ended   Twelve Months Ended
December 31, December 31,
    Percent     Percent
2012 2011 Change 2012 2011 Change
REVENUE
 
Global Technology Services $ 10,284 $ 10,452 -1.6 % $ 40,236 $ 40,879 -1.6 %
Gross profit margin 37.6 % 36.6 % 36.6 % 35.0 %
 
Global Business Services 4,720 4,877 -3.2 % 18,566 19,284 -3.7 %
Gross profit margin 29.9 % 29.3 % 30.0 % 28.8 %
 
Software 7,915 7,648 3.5 % 25,448 24,944 2.0 %
Gross profit margin 90.6 % 89.8 % 88.7 % 88.5 %
 
System and Technology 5,763 5,803 -0.7 % 17,667 18,985 -6.9 %
Gross profit margin 44.1 % 40.5 % 39.1 % 39.8 %
 
Global Financing 535 548 -2.3 % 2,013 2,102 -4.2 %
Gross profit margin 43.8 % 49.7 % 46.5 % 49.8 %
 
Other 87 159 -45.3 % 577 722 -20.1 %
Gross profit margin -73.2 % -11.0 % -71.6 % -54.5 %
 
TOTAL REVENUE 29,304 29,486 -0.6 % 104,507 106,916 -2.3 %
 
 
GROSS PROFIT 15,167 14,722 3.0 % 50,298 50,138 0.3 %
Gross profit margin 51.8 % 49.9 % 48.1 % 46.9 %
 
 
EXPENSE AND OTHER INCOME
 
S,G&A 5,921 6,076 -2.6 % 23,553 23,594 -0.2 %
Expense to revenue 20.2 % 20.6 % 22.5 % 22.1 %
 
R,D&E 1,580 1,555 1.6 % 6,302 6,258 0.7 %
Expense to revenue 5.4 % 5.3 % 6.0 % 5.9 %
 
Intellectual property
and custom development
income (227 ) (253 ) -10.1 % (1,074 ) (1,108 ) -3.0 %
 
Other (income)and expense (47 ) (44 ) 7.3 % (843 ) (20 ) NM
 
Interest expense 109 113 -3.8 % 459 411 11.8 %
 
TOTAL EXPENSE AND
OTHER INCOME 7,336 7,448 -1.5 % 28,396 29,135 -2.5 %
Expense to revenue 25.0 % 25.3 % 27.2 % 27.3 %
 
INCOME BEFORE
INCOME TAXES 7,831 7,274 7.7 % 21,902 21,003 4.3 %
Pre-tax margin 26.7 % 24.7 % 21.0 % 19.6 %
 
Provision for income taxes 1,998 1,784 12.0 % 5,298 5,148 2.9 %
Effective tax rate 25.5 % 24.5 % 24.2 % 24.5 %
 
NET INCOME $ 5,833   $ 5,490   6.3 % $ 16,604   $ 15,855   4.7 %
Net income margin 19.9 % 18.6 % 15.9 % 14.8 %
 
 
EARNINGS PER SHARE
OF COMMON STOCK:
ASSUMING DILUTION $ 5.13 $ 4.62 11.0 % $ 14.37 $ 13.06 10.0 %
BASIC $ 5.19 $ 4.68 10.9 % $ 14.53 $ 13.25 9.7 %
 
WEIGHTED-AVERAGE NUMBER
OF COMMON SHARES OUT-
STANDING (M's):
ASSUMING DILUTION 1,136.4 1,188.7 1,155.4 1,213.8
BASIC 1,124.7 1,172.2 1,142.5 1,197.0
 
NM - - Not Meaningful
 
INTERNATIONAL BUSINESS MACHINES CORPORATION
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
 
  At   At
(Dollars in Millions) December 31, December 31,
2012 2011
ASSETS:
 
Current Assets:
Cash and cash equivalents $ 10,412 $ 11,922
Marketable securities 717 --
Notes and accounts receivable - trade
(net of allowances of $255 in 2012 and $256 in 2011) 10,667 11,179
Short-term financing receivables
(net of allowances of $288 in 2012 and $311 in 2011) 18,038 16,901
Other accounts receivable
(net of allowances of $17 in 2012 and $11 in 2011) 1,873 1,481
Inventories, at lower of average cost or market:
Finished goods 475 589
Work in process and raw materials   1,812     2,007  
Total inventories 2,287 2,595
Deferred taxes 1,415 1,601
Prepaid expenses and other current assets   4,024     5,249  
Total Current Assets 49,433 50,928
 
Property, plant and equipment 40,501 40,124
Less: Accumulated depreciation   26,505     26,241  
Property, plant and equipment - net 13,996 13,883
Long-term financing receivables
(net of allowances of $66 in 2012 and $38 in 2011) 12,812 10,776
Prepaid pension assets 945 2,843
Deferred taxes 3,973 3,503
Goodwill 29,247 26,213
Intangible assets - net 3,787 3,392
Investments and sundry assets   5,021     4,895  
Total Assets $ 119,213   $ 116,433  
 
LIABILITIES:
 
Current Liabilities:
Taxes $ 4,948 $ 3,313
Short-term debt 9,181 8,463
Accounts payable 7,952 8,517
Compensation and benefits 4,745 5,099
Deferred income 11,952 12,197
Other accrued expenses and liabilities   4,847     4,535  
Total Current Liabilities 43,625 42,123
 
Long-term debt 24,088 22,857
Retirement and nonpension postretirement
benefit obligations 20,418 18,374
Deferred income 4,491 3,847
Other liabilities   7,607     8,996  
Total Liabilities 100,229 96,197
 
EQUITY:
IBM Stockholders' Equity:
Common stock 50,110 48,129
Retained earnings 117,641 104,857
Treasury stock -- at cost (123,131 ) (110,963 )
Accumulated other comprehensive income/(loss)   (25,759 )   (21,885 )
Total IBM stockholders' equity 18,860 20,138
 
Noncontrolling interests   124     97  
Total Equity   18,984     20,236  
Total Liabilities and Equity $ 119,213   $ 116,433  
 
INTERNATIONAL BUSINESS MACHINES CORPORATION
CASH FLOW ANALYSIS
 
  Three Months Ended   Twelve Months Ended
(Dollars in Millions) December 31, December 31,
2012   2011 2012   2011
 
Net Cash from Operating Activities per GAAP: $ 6,346 $ 7,097 $ 19,586 $ 19,846
 
Less: the change in Global Financing (GF)
Receivables   (4,151 )   (2,927 )   (2,906 )   (817 )
Net Cash from Operating Activities
(Excluding GF Receivables) 10,497 10,024 22,492 20,663
 
Capital Expenditures, Net (981 ) (1,059 ) (4,307 ) (4,059 )
 
Free Cash Flow
(Excluding GF Receivables) 9,515 8,965 18,185 16,604
 
Acquisitions (1,455 ) (1,588 ) (3,722 ) (1,811 )
Divestitures 13 10 599 14
Dividends (957 ) (880 ) (3,773 ) (3,473 )
Share Repurchase (3,006 ) (3,581 ) (11,995 ) (15,046 )
Non-GF Debt (1,571 ) 599 713 1,692
Other (includes GF Receivables, and
GF Debt) (3,664 ) (2,906 ) (802 ) 2,291
 
Change in Cash, Cash Equivalents and
Short-term Marketable Securities   ($1,125 ) $ 619     ($794 ) $ 271  
 
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
 
  FOURTH-QUARTER 2012
(Dollars in Millions)   Pre-tax  
Revenue Income/ Pre-tax
External   Internal   Total (Loss) Margin
SEGMENTS
 
Global Technology Services $ 10,284 $ 297 $ 10,581 $ 2,027 19.2 %
Y-T-Y change -1.6 % -0.6 % -1.6 % 5.0 %
 
Global Business Services 4,720 181 4,901 841 17.2 %
Y-T-Y change -3.2 % -5.9 % -3.3 % 0.1 %
 
Software 7,915 815 8,730 4,017 46.0 %
Y-T-Y change 3.5 % -4.2 % 2.7 % 8.3 %
 
Systems and Technology 5,763 186 5,949 974 16.4 %
Y-T-Y change -0.7 % 0.0 % -0.7 % 23.2 %
 
Global Financing 535 568 1,103 518 46.9 %
Y-T-Y change -2.3 % -0.1 % -1.2 % 0.7 %
 
TOTAL REPORTABLE SEGMENTS $ 29,217 $ 2,048 $ 31,265 $ 8,377 26.8 %
Y-T-Y change -0.4 % -2.4 % -0.5 % 7.6 %
 
Eliminations / Other 87 (2,048 ) (1,961 ) (546 )
 
TOTAL IBM CONSOLIDATED $ 29,304 $ 0 $ 29,304 $ 7,831 26.7 %
Y-T-Y change -0.6 % -0.6 % 7.7 %
 
 

 

FOURTH-QUARTER 2011

(Dollars in Millions) Pre-tax
Revenue Income/ Pre-tax

External

Internal

Total (Loss) Margin
SEGMENTS
 
Global Technology Services $ 10,452 $ 299 $ 10,751 $ 1,930 18.0 %
 
Global Business Services 4,877 193 5,069 841 16.6 %
 
Software 7,648 851 8,499 3,710 43.7 %
 
Systems and Technology 5,803 186 5,989 790 13.2 %
 
Global Financing 548 569 1,116 514 46.1 %
 
TOTAL REPORTABLE SEGMENTS $ 29,328 $ 2,098 $ 31,425 $ 7,786 24.8 %
 
Eliminations / Other 159 (2,098 ) (1,939 ) (512 )
 
TOTAL IBM CONSOLIDATED $ 29,486 $ 0 $ 29,486 $ 7,274 24.7 %
 
INTERNATIONAL BUSINESS MACHINES CORPORATION
SEGMENT DATA
 
  TWELVE-MONTHS 2012
(Dollars in Millions)   Pre-tax  
Revenue Income/ Pre-tax
External   Internal   Total (Loss) Margin
SEGMENTS
 
Global Technology Services $ 40,236 $ 1,166 $ 41,402 $ 6,961 16.8 %
Y-T-Y change -1.6 % -6.2 % -1.7 % 10.8 %
 
Global Business Services 18,566 719 19,286 2,983 15.5 %
Y-T-Y change -3.7 % -9.7 % -4.0 % -0.8 %
 
Software 25,448 3,274 28,722 10,810 37.6 %
Y-T-Y change 2.0 % -0.1 % 1.8 % 8.4 %
 
Systems and Technology 17,667 676 18,343 1,227 6.7 %
Y-T-Y change -6.9 % -19.3 % -7.5 % -24.9 %
 
Global Financing 2,013 2,060 4,073 2,034 49.9 %
Y-T-Y change -4.2 % -1.6 % -2.9 % 1.1 %
 
TOTAL REPORTABLE SEGMENTS $ 103,930 $ 7,896 $ 111,826 $ 24,015 21.5 %
Y-T-Y change -2.1 % -4.3 % -2.3 % 4.8 %
 
Eliminations / Other 577 (7,896 ) (7,319 ) (2,113 )
 
TOTAL IBM CONSOLIDATED $ 104,507 $ 0 $ 104,507 $ 21,902 21.0 %
Y-T-Y change -2.3 % -2.3 % 4.3 %
 
 
TWELVE-MONTHS 2011
(Dollars in Millions) Pre-tax
Revenue Income/ Pre-tax
External Internal Total (Loss) Margin
SEGMENTS
 
Global Technology Services $ 40,879 $ 1,242 $ 42,121 $ 6,284 14.9 %
 
Global Business Services 19,284 797 20,081 3,006 15.0 %
 
Software 24,944 3,276 28,219 9,970 35.3 %
 
Systems and Technology 18,985 838 19,823 1,633 8.2 %
 
Global Financing 2,102 2,092 4,195 2,011 47.9 %
 
TOTAL REPORTABLE SEGMENTS $ 106,194 $ 8,246 $ 114,440 $ 22,904 20.0 %
 
Eliminations / Other 722 (8,246 ) (7,524 ) (1,901 )
 
TOTAL IBM CONSOLIDATED $ 106,916 $ 0 $ 106,916 $ 21,003 19.6 %
 
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING RESULTS RECONCILIATION
(Dollars in millions except per share amounts)
 
  FOURTH-QUARTER 2012
  Acquisition-   Retirement-  
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross Profit $ 15,167 $ 100 $ 60 $ 15,327
 
Gross Profit Margin 51.8 % 0.3Pts 0.2Pts 52.3 %
 
S,G&A 5,921 (91 ) (29 ) 5,801
 
R,D&E 1,580 0 6 1,586
 
Other (Income) & Expense (47 ) (7 ) 0 (54 )
 
Total Expense & Other (Income) 7,336 (98 ) (23 ) 7,215
 
Pre-Tax Income 7,831 198 83 8,112
 
Pre-Tax Income Margin 26.7 % 0.7Pts 0.3Pts 27.7 %
 
Provision for Income Taxes*** 1,998 (45 ) 30 1,983
 
Effective Tax Rate 25.5 % -1.2Pts 0.1Pts 24.4 %
 
Net Income 5,833 243 53 6,129
 
Net Income Margin 19.9 % 0.8Pts 0.2Pts 20.9 %
 
Diluted Earnings Per Share $ 5.13 $ 0.21 $ 0.05 $ 5.39
 
 
FOURTH-QUARTER 2011
Acquisition- Retirement-
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross Profit $ 14,722 $ 81 ($10 ) $ 14,793
 
Gross Profit Margin 49.9 % 0.3Pts -0.0Pts 50.2 %
 
S,G&A 6,076 (82 ) 2 5,996
 
R,D&E 1,555 0 23 1,578
 
Other (Income) & Expense (44 ) (2 ) 0 (46 )
 
Total Expense & Other (Income) 7,448 (85 ) 25 7,388
 
Pre-Tax Income 7,274 166 (35 ) 7,405
 
Pre-Tax Income Margin 24.7 % 0.6Pts -0.1Pts 25.1 %
 
Provision for Income Taxes*** 1,784 47 (24 ) 1,808
 
Effective Tax Rate 24.5 % 0.1Pts -0.2Pts 24.4 %
 
Net Income 5,490 119 (12 ) 5,597
 
Net Income Margin 18.6 % 0.4Pts -0.0Pts 19.0 %
 
Diluted Earnings Per Share $ 4.62 $ 0.10 ($0.01 ) $ 4.71
* Includes amortization of acquired intangible assets and other acquisition-related charges.
** Includes retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.
*** Tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.
 
INTERNATIONAL BUSINESS MACHINES CORPORATION
U.S. GAAP TO OPERATING RESULTS RECONCILIATION
(Dollars in millions except per share amounts)
 
  TWELVE-MONTHS 2012
  Acquisition-   Retirement-  
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross Profit $ 50,298 $ 376 $ 264 $ 50,938
 
Gross Profit Margin 48.1 % 0.4Pts 0.3Pts 48.7 %
 
S,G&A 23,553 (349 ) (294 ) 22,910
 
R,D&E 6,302 0 20 6,322
 
Other (Income) & Expense (843 ) (13 ) 0 (857 )
 
Total Expense & Other (Income) 28,396 (363 ) (274 ) 27,760
 
Pre-Tax Income 21,902 739 538 23,179
 
Pre-Tax Income Margin 21.0 % 0.7Pts 0.5Pts 22.2 %
 
Provision for Income Taxes*** 5,298 98 156 5,552
 
Effective Tax Rate 24.2 % -0.4Pts 0.1Pts 24.0 %
 
Net Income 16,604 641 381 17,627
 
Net Income Margin 15.9 % 0.6Pts 0.4Pts 16.9 %
 
Diluted Earnings Per Share $ 14.37 $ 0.55 $ 0.33 $ 15.25
 
 
TWELVE-MONTHS 2011
Acquisition- Retirement-
Related Related Operating
GAAP Adjustments* Adjustments** (Non-GAAP)
Gross Profit $ 50,138 $ 341 $ 2 $ 50,481
 
Gross Profit Margin 46.9 % 0.3Pts 0.0Pts 47.2 %
 
S,G&A 23,594 (309 ) (13 ) 23,272
 
R,D&E 6,258 0 88 6,345
 
Other (Income) & Expense (20 ) (25 ) 0 (45 )
 
Total Expense & Other (Income) 29,135 (334 ) 74 28,875
 
Pre-Tax Income 21,003 675 (72 ) 21,605
 
Pre-Tax Income Margin 19.6 % 0.6Pts -0.1Pts 20.2 %
 
Provision for Income Taxes*** 5,148 179 (40 ) 5,287
 
Effective Tax Rate 24.5 % 0.1Pts -0.1Pts 24.5 %
 
Net Income 15,855 495 (32 ) 16,318
 
Net Income Margin 14.8 % 0.5Pts -0.0Pts 15.3 %
 
Diluted Earnings Per Share $ 13.06 $ 0.41 ($0.03 ) $ 13.44

* Includes amortization of acquired intangible assets and other acquisition-related charges.
** Includes retirement-related items driven by changes to plan assets and liabilities primarily related to market performance.
*** Tax impact on operating (non-GAAP) pre-tax income is calculated under the same accounting principles applied to the GAAP pre-tax income which employs an annual effective tax rate method to the results.

More Stories By Business Wire

Copyright © 2009 Business Wire. All rights reserved. Republication or redistribution of Business Wire content is expressly prohibited without the prior written consent of Business Wire. Business Wire shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.

@ThingsExpo Stories
SYS-CON Events announced today that Vicom Computer Services, Inc., a provider of technology and service solutions, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. They are located at booth #427. Vicom Computer Services, Inc. is a progressive leader in the technology industry for over 30 years. Headquartered in the NY Metropolitan area. Vicom provides products and services based on today’s requirements around Unified Networks, Cloud Computing strategies, Virtualization around Software defined Data Ce...
Enterprise IoT is an exciting and chaotic space with a lot of potential to transform how the enterprise resources are managed. In his session at @ThingsExpo, Hari Srinivasan, Sr Product Manager at Cisco, will describe the challenges in enabling mass adoption of IoT, and share perspectives and insights on architectures/standards/protocols that are necessary to build a healthy ecosystem and lay the foundation to for a wide variety of exciting IoT use cases in the years to come.
Containers and microservices have become topics of intense interest throughout the cloud developer and enterprise IT communities. Accordingly, attendees at the upcoming 16th Cloud Expo at the Javits Center in New York June 9-11 will find fresh new content in a new track called PaaS | Containers & Microservices Containers are not being considered for the first time by the cloud community, but a current era of re-consideration has pushed them to the top of the cloud agenda. With the launch of Docker's initial release in March of 2013, interest was revved up several notches. Then late last...
SYS-CON Events announced today that B2Cloud, a provider of enterprise resource planning software, will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY. B2cloud develops the software you need. They have the ideal tools to help you work with your clients. B2Cloud’s main solutions include AGIS – ERP, CLOHC, AGIS – Invoice, and IZUM
There is no doubt that Big Data is here and getting bigger every day. Building a Big Data infrastructure today is no easy task. There are an enormous number of choices for database engines and technologies. To make things even more challenging, requirements are getting more sophisticated, and the standard paradigm of supporting historical analytics queries is often just one facet of what is needed. As Big Data growth continues, organizations are demanding real-time access to data, allowing immediate and actionable interpretation of events as they happen. Another aspect concerns how to deliver ...
SYS-CON Events announced today that MangoApps will exhibit at SYS-CON's 16th International Cloud Expo®, which will take place on June 9-11, 2015, at the Javits Center in New York City, NY., and the 17th International Cloud Expo®, which will take place on November 3–5, 2015, at the Santa Clara Convention Center in Santa Clara, CA. MangoApps provides private all-in-one social intranets allowing workers to securely collaborate from anywhere in the world and from any device. Social, mobile, and easy to use. MangoApps has been named a "Market Leader" by Ovum Research and a "Cool Vendor" by Gartner...
The world's leading Cloud event, Cloud Expo has launched Microservices Journal on the SYS-CON.com portal, featuring over 19,000 original articles, news stories, features, and blog entries. DevOps Journal is focused on this critical enterprise IT topic in the world of cloud computing. Microservices Journal offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. Follow new article posts on Twitter at @MicroservicesE
WebRTC defines no default signaling protocol, causing fragmentation between WebRTC silos. SIP and XMPP provide possibilities, but come with considerable complexity and are not designed for use in a web environment. In his session at @ThingsExpo, Matthew Hodgson, technical co-founder of the Matrix.org, discussed how Matrix is a new non-profit Open Source Project that defines both a new HTTP-based standard for VoIP & IM signaling and provides reference implementations.
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, and physical persons. In the IoT vision, every new "thing" - sensor, actuator, data source, data con...
The Internet of Things is not new. Historically, smart businesses have used its basic concept of leveraging data to drive better decision making and have capitalized on those insights to realize additional revenue opportunities. So, what has changed to make the Internet of Things one of the hottest topics in tech? In his session at @ThingsExpo, Chris Gray, Director, Embedded and Internet of Things, discussed the underlying factors that are driving the economics of intelligent systems. Discover how hardware commoditization, the ubiquitous nature of connectivity, and the emergence of Big Data a...
SYS-CON Events announced today the IoT Bootcamp – Jumpstart Your IoT Strategy, being held June 9–10, 2015, in conjunction with 16th Cloud Expo and Internet of @ThingsExpo at the Javits Center in New York City. This is your chance to jumpstart your IoT strategy. Combined with real-world scenarios and use cases, the IoT Bootcamp is not just based on presentations but includes hands-on demos and walkthroughs. We will introduce you to a variety of Do-It-Yourself IoT platforms including Arduino, Raspberry Pi, BeagleBone, Spark and Intel Edison. You will also get an overview of cloud technologies s...
SYS-CON Media announced today that @WebRTCSummit Blog, the largest WebRTC resource in the world, has been launched. @WebRTCSummit Blog offers top articles, news stories, and blog posts from the world's well-known experts and guarantees better exposure for its authors than any other publication. @WebRTCSummit Blog can be bookmarked ▸ Here @WebRTCSummit conference site can be bookmarked ▸ Here
Scott Jenson leads a project called The Physical Web within the Chrome team at Google. Project members are working to take the scalability and openness of the web and use it to talk to the exponentially exploding range of smart devices. Nearly every company today working on the IoT comes up with the same basic solution: use my server and you'll be fine. But if we really believe there will be trillions of these devices, that just can't scale. We need a system that is open a scalable and by using the URL as a basic building block, we open this up and get the same resilience that the web enjoys.
As we approach the next @ThingsExpo, to be held June 9-11 at the Javits Center in New York, my thoughts naturally turn to the Internet of Things. The IoT is a leviathan—in the best possible sense of the term—that will sweep up most everything in the ocean of data and technology being created today and tomorrow. But rather than try to grasp all of its possible uses, for today I'm looking at “just” the Industrial Internet part. I just read a long paper co-authored by Tim Berners-Lee about the possibility of describing a “web science,” that is, discipline that combines the study involved ...
Chuck Piluso will present a study of cloud adoption trends and the power and flexibility of IBM Power and Pureflex cloud solutions. Speaker Bio: Prior to Data Storage Corporation (DSC), Mr. Piluso founded North American Telecommunication Corporation, a facilities-based Competitive Local Exchange Carrier licensed by the Public Service Commission in 10 states, serving as the company's chairman and president from 1997 to 2000. Between 1990 and 1997, Mr. Piluso served as chairman & founder of International Telecommunications Corporation, a facilities-based international carrier licensed by t...
There are lots of challenges in IoT around secure, scalable and business friendly infrastructure for enterprises. For large corporations, IoT implementations are one of the top priorities of the decade. All industries are seeing a competitive need to sustain by investing in IoT initiatives. The value addition comes from improved customer service, innovative product and additional revenue streams. The data from these IP-connected devices can be leveraged for a variety of business applications as well as responsive action controls. The various architectural building blocks of an IoT ...
The WebRTC Summit 2015 New York, to be held June 9-11, 2015, at the Javits Center in New York, NY, announces that its Call for Papers is open. Topics include all aspects of improving IT delivery by eliminating waste through automated business models leveraging cloud technologies. WebRTC Summit is co-located with 16th International Cloud Expo, @ThingsExpo, Big Data Expo, and DevOps Summit.
Recent technology advances in miniaturization has positioned the wearables as the pinnacle of technology convergence with the human body. We inquire if wearables are mere standard miniaturized devices extended with the connectivity and present our views on considerations like design, applications, performance, efficiency, interoperability, usage scenarios, human device interaction and consequent trade-offs enabling wearables to impart optimal value.
In this session we look at creating interactive communications via the web by adding messaging, file transfer, and group communication (group chat and audio/video conferencing) into the web experience. We will also discuss potential applications of this technology in areas including B2B, B2C, P2P, and gaming. Peter is Technical Director at Acision. He graduated from The University of Edinburgh in 2000 with a BSc (Hons) in Computer Science. After graduation Peter worked on a PSTN switch developing signalling stacks for SS7, ISDN and similar protocols and creating advanced routing and serv...
The Internet of Things Maturity Model (IoTMM) is a qualitative method to gauge the growth and increasing impact of IoT capabilities in an IT environment from both a business and technology perspective. In his session at @ThingsExpo, Tony Shan will first scan the IoT landscape and investigate the major challenges and barriers. The key areas of consideration are identified to get started with IoT journey. He will then pinpoint the need of a tool for effective IoT adoption and implementation, which leads to IoTMM in which five maturity levels are defined: Advanced, Dynamic, Optimized, Primitive,...