IBM Reports 2003 Second-Quarter Results


Forward-Looking and Cautionary Statements

Except for the historical information and discussions contained herein, statements contained in this release may constitute "forward- looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially, as discussed in the company's filings with the Securities and Exchange Commission (SEC).

Presentation of Information in this Press Release

This release includes certain non-GAAP financial measures, as defined under SEC rules. The company provides a reconciliation of those measures to the most directly comparable GAAP measures and a list of the reasons why the company uses these measures, as part of the supplementary materials being presented within the second-quarter earnings materials. These materials are available on the IBM investor relations website at www.ibm.com/investor.

Conference Call and Webcast

IBM's regular quarterly earnings conference call is scheduled to begin at 4:30 p.m. EDT, today. Investors may participate by viewing the webcast at www.ibm.com/investor/2q03.


Financial Results Attached

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

                          Three Months               Six Months
                         Ended June 30,            Ended June 30,

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

 Global Services  $10,635   $8,661    22.8% $20,804  $16,890    23.2%
  Gross margin       25.9%    26.3%            25.4%    26.1%

 Hardware           6,613    6,672    -0.9%  12,421   12,556    -1.1%
  Gross margin       26.9%    24.8%            26.8%    24.6%

 Software           3,471    3,266     6.2%   6,600    6,163     7.1%
  Gross margin       86.2%    84.7%            85.4%    83.0%

 Global Financing     672      825   -18.4%   1,377    1,608   -14.4%
  Gross margin       54.6%    56.8%            56.8%    56.7%

 Enterprise Investments/
 Other                240      227     5.8%     494      464     6.6%
  Gross margin       41.9%    45.8%            39.2%    51.1%


TOTAL REVENUE      21,631   19,651    10.1%  41,696   37,681    10.7%


GROSS PROFIT        7,998    7,270    10.0%  15,231   13,770    10.6%
  Gross margin       37.0%    37.0%            36.5%    36.5%


EXPENSE AND OTHER INCOME

 S,G&A              4,460    5,288   -15.7%   8,675    9,311    -6.8%
  % of revenue       20.6%    26.9%            20.8%    24.7%

 R,D&E              1,226    1,198     2.3%   2,421    2,333     3.8%
  % of revenue        5.7%     6.1%             5.8%     6.2%

 Intellectual property
  and custom development
  income             (199)    (243)  -18.0%    (481)    (539)  -10.8%
 Other (income)
  and expense           4      399   -98.9%      88      194   -54.6%
 Interest expense      41       33    25.1%      81       63    28.6%

TOTAL EXPENSE AND
OTHER INCOME        5,532    6,675   -17.1%  10,784   11,362    -5.1%
  % of revenue       25.6%    34.0%            25.9%    30.2%

INCOME FROM CONTINUING
OPERATIONS BEFORE
INCOME TAXES        2,466      595   314.4%   4,447    2,408    84.6%
  Pre-tax margin     11.4%     3.0%            10.7%     6.4%

Provision for
income taxes          741      150   392.1%   1,335      679    96.4%
  Effective tax
  rate               30.0%    25.3%            30.0%    28.2%

INCOME FROM CONTINUING
OPERATIONS         $1,725     $445   288.1%  $3,112   $1,729    80.0%
  Net margin          8.0%     2.3%             7.5%     4.6%

DISCONTINUED OPERATIONS
Loss from discontinued
operations            (20)    (389)             (23)    (481)

NET INCOME         $1,705      $56 2,951.4%  $3,089   $1,248   147.5%
                   ======   ======           ======   ======

EARNINGS/(LOSS)PER SHARE
OF COMMON STOCK:

 ASSUMING DILUTION
  CONTINUING
   OPERATIONS       $0.98    $0.25   292.0%   $1.77    $0.98    80.6%
  DISCONTINUED
   OPERATIONS       (0.01)   (0.22)             (0.01)      (0.28)
                                      ------      ------                      ------      ------
    TOTAL                          $0.97        $0.03  3,133.3%      $1.75*      $0.71*    146.5%
                                      ======      ======                      ======      ======

  BASIC
    CONTINUING
      OPERATIONS              $1.00        $0.26      284.6%      $1.80        $1.01        78.2%
    DISCONTINUED
      OPERATIONS              (0.01)      (0.23)                      (0.01)      (0.28)
                                      ------      ------                      ------      ------
    TOTAL                          $0.99        $0.03  3,200.0%      $1.79        $0.73      145.2%
                                      ======      ======                      ======      ======

AVERAGE  NUMBER  OF
COMMON  SHARES  OUT-
STANDING  (M's)
    ASSUMING
      DILUTION              1,763.7    1,730.4                    1,761.1    1,741.7
    BASIC                      1,729.8    1,705.0                    1,727.6    1,711.7

*  Does  not  total  due  to  rounding.


                              INTERNATIONAL  BUSINESS  MACHINES  CORPORATION
                            CONSOLIDATED  STATEMENT  OF  FINANCIAL  POSITION
                                                            (Unaudited)

                                                                                  At                      At
(Dollars  in  millions)                              June  30,  December  31,    Percent
                                                                              2003                  2002        Change
                                                                      ---------  -----------      -------
ASSETS

  Cash,  cash  equivalents,
  and  marketable  securities                      $5,821              $5,975          -2.6%

  Receivables  -  net,  inventories,
  prepaid  expenses                                        33,974              35,677          -4.8%

  Plant,  rental  machines,
  and  other  property  -  net                        14,560              14,440            0.8%

  Investments  and  other  assets                42,583              40,392            5.4%
                                                                      --------          --------

TOTAL  ASSETS                                                $96,938            $96,484            0.5%
                                                                      ========          ========


LIABILITIES  AND  STOCKHOLDERS'  EQUITY

  Short-term  debt                                          $4,873              $6,031        -19.2%
  Long-term  debt                                            18,972              19,986          -5.1%
                                                                      --------          --------
  Total  debt                                                    23,845              26,017          -8.3%

  Accounts  payable,  taxes,
  and  accruals                                                26,638              28,519          -6.6%

  Other  liabilities                                      19,882              19,166            3.7%
                                                                      --------          --------
TOTAL  LIABILITIES                                        70,365              73,702          -4.5%

STOCKHOLDERS'  EQUITY                                  26,573              22,782          16.6%
                                                                      --------          --------
TOTAL  LIABILITIES  AND
STOCKHOLDERS'  EQUITY                                $96,938            $96,484            0.5%
                                                                      ========          ========


                                  INTERNATIONAL  BUSINESS  MACHINES  CORPORATION
                                                              SEGMENT  DATA
                                                                (Unaudited)

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

Global  Services                  $10,635          $695      $11,330        $1,168          10.3%
                    %  change                  22.8%        -6.2%          20.5%          65.4%

Systems  Group                          3,221            182          3,403              396          11.6%
                    %  change                    9.8%        13.8%          10.0%        117.6%

Personal  Systems  Group        2,723              44          2,767                (8)        -0.3%
                    %  change                  -2.7%        33.3%          -2.3%          77.1%

Technology  Group                        659            237              896            (111)      -12.4%
                    %  change                -34.3%        19.1%        -25.5%          88.2%

Software                                    3,471            390          3,861              850          22.0%
                    %  change                    6.2%        23.8%            7.8%          -6.9%

Global  Financing                        681            307              988              296          30.0%
                    %  change                -16.7%        59.1%          -2.3%          24.9%

Enterprise  Investments            227                1              228              (87)      -38.2%
                    %  change                    1.8%          0.0%            1.8%          -7.4%

TOTAL  SEGMENTS                      21,617        1,856        23,473          2,504          10.7%
                    %  change                    9.7%        13.0%          10.0%        155.8%

Eliminations  /  Other                  14      (1,856)      (1,842)            (38)

TOTAL  IBM                              $21,631              $0      $21,631        $2,466          11.4%
                    %  change                  10.1%                            10.1%        314.4%


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

SEGMENTS

Global  Services                    $8,661          $741        $9,402            $706            7.5%

Systems  Group                          2,934            160          3,094              182            5.9%

Personal  Systems  Group        2,800              33          2,833              (35)        -1.2%

Technology  Group                    1,003            199          1,202            (943)      -78.5%

Software                                    3,266            315          3,581              913          25.5%

Global  Financing                        818            193          1,011              237          23.4%

Enterprise  Investments            223                1              224              (81)      -36.2%

TOTAL  SEGMENTS                      19,705        1,642        21,347              979            4.6%

Eliminations  /  Other                (54)    (1,642)      (1,696)          (384)

TOTAL  IBM                              $19,651              $0      $19,651            $595            3.0%



                                  INTERNATIONAL  BUSINESS  MACHINES  CORPORATION
                                                                SEGMENT  DATA
                                                                  (Unaudited)

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

SEGMENTS

Global  Services                  $20,804      $1,394      $22,198        $2,151            9.7%
                    %  change                  23.2%          0.9%          21.5%          20.9%

Systems  Group                          5,867            362          6,229              591            9.5%
                    %  change                    8.3%        11.0%            8.4%          64.6%

Personal  Systems  Group        5,113              80          5,193              (77)        -1.5%
                    %  change                  -3.7%        73.9%          -3.1%      -356.7%

Technology  Group                    1,401            411          1,812            (122)        -6.7%
                    %  change                -27.5%        -5.5%        -23.5%          88.7%

Software                                    6,600            777          7,377          1,489          20.2%
                    %  change                    7.1%        43.4%          10.0%            1.1%

Global  Financing                    1,382            602          1,984              569          28.7%
                    %  change                -12.9%        58.8%            1.0%          24.0%

Enterprise  Investments            468                2              470            (154)      -32.8%
                    %  change                    3.1%          0.0%            3.1%        -14.9%

TOTAL  SEGMENTS                      41,635        3,628        45,263          4,447            9.8%
                    %  change                  10.3%        16.6%          10.8%          54.2%

Eliminations  /  Other                  61      (3,628)      (3,567)                0

TOTAL  IBM                              $41,696              $0      $41,696        $4,447          10.7%
                    %  change                  10.7%                            10.7%          84.6%


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

SEGMENTS

Global  Services                  $16,890      $1,381      $18,271        $1,779            9.7%

Systems  Group                          5,418            326          5,744              359            6.3%

Personal  Systems  Group        5,311              46          5,357                30            0.6%

Technology  Group                    1,933            435          2,368        (1,082)      -45.7%

Software                                    6,163            542          6,705          1,473          22.0%

Global  Financing                    1,586            379          1,965              459          23.4%

Enterprise  Investments            454                2              456            (134)      -29.4%

TOTAL  SEGMENTS                      37,755        3,111        40,866          2,884            7.1%

Eliminations  /  Other                (74)    (3,111)      (3,185)          (476)

TOTAL  IBM                              $37,681              $0      $37,681        $2,408            6.4%

 





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