Analyst Conference Summary

conference date: January 17, 2008 @ 1:30 PM Pacific Time
for quarter ending: December 31, 2007 (4th quarter)

Forward-looking statements

Partial summary from press release and published prepared remarks. The geniuses at IBM put the recording of the conference on a Web server without a known DNS address. I probably won't ever get back to see if they have done a fix.

Overview: As pre-announced, a great quarter for IBM.

Basic data:

Revenues were $28.87 billion, up 20% sequentially from $24.1 billion and up 10% from $26.26 billion in Q4 2006.

Net income was $3.95 billion, up 65% sequentially from $2.4 billion and up 11% from $3.54 billion year-earlier.

Earnings per share (EPS) were $2.80, up 67% sequentially from $1.68, and up 21% from $2.31 year-earlier.

Guidance:

EPS growth of 15 to 16% over 2007 base, or $8.20 to $8.30 for full 2008.

2010 roadmap is for $10 to $11 earnings per share.

Conference Highlights:

Record revenue and profit was led by Asia, Europe and emerging countries. 65% of revenue was generated outside the U.S.

Revenue by geography: Americas $11.7 billion, up 5%; Europe/Middle East/Africa (EMEA) $10.8 billion, up 16%; Asia-Pacific $5.5 billion, up 15%.

OEM revenues were $894 million, down 13% from year-earlier.

Revenues by segment: Global tech services $10.0 billion (up 16% y/y); global business services $4.9 billion (up 17%); systems and technology $6.8 billion; software $6.26 billion; global financing $668 million; other $212 million.

$15.4 billion in new business was signed in global services segments. Business Transformation Outsourcing was up 56%. Green Data Center services getting good reception.

$12.4 billion in free cash flow; cash balance ended at $16.1 billion. $19 billion in shares were repurchased in 2007, reducing share count by 8%. But has $35 billion in debt.

Of the 9% growth in Q4, 5% was due to currency changes.

Because of the strong year, bonus compensation to non-executive employees was almost $300 million, impacting gross margin by 0.5%.

Effective tax rate was 28%.

New quad-core servers sold out in quarter. Storage had revenue up 11%, and tape was up 22%. Acquisition of XIV will help with Web 2.0 applications.

2008 looks good. Services businesses started year with $118 billion backlog.

Q&A:

not available

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