“2007 was a superb year for IBM. It is a pleasure to report to you that IBMers around the world turned in a strong performance, which you saw in our results.”
With these words, IBM’s Chairman and CEO Sam Palmisano began his report on our strategy and results to our shareholders, employees and retirees at IBM's annual meeting of stockholders.
Sam noted that “we achieved record revenue, profit, earnings per share and cash performance.” He also provided an update on where we stand with our EPS 2010 Roadmap, which was announced last year, saying “we made strong progress on each element of our roadmap, growing 18 percent in 2007 and surpassing our objective of 14 to 16 percent.”
Our global reach
One of the key factors in our continuing success and our belief that IBM’s success is sustainable is our geographic reach. “The first quarter saw continued robust growth in the world’s emerging markets, as we focus on building out the infrastructures in these countries,” said Sam. IBM grew revenues by more than 10 percent in 2007 in more than 50 growth countries.
To take advantage of this growth and make the most of this opportunity, IBM recently announced a new growth markets organization, headquartered in Shanghai.
Sam described how IBM helps develop public and private infrastructures around the world to support the three billion people who are moving into an expanding global middle class. And he highlighted some recent examples:
- Our work with Telecom Egypt to construct a state-of-the-art data center with IBM's green technologies, based on our mainframe platform.
- In Korea, our work to help a leading bank expand into investment banking, via an infrastructure to develop and sell capital markets products.
- In Indonesia, our participation in a collaborative effort to deliver a microfinance solution for rural communities.
Our clients benefit
Sam cited our ability to quickly adjust to changing client demand as the other key element in our continuing leadership. He acknowledged that we are living through a changing economic environment, but stressed clients’ willingness to invest in IT as long as it reduces their costs, conserves their capital, provides a faster return-on-investment and addresses critical business issues, such as risk management, security and energy efficiency.
The following are some examples that Sam shared of the work we’re doing with and for our clients to meet those needs:
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Our green solutions combine important capabilities, such as data center design expertise, advanced systems technology, virtualization and new software to control energy use, utilization and provisioning. Through continuing innovation, many of those solutions now offer our clients return on their investments. In the fourth quarter of 2007 alone, IBM Global Technology Services signed $300 million in green services contracts and had more than 700 engagements.
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Our security and storage products help clients address the complex regulatory environment. Sam pointed to Tivoli software’s 9 percent growth in the first quarter and Storage Management software’s 14 straight quarters of double-digit growth as proof that we’re addressing our clients’ needs in this important area.
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Our service-oriented architecture approach enables thousands of clients to reduce their costs and increase their flexibility. Sam explained that IBM was among the first to see the opportunity for SOA and currently leads in this $160 billion global opportunity for IBM and our partners.
Our shareholders benefit
On the day of the meeting, Sam announced an increase in dividends and highlighted the past year’s share repurchases, both examples of how our shareholders benefit from the company’s strategy and performance.
The quarterly dividend will be $0.50, an increase of $0.10 per common share or 25 percent higher than the prior quarterly dividend. This is the thirteenth year in a row IBM has increased its quarterly cash dividend. The dividend has increased 150 percent since 2006. With the June 10 dividend, IBM will have paid 370 consecutive quarterly dividends, starting in 1916.
Last year, the Board authorized $19 billion to repurchase IBM shares and, in February of this year, authorized a further $15 billion repurchase.
As we stand poised before a profoundly new era of technology, business and society, I strongly believe that there is no other company that is as well positioned for leadership, in all the ways that a business can lead.
- Sam Palmisano
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