Full Description

International Business Machines Corporation (IBM), incorporated on June 16, 1911, is an information technology (IT) company. The Company’s major operations include Global Technology Services segment (GTS), Global Business Services segment (GBS), Software segment, Systems and Technology segment, and Global Financing segment. On January 31, 2008, the Company acquired 100% of Cognos, Inc. On April 3, 2008, IBM acquired 100% of Telelogic, AB. In July 2008, the Company acquired Platform Solutions, Inc. (PSI). In December 2008, its internal global logistics operations were acquired by SNCF Transport and logistics division of Geodis. In July 2009, IBM acquired Ounce Labs, Inc., a privately held company based in Waltham, Massachusetts, whose software helps companies to reduce the risks and costs associated with security and compliance concerns. IBM will integrate Ounce Labs, a provider of enterprise source code security testing, into its Rational software business. In August 2009, the Company announced the launch of its China Analytics Solution Center, part of a network of global centers. In October 2009, IBM Corporation completed its acquisition of SPSS Inc.

Global Technology Services

GTS primarily provides IT infrastructure services and business process services, delivering business value through the Company’s global scale, standardization and automation. GTS capabilities include strategic outsourcing services, integrated technology services, business transformation outsourcing, integrated technology services, business transformation outsourcing, business transformation outsourcing and maintenance.

The Company competes with Hewlett-Packard Company , Accenture, Computer Sciences Corporation, Satyam Computer Services Ltd. and Wipro Technologies.

Global Business Services

GBS primarily provides professional services and application outsourcing services. GBS capabilities include consulting and systems integration, and application management services. Consulting and systems integration includes delivery of value to clients through consulting services for client relationship management, financial management, human-capital management, business strategy and change, and supply-chain management. Application management services include application development, management, maintenance and support services for packaged software, as well as custom and legacy applications.

The Company competes with Accenture, Infosys Consulting and Wipro.

Software

Software consists primarily of middleware and operating systems software. Middleware software enables clients to integrate systems, processes and applications across a standard software platform. IBM middleware is designed to open standards, which allows the integration of disparate client applications that may have been built internally, or provided by packaged software vendors or system integrators. Operating systems are the software engines that run computers. Approximately two-thirds of external software segment revenue is annuity-based, coming from recurring license charges and on-going subscription and support from one-time charge (OTC) arrangements. The remaining one-third of external revenue relates to OTC arrangements, in which the client pays one up-front payment for a perpetual license. Arrangements for the sale of OTC software include one year of maintenance. The client can also purchase ongoing maintenance after the first year, which includes product upgrades and technical support. Its software includes WebSphere software, Information Management software, Tivoli software, Lotus software, Rational software and Operating systems.

The Company competes with Oracle Corporation, Microsoft Corporation, EMC and CA, Inc.

Systems and Technology

Systems and Technology segment provides clients with business solutions requiring advanced computing power and storage capabilities. Approximately 55% of Systems and Technology’s server and storage sales transactions are through the Company’s business partners; approximately 45% are direct to end user clients. In addition, Systems and Technology provides semiconductor technology and products, packaging solutions and engineering technology services to clients and for IBM’s own technology needs.

The Company competes with Hewlett-Packard Company, Dell, Inc., Sun Microsystems and EMC Corporation.

Global Financing

Global Financing invests in financing assets, leverages with debt and manages the associated risks with the objective of generating returns on equity. Global Financing comprises three lines of business: Client financing, Commercial financing and Remarketing. Client financing provides lease and loan financing to end users and internal clients for terms generally between two and seven years. Internal financing is predominantly in support of Global Services’ long-term client service contracts. Commercial financing provides primarily short-term inventory and accounts receivable financing to dealers and remarketers of IT products. Remarketing sells and leases used equipment to new or existing clients both externally and internally. This equipment is primarily sourced from the conclusion of lease transactions.

The Company competes with Hewlett-Packard Company, Dell, Inc., General Electric Company and CIT Group, Inc.