IBM 1998 Annual Report Download - page 5

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We did that in 1998, and the results were strong. Our market
value – probably the most important measure of progress to
investors – grew $69 billion. (It has grown by $146 billion since
our major restructuring in 1993.) Last year, IBM’s share price
rose 76 percent. As 1999 began, our Board of Directors approved
the second IBM stock split in two years.
There were good reasons for this growth in investor confi-
dence in IBM. For the fourth straight year, we reported record
revenue – $81.7 billion. Our earnings rose to $6.3 billion. We set a
new record in earnings per share. Customer satisfaction improved
measurably. After making substantial investments – $5.6 billion
in research and development, $6.5 billion on capital expendi-
tures, and $700 million to acquire companies that strengthened
our portfolio of businesses – we still had substantial cash on
hand to return to shareholders via dividends and our ongoing
stock buyback program (another $6.9 billion of IBM shares in
1998). Even then, we finished the year with $5.8 billion in cash.
We had our difficulties, too. Some were external – the economic
distress in Asia and Latin America, soft memory chip prices and
a PC price war. Some were of our own making – wrestling with
important product transitions in our server line, for example.
But overall, in the marketplace and inside the company, IBM
remains on track.
You might expect, then, that my message for 1999 would be
the same – continuity and staying the course. But continuity is
not my message to you this year.
3
letter to shareholders
Last year my message to you was one of continuity.
We were making our strategic vision of a networked
world real, in the marketplace and in the laboratory.
We were intensifying execution across all our businesses
to produce marketplace wins and consistent revenue
growth. I said that we planned to stay the course.
Dear fellow investor,