IBM 2000 Annual Report Download - page 5

chairman’s foreword
page no.
three
Last year at this time,I said 2000
looked to be a year of great promise
for IBM — as well as a year of great
uncertainty. I said that,based on the
way things were playing out in our
dear fellow investor,
industry — and in business in general — and because
IBM, more perhaps than any other company in
information technology, was vulnerable to cus-
tomer wariness over “ Y2K problems.”
It turned out that last year was, in a word, unique.
As you may remember, our company entered the
year facing a severe drop-off in customer demand
because of Y2K. Many of our largest customers
had frozen big-ticket technology purchases heading
into the new millennium, and that persisted until
almost the middle of 2000.
Then, in a flip-flop the likes of which I have
never seen, demand went through the roof.
Within a 30-day period last summer, orders for
some of our products tripled. We couldn’t build
fast enough to fill orders and, to make matters
worse, we had shortages of some key components.
Thanks to the determined, round-the-clock work
of literally hundreds of thousands of IBMers, we
got supply and demand into better balance in the
final quarter of the year, and we finished strong.
But, I don’t need to describe to you the frustration
of not being able to satisfy customer demand, par-
ticularly in view of the drought we had endured. I
am determined that’s not going to happen again.
But, add it all up
— the highs, lows and sideways
moves of 2000 — and IBM had a solid year. For the
sixth straight year we reported record revenue —
$88.4 billion. Our earnings rose to $8.1 billion, a
16 percent increase, resulting in another record
in earnings per diluted common share. After
making substantial investments — $5.6 billion in
research and development, $5.6 billion in capital
expenditures and more than $500 million in
strategic acquisitions that strengthened our busi-
ness portfolio — we had enough cash to increase
our dividend to shareholders and to buy back
$6.7 billion of common shares.
The most disappointing note was that our year-
to-year stock price went down for the first time
since I joined the company — to $85 from $108, a
decline of 21 percent. Of course, just about all
information technology stocks dropped, in what
might be called a NASDAQ crash, and IBM fared
better than most. Also, over the past eight years
IBM’s share price has increased nearly 800 percent.
Even so, we can do better.
What about 2001? Can the recent trend con-
tinue? Whether or not there is a softening of the
U.S. economy, IBM should be in reasonably good