IBM 2002 Annual Report Download - page 13

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11
Of course, you know that IBM stumbled badly
in the early 1990s, largely because it strayed from
its values and stopped listening—to customers
and to its own smart people. As a consequence, the
company failed to reinvent itself for new realities.
Under Lou Gerstner’s leadership, the people
of IBM rebuilt their company. It has come back
a long way.
To day, as I reflect on my first year as chief exec-
utive, I believe we stand our best chance in decades
of returning IBM to a position of leadership—in
all the ways that a business should lead.
I want to talk to you about that in this letter.
It’s important that you understand how we define
leadership for IBM, because it is the context for
understanding what we accomplished in 2002 and
the framework for how we will manage IBM in
the decade ahead.
seizing the moment
There’s no question that 2002 tested our company.
We had to deal with a continuing tough economic
climate, particularly for the information technol-
ogy industry, which contracted for the second year
in a row.
Although our revenue from continuing operations
of $81.2 billion was off 2 percent from 2001 and
our earnings decreased 35 percent, to $5.3 billion,
all of our core businesses—from servers to storage
systems, to middleware, to services—gained
marketshare in 2002. This is important. It means
we will emerge in an even stronger position,
relative to our competitors.
An environment like this, for all its challenges,
is the ideal time to make decisive moves for future
growth. Because of our ability to generate strong
cash flows, last year we invested $4.8 billion in
Dear IBM Investor,
when i joined ibm, it was one of the most respected, innovative
and successful companies in the world. That was, in large part, because
of the way Tom Watson, Sr., IBM’s founder, had shaped it. He nurtured
a unique culture, a progressive set of values and the aspiration to make
a difference in the world.
The company’s position had been further enhanced in the 1960s,
when Tom Watson, Jr., took a daring, “bet-the-company” gamble on the
System/360 mainframe. It revolutionized computing and transformed
the way business was done. It also spurred a radical reinvention of
IBM and propelled the company to worldwide commercial leadership
for two decades.