IBM 2003 Annual Report Download - page 5

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3
twelve months later, it’s clear that the future we
envisioned is arriving, and more rapidly than we
expected. This is in part because of the hopeful signs
we’re seeing of economic recovery, with the promise
of renewed business investment in information tech-
nology. It’s partly because of the rapid adoption of our
on demand strategy by clients, partners and the overall
IT industry. But it’s also something more—something
specific to this company and its people, and something
longer lasting than a particular economic cycle.
IBM today is a very different enterprise than it
was just a few years ago. Our business model has been
quietly but substantially reshaped to capitalize on the
most promising growth and profit opportunities in
the market. Even more important for the long term,
our operations and culture are being transformed as
well. We are now focused with an intensity and unity
I haven’t seen since the heyday of the mainframe. As a
result, we are poised to take IBM to the next level, and
to redraw and extend the boundaries of the IT industry.
Avery good year, for a very different company
IBM’s 2003 is the kind of year on which it’s gratifying to
look back—both for our overall achievements and for
the strong momentum with which we ended the year.
Our revenue from continuing operations, at
$89.1 billion (a company record), increased by
10 percent. Earnings from continuing operations were
$7.6 billion compared to $5.3 billion in 2002, which
included $1.6 billion of after-tax charges for second
and fourth quarter 2002 actions. We c ontinued to gain
market share across all our core businesses. IBM today
is the market leader in servers, middleware, business
transformation services and strategic outsourcing.
Highlights for the year included revenue growth
in every server segment, a WebSphere middleware
platform that grew 12 percent and gained market
share, and 14 percent growth in strategic outsourcing.
Our success with clients was evident in faster-than-
market growth for five of IBM’s six industry sectors.
For example, in the public sector, which includes
our relationships with governments and health care
providers, we grew by 15 percent; in communications
by 8 percent; in industrial by 14 percent; and in
financial services by 13 percent.
We a gain generated excellent cash flows. After
investing $5.1 billion in R&D, we had $12.7 billion in
cash available for investment and distribution to
shareholders. We invested $3.9 billion of that in net
capital expenditures and $1.8 billion in acquisitions to
Dear IBM Investor,
Last year, I told you that we were repositioning IBM
for leadership, in all the ways that a business can lead.
I described how IBM defines leadership, along with our
plans to achieve it. And I said that I believed the results
of this repositioning would roll out in meaningful ways
in the years and decades to come.