IBM 2004 Annual Report Download - page 3

Download and view the complete annual report

Please find page 3 of the 2004 IBM annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 100

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100

01
chairman’s letter
Now it’s a year later, and I want to tell you about the progress
we have made. IBM today is stronger and more focused than
it has been in years. The path we set for ourselves several
years ago is yielding results—in terms of an improved compet-
itive position, an enhanced capacity to innovate, and a greater
ability to deliver results to our clients and to you, our owners.
Our task now comes down to execution. At a recent
meeting with IBM’s senior leaders, I said that 2005 is the year
of “small s and big E”: less focus on strategic development,
maximum push on execution. This is the appropriate emphasis
for our company today, because most of the major strategic
pieces are now in place for IBM to become the leader of a
rapidly changing information technology industry.
A good year
I want to explain to you what we did last year to turn strategy
and vision into results. Your company turned in another good
year in 2004. We continued to execute our business plan
effectively, producing share gains in key markets, increasing
revenue and growing both earnings and earnings per share.
Our results from continuing operations saw record
revenue of $96.3 billion, an increase of 8percent; earnings
of $8.4 billion, an increase of 11 percent; and diluted earnings
per share of $4.94, an increase of 14 percent.
One of the strengths of our business model, from a
financial point of view, is the amount of cash we generate.
After committing $5.7 billion to R&D in 2004, we had
Dear IBM Investor: Last year, I told you that IBM was in the process of
becoming a very different company. I said that we had achieved a new
degree of clarity about our business model— innovation for the enterprise—
and that this was driving change in every aspect of the corporation. And I
described the deeper level of this reexamination—our collective work to
redefine IBM’s core values.
Samuel J. Palmisano
CHAIRMAN, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
$12.9 billion in cash available for investment and distribution
to shareholders. Of that, $3.7 billion went for net capital
expenditures and $1.7 billion for acquisitions that strength-
ened our capabilities.
We were able to return a record $8.3 billion to investors—
$7.1 billion through share repurchase and $1.2 billion through
dividends. We ended the year in a strong cash position,
with $10.6 billion, including marketable securities. In 2004,
our return on invested capital increased to 29 percent,
excluding our Global Financing business and a one-time
pension settlement charge.*