IBM 2006 Annual Report Download - page 10

8 2006 Annual Report
focused on China or India or Brazil or Ireland. They are
leading integrated global operations.
In addition to integrating the entire company globally,
we are investing to extend our leadership within the
fastest-growing markets. We have tripled the number of
people working in or serving markets such as China, India,
Brazil and Russia in the past four years. Our business there,
excluding PCs, grew 21 percent last year. Over the next
four years, we expect these markets to grow at more than
two times the worldwide rate, with an opportunity of more
than $150 billion by 2010.
In the May / June 2006 issue of the public policy journal
Foreign Affairs, I described our point of view on the globally
integrated enterprise, and this idea has struck a chord with
many leaders around the world. We are now working
actively across IBM’s broad ecosystem to explore the
promise
— and challenges — of this new model. We believe
it offers hope for a new kind of globalization, one that not
only generates vast new opportunity, but that also vastly
expands the chances for all people on the planet to share in it.
A DISTINCTIVE WAY OF THINKING
To many of us, IBM’s transformation of the past few years,
while dramatic, has not felt unfamiliar. For me and others
in my generation, the experience has not been one of
entering uncharted waters, but of returning to a pace of
change, a level of impact and a type of thinking that drew
us to this company in the first place. And its origins go
back a long way.
For nearly a century, businesses, institutions and
individuals have sought a relationship with IBM because of
this company’s unique ability to conceptualize opportunities,
to analyze developments and to reimagine how the world
could work. For nearly a century, literally millions of
women and men have been drawn here to be part of an
enterprise that above all grounded itself in lasting values,
and that valued, above all, the capacity of its people to think.
Today, those values and that kind of thinking are deepening
and taking on more and more exciting new forms. One
example in 2006 was InnovationJam
— an open brainstorming
event on IBM’s worldwide intranet that engaged more than
150,000 IBMers, their family members, IBM clients and
partners from business and academia. We shared a few of
our “crown jewels,” some of the latest technologies from
IBM’s labs. Then, together, we explored how these new
capabilities might be applied to urgent needs
— from the
environment, to healthcare, to small global business, to the
emergence of a “3-D Internet” — and how those possibilities
might spawn new high-growth businesses.
We have assigned senior business owners to develop
10 of the most promising ideas, and we’ve stripped away
process so they can move quickly. We also gave them a pool
of $100 million in development funds to get them started.
The important point in this is that when you commit yourself
to innovation that matters, you free up talented people
to try new things
— new approaches, new partnerships, new
markets. That is, you ask them to think.
To capture some of the essential elements of IBM’s
way of working, collaborating and approaching problems,
we have created a companion piece for this year’s annual
report. It is entitled, appropriately enough, THINK. For
all IBM investors — and for anyone who is considering a
relationship with our company, either as a client, a partner,
an employee, or a neighbor
— an understanding of what
makes IBM tick is essential in gauging our prospects for
the century ahead.
As we enter this new era of technology, business and
global society, I am proud of the worldwide IBM team for
bringing us to this point, and I am grateful to you, our
shareholders, for your support in our journey. I hope and
trust that you are pleased with how your company is
growing and evolving. My colleagues and I are excited by
the possibilities for how, together with our clients, our
partners and you, we can bring this remarkable enterprise
into its next phase of leadership and discovery.
Samuel J. Palmisano
Chairman, President and Chief Executive Officer
Chairman’s Letter
The selected references in this letter to the company’s financial results: (1) excluding the effects of the divestiture
of the company’s PC business, (2) excluding non-recurring items, and (3) excluding the Global Financing
business are non-GAAP financial measures, as is the reference to return on invested capital (ROIC), and these
references are made to facilitate a comparative view of the company’s ongoing operational performance. Additional
information on the use of these non-GAAP financial measures is provided in the company’s Form 8-K submitted
to the SEC on January 18, 2007 (Attachment II — Non-GAAP Supplementary Materials) and in the company’s
2006 Annual Report (Management Discussion and Analysis — Year in Review and Looking Forward — Liquidity
and Capital Resources).
cyan mag yelo black
MAC
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