IBM 2010 Annual Report Download - page 7

A road map to the future
IBM today is a fundamentally different company.
In order to make that clear to our investors and to the
financial markets, we decided four years ago to
introduce our 2010 Road Map. We wanted to explain
where we were going and to provide benchmarks
for you to evaluate us along the way. We believed—
and still believe—that this longer-term framework
is the most helpful way to understand our company.
To some, it seemed foolhardy. To my knowledge
no company in our industry had done this before.
But we felt IBM should take a long-term view, in public
as well as in private. And we felt confident about the
future, because of the transformational steps we had
taken to reposition the company.
Clearly, this worked. As you know, we surpassed
our 2010 goal of $10 to $11 in earnings per share.
And now that we have shown we can deliver results
with consistency, we are doing it again through the
introduction last year of our 2015 Road Map.
As before, our new road map isn’t just a list
of targets; it’s a management model, organized
around the major drivers of IBM’s earnings per
share performance. Those are: operating leverage,
share repurchase and growth strategies.
Operating leverage will come from our continuing
shift to higher-margin businesses and our improving
enterprise productivity. We are aiming for $8 billion
of productivity improvement over the next five years.
Part of that will go to our bottom line, and part will
go to investments that improve our competitiveness
in the marketplace.
Secondly, we will continue returning value to you.
Our road map calls for $50 billion in anticipated share
repurchases and $20 billion in dividends.
When it comes to the third component of our
road map, we will focus on four growth priorities:
1. Growth Markets.
A historic economic expansion is underway in the
emerging markets of the world—as their populations
join the middle class and their economies join the
global marketplace. These markets are expected
to achieve average GDP growth of 5 percent through
2015, more than double the projected growth
rate of the developed world. In the largest of these
emerging markets, such as China, India and Brazil,
IBM is broadening its well-established base of skills
and capabilities, nearly doubling our number of branch
locations. In less developed markets, such as Africa,
we are leveraging anchor clients in sectors like
communications and banking. Our recent partnership
with Bharti Airtel to provide 21st century wireless
telecommunications across 16 countries of Sub-
Saharan Africa is one example. Our Growth Markets
Unit accounted for 21 percent of IBM’s geographic
revenue in 2010. We are aiming to approach
30 percent by 2015.
A Letter from the Chairman 5