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32
Management Discussion
International Business Machines Corporation and Subsidiary Companies
Geographic Revenue
In addition to the revenue presentation by reportable segment, the company also measures revenue performance on a geographic basis.
The following geographic, regional and country-specific revenue performance excludes OEM revenue, which is discussed separately below.
($ in millions)
For the year ended December 31: 2011 2010
Yr.-to-Yr.
Percent
Change
Yr.-to-Yr.
Percent Change
Adjusted for
Currency
Total revenue $106,916 $99,870 7.1%3.4%
Geographies $104,170 $97,060 7.3%3.6%
Americas 44,944 42,044 6.9 6.2
Europe/Middle East/Africa 33,952 31,866 6.5 1.6
Asia Pacific 25,273 23,150 9.2 1.7
Major markets 5.1%1.6%
Growth markets 16.0%11.4%
BRIC countries 18.6%16.1%
Total geographic revenue increased 7.3 percent (4 percent adjusted
for currency) to $104,170 million in 2011, led by strong performance
in the growth markets.
The growth markets increased 16.0 percent (11 percent adjusted
for currency) in 2011 and gained 4 points of market share. The growth
markets strategy to expand into new markets, build out IT infrastructures
and lead in specific industries is driving the strong performance and
share gains. Revenue growth outpaced growth in the major markets
by 10 points in 2011 on a constant currency basis. In the BRIC countries
(Brazil, Russia, India and China), revenue increased 18.6 percent
(16 percent adjusted for currency) in 2011, with double-digit growth
in each country. Overall in 2011, the company had double-digit constant
currency revenue growth in nearly 40 growth market countries.
These countries contributed nearly two-thirds of the company’s 2011
constant currency revenue growth and represented 22 percent of
total geographic revenue in 2011. To further drive market expansion,
the company opened 92 new branches and added over 1,500 new
sales resources in 2011.
Americas revenue increased 6.9 percent (6 percent adjusted
for currency) in 2011. Within the major market countries, the U.S.
increased 4.2 percent and Canada increased 14.3 percent (10 percent
adjusted for currency). Revenue in the Latin America growth markets
increased 16.9 percent (14 percent adjusted for currency) with growth
in Brazil of 13.0 percent (9 percent adjusted for currency).
Europe/Middle East/Africa (EMEA) revenue increased 6.5 percent
(2 percent adjusted for currency) in 2011 compared to 2010. In
the major market countries, revenue growth was led by the U.K. up
9.4 percent (5 percent adjusted for currency), Spain up 11.2 percent
(6 percent adjusted for currency), Germany up 5.8 percent (1 percent
adjusted for currency) and France up 4.4 percent (flat adjusted for
currency). Revenue in Italy decreased 0.6 percent (5 percent adjusted
for currency). The EMEA growth markets increased 11.6 percent
(10 percent adjusted for currency) in 2011, led by growth in Russia
of 49.8 percent (49 percent adjusted for currency).
Asia Pacific revenue increased 9.2 percent (2 percent adjusted
for currency) year over year. The Asia Pacific growth markets increased
16.8 percent (11 percent adjusted for currency), led by growth in
China of 21.6 percent (18 percent adjusted for currency) and India
of 10.9 percent (13 percent adjusted for currency). Japan revenue
increased 2.0 percent (decreased 7 percent adjusted for currency).
OEM revenue of $2,746 million in 2011 decreased 2.3 percent
(3 percent adjusted for currency) compared to 2010, driven by the
Microelectronics OEM business.
Total Expense and Other Income
($ in millions)
For the year ended December 31: 2011 2010
Yr.-to-Yr.
Percent/
Margin
Change
Total consolidated expense
and other (income) $29,135 $26,291 10.8%
Non-operating adjustments
Amortization of acquired
intangible assets (289) (253) 14.4
Acquisition-related charges (45) (46) (1.8)
Non-operating retirement-related
(costs)/income 74 210 (64.6)
Total operating (non-GAAP)
expense and other (income) $28,875 $26,202 10.2%
Total consolidated
expense-to-revenue ratio 27.3% 26.3% 0.9 pts.
Operating (non-GAAP)
expense-to-revenue ratio 27.0% 26.2%0.8 pts.