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46
Management Discussion
International Business Machines Corporation and Subsidiary Companies
Segment Details
The following is an analysis of the 2010 and 2009 reportable segment results. The table below presents each reportable segment’s external
revenue and gross margin results. Segment pre-tax income includes transactions between the segments that are intended to reflect an
arm’s length transfer price and excludes certain unallocated corporate items.
($ in millions)
For the year ended December 31: 2010*2009*
Yr.-to-Yr.
Percent/
Margin
Change
Yr.-to-Yr.
Percent Change
Adjusted for
Currency
Revenue
Global Technology Services $38,201 $37,347 2.3%0.7%
Gross margin 34.5% 34.8% (0.3) pts.
Global Business Services 18,223 17,653 3.2%1.6%
Gross margin 28.0% 27.8% 0.3 pts.
Software 22,485 21,396 5.1%4.8%
Gross margin 87.9% 86.7% 1.2 pts.
Systems and Technology 17,973 16,190 11.0%11.1%
Gross margin 38.1% 37.5% 0.7 pts.
Global Financing 2,238 2,302 (2.8)% (4.3)%
Gross margin 51.3% 47.5% 3.8 pts.
Other 750 869 (13.7)% (13.8)%
Gross margin (8.6)% 17.5% (26.1) pts.
Total consolidated revenue $99,870 $95,758 4.3%3.3%
Total consolidated gross profit $46,014 $43,785 5.1%
Total consolidated gross margin 46.1% 45.7% 0.3 pts.
Non-operating adjustments
Amortization of acquired intangibles assets 260 204 27.5%
Acquisition-related charges 0 — NM
Retirement-related costs/(income) (204) (259)(21.4)%
Operating (non-GAAP) gross profit $46,070 $43,730 5.4%
Operating (non-GAAP) gross margin 46.1% 45.7% 0.5 pts.
* Reclassified to conform with 2011 presentation.
NM—Not meaningful