IBM Announces Preliminary 2008 Third-Quarter EPS of $2.05; Reaffirms Full-Year 2008 EPS Outlook of at Least $8.75

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ARMONK, N.Y. - 08 Oct 2008: IBM (NYSE:IBM) today announced third-quarter 2008 diluted earnings of $2.05 per share from continuing operations, an increase of 22 percent, compared with diluted earnings of $1.68 per share in the third quarter of 2007. The company also reported net income of $2.8 billion, an increase of 20 percent. Revenue increased 5 percent, including 3 points of currency benefit, to $25.3 billion, compared with the third quarter of 2008.

IBM said it continues to expect full-year 2008 earnings per share of at least $8.75, or year-to-year growth of 22 percent.

The company’s gross profit margin in the third quarter was 43.3 percent compared with 41.3 percent in the third quarter of 2007. Pre-tax income was $3.9 billion, an increase of 19 percent compared with the third quarter of 2007.

At the end of the third quarter, IBM’s year-to-date free cash flow was approximately $6.4 billion and its cash balance was $9.8 billion.

“Our results demonstrate that the combination of a steady base of recurring revenue and profits, investments for growth in emerging markets, a range of products and services that deliver value to clients, and a strong and flexible financial foundation give IBM a competitive edge in good times and tough times,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer. “We remain confident in our full-year outlook.”

IBM will provide more detailed information about its third quarter results during its regularly scheduled Webcast.

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