Dear IBM Investor: As I write to you, the global economy is experiencing profound disruption. There is a great deal of understandable and appropriate anxiety about where we are headed in the near and medium term. Many approaches are being offered to stimulate economic recovery and growth. And it is clear that IBM’s industry, as well as many others, will look very different a few years from now.

You need to know, in this time of turmoil, that your company is well positioned to continue delivering strong results, as we have been doing and did again in 2008 — achieving record revenue, record pre-tax earnings, record earnings per share and record free cash flow. Even more importantly, we are also positioned to lead in the new era that lies on the other side of the present crisis.

In this letter, I will explain why. I will describe how this moment of historic change presents an opportunity for IBM, not only to assert leadership in our industry, but to play a central role in changing how the world literally works. Our confidence is grounded in the strategic transformation of IBM over the past several years and the focused execution of nearly 400,000 dedicated and innovative women and men around the world.

IBM is now a very different company than it was just a few years ago. As a result, we entered this turbulent period strong, and we expect to exit it stronger.

A New Era – and a New IBM
What explains our strong performance, when so many of our competitors and other companies across business are struggling during a deep economic slowdown? The answer lies at the beginning of this decade, when the IT industry and businesses everywhere were confronted by three fundamental shifts in the world: ...

Samuel J. Palmisano
CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER

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