IBM 2015 Roadmap

Mark Loughridge Senior Vice President and Chief Financial Officer

Certain comments made in the presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Those statements involve a number of factors that could cause actual results to differ materially. Additional information concerning these factors is contained in the Company's filings with the SEC. Copies are available from the SEC, from the IBM web site, or from IBM Investor Relations. Any forward-looking statement made during this event or in these presentation materials speaks only as of the date on which it is made. The Company assumes no obligation to update or revise any forward-looking statements. These charts and the associated remarks and comments are integrally related, and are intended to be presented and understood together. In an effort to provide additional and useful information regarding the Company’s financial results and other financial information as determined by generally accepted accounting principles (GAAP), certain materials presented during this event include non-GAAP information. The rationale for management’s use of this non-GAAP information, the reconciliation of that information to GAAP, and other related information is included in supplementary materials entitled “Non-GAAP Supplementary Materials” that are posted on the Company’s investor relations web site at http://www.ibm.com/investor/events/investor0510/. The Non-GAAP Supplementary Materials are also included as Attachment II to the Company’s Form 8-K dated May 12, 2010.

IBM Transformation Operating PTI / EPS *

At Least $20

2015 Roadmap

Segment Operating PTI$ Operating EPS

ƒ Software contributes nearly half of our segment profit ƒ Growth initiatives deliver $20B in revenue growth ƒ Growth markets revenue exceeds 25% of IBM’s total ƒ Enterprise productivity delivers another $8B in gross savings ƒ IBM generates $100B in free cash flow, returning 70% to shareholders

'00

'01

'02

'03

'04

'05

Hardware / Financing

'06

'07

'08

'09 '10e '11e '12e '13e '14e '15e

Services

* Non-GAAP: Excludes Acquisition-related charges and non-operating retirement-related expense

Software Sum of external segment pre-tax income not equal to IBM pre-tax income 2000 & 2001 segments not restated for stock based compensation

2015 Roadmap Base Revenue Growth ~2%

Shift to Faster Growing Business Mix Provides ~1% Revenue Growth

~$20B of Acquisition Spend Provides ~2% Revenue Growth

Enterprise Productivity Yields Margin Expansion

Shift to a Higher Value Portfolio Continues to Provide Leverage

~$50B Returned Through Share Repurchase

Shares

Enterprise Productivity

Base Revenue Growth

Revenue Mix

~$0.90

~$0.70 At Least $11.35

~$1.45

At Least $20

Margin Mix

~$0.75

Future Acquisitions

12% CAGR

~$2.80

~$2.05

Operating Leverage

~$2.80 Revenue Growth

~$3.05

2010 Operating EPS*

2015 Operating EPS* * Non-GAAP: Excludes acquisition-related charges and non-operating retirement-related expense

Uses of Cash / Free Cash Flow At Least $20 ~2.80

~2.80

Share Repurchase

IBM generates about $100B in free cash flow and creates over $40B of financial flexibility by 2015 Primary Uses of Cash

Free Cash Flow*

$B

ƒ Continued free cash flow growth

Operating Leverage

ƒ Cash realization over 100%

~$100B ~3.05

Revenue Growth

Share Repurchase

~50B Capital $25

~25B

At Least

Dividends

$11.35

~20B

~20B Acquisitions

Substantial Flexibility Model continues to build cash $10 2010

2015 Operating EPS

2011

2012

* Excluding GF Receivables

2013

2014

2015

Balance sheet and cash flow provide for additional debt capacity

2015 Roadmap At Least $20 ~2.80

Share Repurchase

~2.80

Operating Leverage

~3.05

Revenue Growth At Least

$11.35

IBM Model supports the Roadmap base and provides opportunity for upside ƒ Full execution on growth initiatives objectives ƒ Full benefit of $8B in enterprise productivity savings to the bottom line ƒ Cash generation and capital structure

2015 Operating EPS

+1 to 2% Additional Revenue Growth +$4B Profit +$40B Financial Flexibility

Dividend and Share Repurchase At Least $20 ~2.80

~2.80

~3.05

Dividend and share repurchase program provides compelling returns 2010 Roadmap As of May 17, 2007

2015 Roadmap As of May 10, 2010

~$12 $10 $2

~$14 $10 $4

$156.4 $105.31

$161.9 $126.27

Roadmap Indicated Return Actual Cash Returned 2007-09

7.8% 9.5%

8.9%

Since 5/17/07, Cumulative Total Return (Share Appreciation + Dividend Yield)

27%

Roadmap Guidance Share Repurchase Operating Leverage Revenue Growth

Annual Average Return ($B) Share Repurchase Dividend Market Capitalization ($B) Stock Price ($/share)

At Least

$11.35

9.5%

Dow 30 Companies* Average Annual Dividends + Share Repurchases (2007-09) Market Capitalization on May 17, 2007

2015 Operating EPS

IBM

* Excludes Banks, Financial Services and Insurance Source: Capital IQ. Calendar year basis