International Business Machines Corporation · NYSE:IBM
International Business Machines — Merger or Acquisition (October 2020)
24 slides from International Business Machines's merger presentation, Oct 8, 2020
Slide 1: IBM Strategic Update
IBM Strategic Update October 8, 2020 ibm.com/investor
Slide 2: Forward Looking Statements and Non-GAAP Information
Forward Looking Statements and Non-GAAP Information Certain comments made in this presentation may be characterized as forward looking under the Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on the company’s current assumptions regarding future business and f
Slide 3: Arvind Krishna and James Kavanaugh
Arvind Krishna Chief Executive Officer James Kavanaugh SVP, Finance & Operations, Chief Financial Officer
Slide 4: Multi-year transformation positions IBM for success in hybrid cloud and AI
Multi-year transformation, accelerated by strong Red Hat adoption, has positioned IBM for success in the hybrid cloud and AI market Foundation now in place to further capitalize on the $1 trillion hybrid cloud market opportunity and bolster IBM’s leadership position IBM will accelerate its growth th
Slide 5: Creating value through focus
Creating value through focus Establishing the #1 Managed Infrastructure Services Company Improving growth trajectory of both businesses
Slide 6: Establishing Two Market-Leading Companies with Focused Strategies
Establishing Two Market-Leading Companies with Focused Strategies Technology & platform innovation Digital transformations Significant growth opportunities IBM #1 Hybrid Cloud Platform and AI Company $59B Revenue* NewCo #1 Managed Infrastructure Services Company $19B Revenue* IT infrastructure moder
Slide 7: Creating Value Through Focus
Creating Value Through Focus Establishes two industry-leading enterprise technology companies with mission-critical portfolios Increased clarity and agility to focus on respective operating and financial models Freedom to partner and invest for enhanced customer outcomes and drive better growth oppo
Slide 8: Hybrid Cloud Delivers a Generational Leap in Client Value
Hybrid Cloud Delivers a Generational Leap in Client Value 2.5X More client value through hybrid cloud approach* Business acceleration Developer productivity Infrastructure cost efficiency Regulatory, Compliance & Security Strategic optionality Hybrid cloud platform Greenfield cloud applications Lift
Slide 9: Hybrid Cloud is a Significant Market Opportunity
Hybrid Cloud is a Significant Market Opportunity 1 Trillion >90% of enterprises have hybrid environments ~75% of workloads not in public cloud ~60% of hybrid cloud opportunity is in highly-regulated industries Hybrid Cloud Market Opportunity 9
Slide 10: IBM Has Created the Foundation to Capitalize on this Opportunity
IBM Has Created the Foundation to Capitalize on this Opportunity $1T Adressable Opportunity Application Modernization OpenShift Everywhere $300B Cloud Transformational Services Red Hat Acquisition & Marketplace Cloud Paks $450B Cloud Software & Platforms Linux One with OpenShift on Z Regulated Indus
Slide 11: IBM's Core Strengths and Enhanced Focus Drive Success
IBM’s Core Strengths and Enhanced Focus Drive Success Core Strengths Financial Profile üMost broadly adopted open hybrid cloud platform architecture enabling “build once, run anywhere” üFull stack capabilities leverage incumbency to accelerate hybrid cloud adoption and realize value of data üTrusted
Slide 12: Strong Track Record in Hybrid Cloud
Strong Track Record in Hybrid Cloud Leading Companies Leverage IBM’s Platform to Drive Digital Transformations… …Accelerating IBM’s Cloud Performance >2,400 Hybrid Cloud platform clients >2x increase in # of large Red Hat deals, contributes to >20% Red Hat revenue growth* >200 Global Business Servic
Slide 13: IBM's Integrated Capabilities Drive Adoption of our Hybrid Cloud Platform
IBM’s Integrated Capabilities Drive Adoption of our Hybrid Cloud Platform… Cloud Transformation Services IBM Services Global System Integrators Deep expertise drives digital transformations and adoption of IBM's open hybrid cloud platform Software IBM Applications IBM Middleware 3rd Party Ecosystem
Slide 14: Platform Economics (Revenue per $1 Platform Spend)
Platform Economics (Revenue per $1 Platform Spend) Cloud Transformation Services IBM Services Application Modernization | Intelligent Workflows Multi-cloud Management | Security and Compliance … Global System Integrators $6 – $8 Software IBM Applications Data and AI , Supply Chain and Asset Manageme
Slide 15: I INTERCOPE iiiTickTradebox "" ""' " O 'O "W•"'"""" ' TEMENOSintellect® • • Design
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Slide 16: Key Initiatives
Key Initiatives Increased Investments Organic/Inorganic Accelerated Growth Growth Mindset Separate NewCo Streamline Operations Technology Skills Ecosystem Sustainable mid single-digit revenue growth over medium term Expect a $2.3 billion charge by the end of 2020 for structural actions Savings to be
Slide 17: End-to-end Capabilities to Manage and Modernize Client-owned Infrastructures
End-to-end Capabilities to Manage and Modernize Client-owned Infrastructures …with Unparalleled Scale and Expertise $19B revenue*, 2x size of next largest provider Hosting & Network Services Infrastructure Modernization Services Management Hybrid Multi-cloud Management $60B services backlog, of whic
Slide 18: Core Strengths and Financial Profile
Core Strengths Financial Profile üUnrivaled expertise in managing complex and mission-critical infrastructure üDifferentiated capabilities to help clients in their transformation journeys üUnique operational footprint with highest level of service, performance and reliability üMost comprehensive bas
Slide 19: Two Market-Leading Companies
Two Market-Leading Companies IBM NewCo Strategic Focus •Technology & platform innovation •Digital transformations •Significant growth opportunities •IT infrastructure modernization •Service delivery excellence •Operational efficiency and cash flow generation Scope •Cloud & Cognitive Software, Global
Slide 20: Structure, Timing and Conditions, Transaction Charges
Structure •Spin off of Managed Infrastructure Services (“NewCo”) to IBM shareholders •Expected to be tax free for U.S. federal tax purposes Timing and Conditions •Expected to close by end of 2021 •Subject to customary conditions including Form 10 registration, tax opinion from counsel and final IBM
Slide 21: Accelerating IBM's hybrid cloud platform growth strategy
Accelerating IBM’s hybrid cloud platform growth strategy Driving sustainable mid-single digit revenue growth for IBM over the medium term Establishing the #1 Managed Infrastructure Services Company
Slide 22: ibm.com/investor
ibm.com/investor
Slide 23: Reconciliation of Revenue for Red Hat, Normalized – TTM June 30, 2020
Reconciliation of Revenue for Red Hat, Normalized – TTM June 30, 2020 (Dollars in billions) Red Hat Revenue, Normalized for Trailing Twelve Months EndedChange YTY Historical Comparability June 30, 2020 June 30, 2019 YTY @constant currency $ 2.5 $ - 0.1 3.5 1.6 - $ 4.2 $ 3.5 19 % 20 % consolidated re
Slide 24: ibm.com/investor
ibm.com/investor
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