8-K

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


                                    FORM 8-K


                 CURRENT REPORT PURSUANT TO SECTION 13 OR 15 (d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934


                          Date of Report: June 4, 2002
                        (Date of earliest event reported)


                   INTERNATIONAL BUSINESS MACHINES CORPORATION
             (Exact name of registrant as specified in its charter)


          New York                  1-2360                    13-0871985
(State of Incorporation)    (Commission File Number)         (IRS employer
                                                           Identification No.)


                 ARMONK, NEW YORK                            10504
     (Address of principal executive offices)              (Zip Code)


                                  914-499-1900
                         (Registrant's telephone number)



Item 5.  Other Events

     The registrant's press release dated June 4, 2002, regarding a definitive
agreement between Hitachi and IBM on the transfer of their hard disk drive
operations to a new standalone company under majority Hitachi ownership is
Attachment I of this Form 8-K.

    The registrant's press release dated June 4, 2002, regarding actions to
strengthen strategic and competitive position is Attachment II of this Form
8-K.

    Attachment III of this Form 8-K is IBM's Chief Financial Officer John R.
Joyce's remarks to securities analysts on Tuesday, June 4, 2002, regarding
the definitive agreement between Hitachi and IBM to transfer their hard disk
drive operations to a new standalone company, the realignment of the
company's Microelectronics Division and workforce and related actions being
taken in the second quarter of 2002. In addition, IBM's Senior Vice President
and Group Executive John E. Kelly, III's remarks to securities analysts
regarding the realignment of the Microelectronics Division and the definitive
agreement between Hitachi and IBM to transfer their hard disk drive
operations to a new standalone company and IBM's Senior Vice President and
Group Executive Linda S. Sanford's remarks to securities analysts regarding
the status of the company's separate alliance with Hitachi in storage systems
are included in Attachment III of this Form 10-K.

    IBM's web site (www.ibm.com) contains a significant amount of information
about IBM, including financial and other information for investors
(www.ibm.com/investor/). IBM encourages investors to visit its various web sites
from time to time, as information is updated and new information is posted.


                                    SIGNATURE


     Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, hereunto duly authorized.


Date:   June 4, 2002


                                    By: /s/  Robert F. Woods
                                    --------------------------------
                                            (Robert F. Woods)
                                       Vice President and Controller

EX-99.1

                                                                    Exhibit 99.1


                                   Contact:    Yasuo Hirano
                                               Hitachi, Ltd.
                                               +81-3-3258-2057
                                               yasuo_hirano@hdq.hitachi.co.jp

                                               Scott Brooks
                                               IBM Corporation
                                               914-499-6734
                                               srbrooks@us.ibm.com


                   HITACHI AND IBM REACH DEFINITIVE AGREEMENT
                          ON HARD DISK DRIVE OPERATIONS


TOKYO, Japan and SAN JOSE, Calif. -- June 4, 2002 -- Hitachi, Ltd. (NYSE: HIT,
TSE: 6501) and IBM today announced that they have reached a definitive agreement
to transfer their hard disk drive (HDD) operations to a new standalone company
under majority Hitachi ownership. These plans were originally announced in April
as part of a larger storage relationship between the two companies.

Hitachi has agreed to purchase the majority of IBM's HDD-related assets for
$2.05 billion, which includes the transfer of IBM's HDD-related intellectual
property portfolio to the new organization. Hitachi will initially own 70
percent of this new company and will make a series of fixed payments to IBM
before assuming full ownership after three years.

The new company will be based in San Jose, California, and managed by an
independent team comprising executives from Hitachi and IBM's existing HDD
operations. The chief executive officer will be Dr. Jun Naruse, Corporate
Managing Director of Hitachi, Ltd., formerly CEO of Hitachi Data Systems, and
the chief operating officer will be Dr. Douglas Grose, currently general manager
of IBM's Storage Technology Division. Hitachi will select the new company's
board of directors, and IBM will not be involved in its operations.

The new organization will bring together approximately 24,000 employees, about
18,000 from IBM and 6,000 from Hitachi, with major manufacturing operations at
11 locations around the world. Certain IBM HDD operations are not included in
the deal.

Hitachi estimates the new company may deliver approximately $5 billion in sales
in fiscal year 2003, and will target annual sales of $7 billion by fiscal year
2006. IBM and Hitachi have each agreed to multi-year HDD supply commitments from
the new company.
                                     -more-



                               HITACHI AND IBM REACH DEFINITIVE AGREEMENT/PAGE 2

Pending the completion of applicable regulatory processes, the deal is expected
to close before year-end.

 "The purchase of IBM's HDD business brings us the valuable business assets
required for long-term success in this highly competitive market," said Masaaki
Hayashi, Senior Vice President and Director, Hitachi, Ltd. "By combining HDD
research, development, manufacturing, marketing and sales into an independently
operating company, we are creating a new industry leader fully focused on the
$20 billion disk-drive market. This new company is uniquely positioned for
success by its broad customer portfolio, its unparalleled technological
capabilities and its strong position in key growth markets, including
storage-intensive consumer electronics."

"Customers will benefit from the increased efficiencies of the new company and
its ability to quickly bring advanced technologies and products to market," said
John E. Kelly III, senior vice president and general manager of IBM's Technology
Group. "The singular focus on the HDD business will provide employees with the
dedicated resources necessary to fully apply their industry-leading expertise to
developing new HDD technologies and market opportunities."

In addition, IBM and Hitachi are proceeding with separate negotiations related
to a planned multi-year alliance to research and develop new open
standards-based technologies specific to next-generation storage networks,
systems and solutions. The companies have created a process to review joint
projects designed to improve interoperability, reduce complexity and improve
cost of ownership for storage systems customers. Additional information on this
alliance will be announced when negotiations are finalized.

                                      # # #
CAUTIONARY STATEMENT
Statements in this document contain forward-looking information which reflect
Hitachi's current views with respect to certain future events and financial
performance. Actual results may differ materially from this forecast.
Further, this forward-looking information is based upon assumptions of future
events which may not prove to be accurate.  Factors that could cause actual
results to differ materially from the forecast include, but are not limited
to: rapid technological change; uncertainty as to the new company's ability
to continue to develop products and to market products that incorporate new
technology on a timely and cost-effective basis and achieve market
acceptance; fluctuations in product demand and industry capacity; increasing
commoditization of information technology products, and intensifying price
competition in the market for such products; fluctuations in rates of
exchange for the U.S. dollar and other currencies in which the new company
makes significant sales or in which the new company's assets and liabilities
are denominated; uncertainty as to the new company's access to liquidity or
long-term financing, particularly in the context of restrictions on
availability of credit prevailing in U.S.; uncertainty as to the new
company's ability to implement measures to reduce the potential negative
impact of fluctuations in product demand and/or exchange rates; general
economic conditions and the regulatory and trade environment of the new
company's major markets, continued stagnation or deterioration of the
Japanese or other East Asian economies, or direct or indirect restriction by
other nations of imports; uncertainty as to the new company's access to, or
protection for, certain intellectual property rights; the new company's
dependence on alliances with other corporations in designing or developing
certain products; and the market prices of equity securities in Japan,
declines in which may result in write-downs of equity securities Hitachi
holds.
                                      # # #



                               HITACHI AND IBM REACH DEFINITIVE AGREEMENT/PAGE 3


ADDITIONAL HITACHI PRESS CONTACTS:
Japan:  Tsuyoshi Miyata, Hirotaka Ohno
Hitachi, Ltd.
Tel:  +81-3-3258-2057
tsuyoshi_miyata@hdq.hitachi.co.jp
hirotaka_ohn@hdq.hitachi.co.jp

Singapore:  Yuji Hoshino
Hitachi Asia Ltd.
Tel:  +65-231-2522
yhoshino@has.hitachi.com.sg

US:  Masahiro Takahashi
Hitachi America, Ltd.
Tel:  +1-650-244-7902
masahiro.takahashi@hal.hitachi.com

UK:  Kantaro Tanii
Hitachi Europe Ltd.
Tel:  +44-1628-585379
Kantaro.tanii@hitachi-eu.com

EX-99.2

                                                                 EXHIBIT 99.2







                                          Contact: Bill Hughes
                                                   (914) 499-6565
                                                   bhughes@us.ibm.com



                 IBM ANNOUNCES ACTIONS TO STRENGTHEN STRATEGIC
        AND COMPETITIVE POSITION; ANTICIPATES SECOND-QUARTER CHARGE



     ARMONK, N.Y., June 4, 2002 . . . IBM today announced a series of actions
to improve further the company's competitive and strategic position in the
changing information technology industry.

     As announced yesterday, Hitachi Ltd., has agreed to purchase IBM's disk
drive operations and form a new company majority-owned by Hitachi.  In
addition, IBM and Hitachi are proceeding with separate negotiations related
to a planned multi-year alliance to research and develop open technologies
for next-generation storage networks, systems and solutions.  The companies
have created a process to review joint projects designed to improve
interoperability, reduce complexity and improve cost of ownership for storage
systems customers.

     IBM also is realigning its Microelectronics Division to increase
operational efficiencies and capitalize on emerging growth opportunities.  As
part of this realignment, the Division will increase its use of leading-edge
copper technology and close older aluminum technology capacity.  The Division
will increase its focus on custom-chip design and manufacturing, and advanced
foundry, while adding new technology design services, which were announced
today.

     Further, IBM is rebalancing skills and reducing its workforce in other
business units and headquarters staffs.  These actions will enhance IBM's
competitiveness by improving productivity and operational efficiencies over
the long term.  The majority of the employees affected by these actions have
been notified.






                                    - more -



                                     - 2 -

     As a result of all of these actions, IBM will record pre-tax charges of
approximately $2.0 billion to $2.5 billion, primarily in the second quarter.
These include charges associated with the company's exit from the hard disk
drive business, write-offs of assets in the Microelectronics business, and
charges related to productivity initiatives, principally workforce reduction.

     "These actions will not only substantially lower IBM's annual operating
expenses, more important, they strengthen the company's strategic position in
the near and long term," said John R. Joyce, senior vice president and chief
financial officer.

     "We are moving quickly to occupy the strategic areas in the technology
and storage marketplace," added Nick Donofrio, senior vice president,
Technology and Manufacturing.  "At our core, we are a technology company, and
we will continue to focus on leading-edge products, such as our copper
technology and move away from maturing technologies, and align our operations
to meet that shift in demand.  The actions we are taking now will better
position IBM in areas where there is both long-term growth and
profitability."

       IBM will describe today's actions in additional detail when the
company announces second-quarter results in mid-July.



                                   #  #  #

EX-99.3

                                                                    Exhibit 99.3

Hervey Parke's Remarks:

Thank you, Mandy. Good afternoon. This is Hervey Parke of IBM's Investor
Relations. Thank you all for joining us. Let me quickly give you a few pieces of
information.

At this time, the opening page of the presentation should have automatically
loaded -- and you should be on Chart 1 -- the title page.

You will find a navigation bar on the left side of your screen that provides
access to our two recent press releases --

         -   The first, which was released last night, covers the
             definitive agreement with Hitachi on hard disk drive
             operations.

         -   The second, which was released in the past hour, covers our
             2nd-quarter actions.

Let me also mention that a replay of this webcast will be available on this
website by this time tomorrow.

Now please click on the NEXT button and move to Chart 2.

         Certain comments made by today's presenters during this call 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 filing with the SEC. Copies are available from the SEC, from
         the IBM web site, or from us in Investor Relations.

Please note that there are no additional charts for today 's presentation.

And at this time, let me turn the call over to John Joyce, IBM's Senior Vice
President and Chief Financial Officer. John --



John Joyce's Remarks:

Thanks, Hervey.   Good afternoon.

The purpose of this conference call is to give you a little more color about the
recent actions described in our press releases. I have with me John Kelly, who
runs our Technology Group, and Linda Sanford, who runs our Storage Systems
Group. After our prepared remarks, we will take a few questions about these
actions, but we will wait until our 2nd-quarter earnings release in mid-July to
get into the details of our financials.

Today we have announced a series of initiatives that are clearly part of both
our stated objectives for 2002 and -- more importantly -- our longer-term
strategic objectives.

At the beginning of the year, we said that we had three special focus issues for
2002:

         -  Continuing to gain share in key business areas

         -  Improving our PC business, hard disk drive business, and
            microelectronics business

         -  And improving productivity -- for both financial and
            competitive reasons.

At our analyst meeting on May 14, Sam Palmisano said that we will continue to
position IBM in those business areas where there is both long-term growth and
profit.

And we want to take advantage of IBM's breadth to achieve productivity that no
piece-part competitor can.

Today's announcements hit on these objectives.

Last night, we announced that we had reached a definitive agreement with Hitachi
to transfer our hard disk drive operations to a new company -- controlled by
Hitachi.

This move is consistent with both companies' strategic objectives.

And in storage systems and networks -- while IBM and Hitachi will continue to
compete vigorously in the marketplace -- we intend to work more closely on
several key projects based on open standards to improve interoperability, reduce
complexity and cost of ownership -- to the benefit of our mutual customers.
Linda Sanford will talk more about this in a few minutes.

And a few minutes ago, we provided an update on two important initiatives --



First, we will realign our Microelectronics Division. We intend to put greater
focus on technology design and advanced foundry services -- in addition to our
custom-chip design and manufacturing, and our standard chip products. And, we
will continue our strategy of staying on leading-edge technology by reducing our
aluminum capacity as we increase our use of copper. John Kelly will talk more
about this.

Second, we have been taking workforce and related actions in other parts of our
business as we position ourselves to benefit from broad-based efficiencies --
such as sales and distribution, supply/chain management, shared development,
services productivities, as well as reduced requirements for various
headquarters functions.

These efficiencies are intended to go beyond addressing the current weakness in
the market. Our objectives are lower product costs and better expense ratios
than our competitors, over the long run.

Most of these workforce actions will be completed by the end of the 2nd quarter.

As a result of these three actions --

        first, the HDD agreement with Hitachi,
        second, the realignment of our Microelectronics Division, and
        third, our strategic focus on productivity

- -- we expect to take pretax charges of approximately two to two and a half
billion dollars -- primarily in the 2nd quarter.

We cannot be more definitive at this time -- but we wanted to provide the
strategic basis for these actions. And although we can't step you through all
the detail right now, we will in mid-July when we release our 2nd-quarter
earnings.

At that time, we will break out the loss on the sale to Hitachi as well as the
other actions -- and we will explain how we will handle our HDD business as
discontinued operations following Generally Accepted Accounting Principles. You
will be able to see how we performed in the 2nd quarter against the models you
built before these actions -- currently represented by a consensus of 87 cents.

Financially, we will start to benefit from these actions in the second half in
our Microelectronics Division specifically, and in the rest of our company as a
whole.

Again, we will give you added perspective on these savings when we report our
2nd-quarter results in mid-July.

Now let me turn the call over to John Kelly who heads our Technology Group,
including both our HDD and Microelectronics businesses.

After John expands on the strategic implications of his changes, Linda Sanford
will address the status of our separate alliance with Hitachi in storage
systems.

Then I will come back to wrap up the call.



John --

John Kelly Remarks:

Thank you, John. I'll begin with the changes in our chip business since that's
the new news.

Let me start by saying we are serious about our chip business and we're in it to
stay. As Sam Palmisano indicated in his comments to you in New York last month,
"we love this business."

So, our IBM and OEM customers can count on us to stay with our basic strategy:
providing the most advanced chip technologies in the industry. This is what
differentiates us in the marketplace.

And, going forward, we'll continue to make the investments in research,
development and manufacturing capacity to succeed. At the same time, we
recognize the semiconductor industry is going to emerge from this unprecedented
downturn looking very different then ever before.

So, we will be adjusting the vehicles by which we take our technologies and
design expertise to the marketplace.

         The "New Semiconductor Industry" will be characterized by three things:
         First, increasing customization of low-end standard products and
         technologies; Second, greater reliance on advanced technologies to meet
         performance, function and power requirements; And third, more emphasis
         on service and support to help customers make use of it all, and
         achieve time-to-market.

This is proving to be a formidable challenge for many of our competitors. All
the proof you need is in the recent actions of several U.S. and Japanese leaders
in semiconductors.

It's not just the two plus billion dollars it costs to build a fab that has many
companies going fab-less. The new technologies -- copper, Silicon On Insulator,
low-k dielectrics, to name a few -- are not easy to manufacture or design to.
But they are becoming "must-haves" in customer designs, in order to reach the
performance, function and power levels required.

And I assure you, many more companies are claiming to have mastered these
production techniques than have actually succeeded. I know this because some of
them are paying us to teach them how to do it.



There is undoubtedly excess aluminum capacity in the industry and at IBM. By in
large, this is older technology. Though, keep in mind, that IBM uses a portion
of our aluminum capacity in Burlington for production of silicon germanium -- a
leadership technology IBM invented and in which we are the leading supplier.

However, the excess aluminum capacity is, in part, evidence of the fact that the
new semiconductor industry is moving to new materials. So, we are therefore
adjusting our aluminum capacity in this action. We are, however, 100 percent
filled in our copper capacity and we're looking forward to our new all-copper
300 mm facility coming online later this year.

Looking back, IBM has an outstanding track record of anticipating shifts in the
chip business and getting there ahead of the pack.

In 1993, we began selling chips on the merchant market. That decision helped
fund development of some of our current leadership technologies and processes.

In 1996, we increased our focus on high-gate-count ASICs. As a result, last year
we were the largest provider of ASICs for the third consecutive year and we
gained share relative to the #2 player.

And in 1999, we chose to get out of the commodity DRAM business. No one thinks
that was a bad idea.

Finally, in 2001, IBM Microelectronics had full-year revenue growth in an
industry that declined by about 30 percent.

So, we understand the shift in demand and we are looking forward and refocusing
our chip business on a few key high-growth opportunities, that take advantage of
our technologies and our design expertise in using them.

First, there's advanced foundry -- or what I call "foundry plus." A recent First
Albany report sees the same trend we do -- there's a growing shortage of
advanced capacity -- .13 micron copper capacity. Only a few companies can do it
and we're one of them. While many of our competitors are throwing in the towel,
we're going 180 degrees the other way. We plan to move right into that void at
...13 microns, and soon thereafter, with 0.09 micron, or 90 nanometer circuit
sizes.

Second, we're accelerating our ASICs business. We'll shortly be announcing a
new IBM ASIC offering, called Copper-08, or CU-08, that supports circuits as
small as 90 nanometers, as well as innovative materials and design techniques
to drive power consumption down by as much as 40 percent while pushing
performance up as much as 20 percent.

Cisco Systems is one of IBM's ASIC customers and is expected to be one of the
first to use this new technology in the development of its next-generation
products.



With IBM's earlier generation of ASIC technology, Copper-11, we worked with
Cisco to implement a single chip supporting more than 35 million gates, believed
to be the world's most sophisticated ASIC to date.

As with the previous ASIC technology, Cisco plans to work with us to develop new
custom chips that take advantage of the reduced power consumption and increased
performance this new process affords.

And, finally, we will focus our resources on a more targeted set of standard
products, led by PowerPC. We may have lost the desktop battle, but PowerPC is
winning the pervasive computing war. PowerPC is the most scalable chip
architecture powering devices from game machines to networking gear to
servers to supercomputers. And, we'll have more news on extending PowerPC in
the coming weeks.

You'll note that a recurring theme here is the higher-level technologies and
design assistance that we believe IBM is uniquely positioned to provide. That
doesn't stop at the chip level. Our customers have been increasingly telling us
that the job of integrating components -- hardware and software -- is getting
too difficult, time-consuming and costly. They're looking for more and more
outside assistance. So, we're also starting a new complementary business to our
Microelectronics activity -- an electronic design services business.

This new unit will help OEM customers reduce cost, time-to-market and complexity
versus designing systems totally internally. It also will help them exploit the
latest technologies and integrate hardware and software for everything from chip
development to delivery of complete systems. IBM's vast skill and intellectual
property will be made available to our design customers. This new group will
draw its expertise from existing IBM organizations. We are already engaged with
numerous customers and soon will have over 500 engineers supporting this
business.

So, we see this as a high-growth opportunity with some real advantages, namely:

         -  First, it's high growth yet less capital intensive and
            cyclical;

         -  Second, IBM has unparalleled massive expertise in this area in
            our Server Group and our Software Group;

         -  And third, we're working with IBM Global Services -- the
            world's largest IT services company -- to help launch this
            business.

Let me close by spending a few minutes on our HDD business.

As you know by now, we have reached a definitive agreement with Hitachi to focus
our hard disk drive operations into a new standalone company. Hitachi has agreed
to



purchase the majority of our HDD-related assets for $2.05 billion. The deal
includes the transfer of all HDD-related IP from IBM and Hitachi to the new
company.

Officers for the new company will be:
         -- CEO -- Dr. Naruse, formerly CEO of Hitachi Data Systems
         -- COO -- Dr. Grose, currently GM of IBM's HDD business

Hitachi will select the board of directors for the new company and IBM will not
be involved in its operations.

The combined organization will bring together approximately 24,000 employees,
with operations at more than a dozen locations around the world.

Pending the completion of applicable regulatory processes, the deal is expected
to close before year-end.

IBM's HDD team has some of the finest, most talented people I've ever known. As
part of a focused HDD company -- and along with the fine people at Hitachi --
I'm confident this team will succeed. Together they will have the technology and
scale to compete and win in a tough market.

To recap, Technology Group is taking three major steps to improve our
performance:

First, transfer our HDD business to a new company controlled by Hitachi;

Second, refocusing our Microelectronics business on leveraging our leadership
technology, while reducing our capacity in older technology;

And finally, forming a new Technology Design Services business aimed at meeting
strong customer demand for access to IBM's broad capabilities.

Thank you and now here's Linda Sanford to discuss our Storage Systems
announcement.


Linda Sanford's Remarks:

Thanks John,

Let me take a minute or two to put this systems alliance in perspective and then
update you on the progress we have made.

Back in April we said this alliance had three parts. First, IBM and Hitachi
announced a common approach to virtualization based on IBM's technology. Second
we intend to jointly develop high-performance technologies and functionality for
next-generation high-end storage systems. And third, we would continue to drive
interoperability and



open standards for the management of multi-vendor networks, in conjunction with
existing standards body initiatives, not around them, and deploy the emerging
Common Information Model, (CIM), for better storage management.

We entered into this alliance for one reason -- our customers.

With this alliance, we're aggressively addressing the biggest issues that
customers face today -- interoperability, storage management, and improved cost
competitiveness.

By collaborating on next generation storage technologies, IBM and Hitachi will
be able to deliver more powerful, cost effective systems that work in today's
mixed computing environments.

Now there is one thing I want to make sure that everyone on this call
understands. While we will work with Hitachi on the development of new high-end
storage technologies, each of us will take those technologies, add our own
unique features, functions and technology, and create systems that will compete
head to head in the marketplace.

Contrary to what our competitors would like to see, we are not getting out of
the storage systems business. In fact, our goal is to provide our customers with
even more value.

IBM and Hitachi's common approach to virtualization, working in conjunction with
existing standards body initiatives, and deploying the emerging Common
Information Model, or CIM, for better storage management, will reduce total cost
of ownership, improve the productivity of the storage administrator, and
maximize the use of storage assets.

I recently read a study that showed that for every one dollar spent on storage
hardware, eight dollars is spent on managing that hardware. So I believe our
customers will appreciate IBM and Hitachi working together to improve total cost
of ownership, productivity, and storage utilization, especially as they move
from a direct-attached storage model to a networked storage model, with all of
the software implications that entails.

As you know IBM recently launched our storage software roadmap, including
virtualization, Storage Tank, and Policy-based Automation. These are all
critical software technologies customers need as they move to the networked
world.

By the way, if you'd like more information on these software technologies,
contact Hervey for a copy of our white paper.

Today's announcement is a testament to IBM's leadership in storage technology
innovation, our commitment to interoperability, and our insight into our
customer's business issues. It also firmly demonstrates our willingness to take
the bold steps necessary to address those issues.



I believe our IBM strategy to drive the industry toward openness and
interoperability is taking hold, and that storage vendors still creating their
own de facto standards or playing a shell game with openness will find
themselves increasingly marginalized.

So where does the IBM and Hitachi alliance stand today?

We are proceeding with negotiations on a planned multi-year alliance to research
and develop new open standards-based technologies specific to next-generation
storage networks, systems and solutions.

We've created a process to review joint projects designed to improve
interoperability, reduce complexity, and improve cost of ownership for storage
systems customers, while maintaining our individual ability to compete
aggressively in the market with our existing and future products. And we will
compete aggressively, make no mistake about it.

We are excited about the potential that this agreement has for both IBM and
Hitachi, but more importantly for improving our customer's business environment.

And of course, more information will be forthcoming when the alliance is
finalized.

With that, I'll turn the call back over to John Joyce.

Thank you, Linda.


John Joyce's Closing Remarks:

We had commented back in mid-April that current estimates for IBM's full-year
2002 better reflected the realities of the technology market -- and that we
should be able to achieve general expectations.

In this environment -- with the lack of clarity in everyone 's crystal ball --
there's no point in trying to update those full-year expectations after just six
weeks. That would suggest too much precision.

But these actions we've announced today put us in a better, more competitive
financial position -- for the second half as well as 2003.

As I said, we will revisit all of this in July -- once we have all our
2nd-quarter results and greater financial detail associated with these actions.

We are very confident in the steps we are taking. They position us very well for
when the economy picks up -- providing competitive benefits for our customers
and financial benefits for IBM's investors.



Thank you for your time. I look forward to talking with you next month. Now let
me turn it back to Hervey.

Hervey Parke's Closing Remarks:

Thanks, John.

Before I turn the call over to the operator to give you polling instructions --
let me reiterate what John Joyce said in his opening.

         John Kelly and Linda Sanford will take questions on their initiatives,
         but we will wait until our 2nd-quarter earnings release in mid-July to
         get into the financial discussions. We are going to hold to that.

OK, Mandy -- let's get started.