8. Segments: In the first quarter of 2019, the company made a number of changes to its organizational structure and management system that brought cloud and cognitive software under one organization to more effectively address evolving client needs and to prepare for the pending acquisition of Red Hat, Inc. (Red Hat). With these changes, the company has revised its reportable segments, but did not impact its Consolidated Financial Statements. In addition, the company is presenting the results of its announced divestitures in an “Other” segment, as the realignment of these businesses allows for a better representation of management’s view of the company, as well as the ongoing operational performance of the reportable segments. The company’s segments are as follows:

2018 Segments	Changes (+/-)	2019 Segments

Cognitive Solutions	+ Integration Software + Security Services - Divested Select Software* + Red Hat (post closing)	Cloud & Cognitive Software

Global Business Services	- Divested Mortgage Servicing**	Global Business Services

Technology Services & Cloud Platforms	- Security Services - Integration Software	Global Technology Services

Systems		Systems

Global Financing		Global Financing

Other	+ Divested Mortgage Servicing** + Divested Select Software*	Other

* IBM announced sales of select software assets expected to close mid-2019. Refer to note 11, “Acquisitions/Divestitures,” for additional information.

**IBM completed the sale of the mortgage servicing business on February 28, 2019.

The tables below reflect the continuing operations results of the company’s segments consistent with the management and measurement system utilized within the company. Performance measurement is based on operating pre-tax income from continuing operations. The segments represent components of the company for which separate financial information is available that is utilized on a regular basis by the chief operating decision maker (the chief executive officer) in determining how to allocate resources and evaluate performance. The tables reflect the segment recast for the prior-year period.

SEGMENT INFORMATION

	Cloud &			Global			Global
	Cognitive			Business			Technology						Global			Total
(Dollars in millions)	Software			Services			Services			Systems			Financing			Segments
For the three months ended March 31, 2019:
External revenue	$	5,037		$	4,119		$	6,875		$	1,328		$	406		$	17,765
Internal revenue	841			74			290			163			300			1,668

Total revenue	$	5,879		$	4,193		$	7,164		$	1,491		$	706		$	19,433

Pre-tax income/(loss) from continuing operations	$	1,767		$	315		$	275		$	(202	)	$	288		$	2,444

Revenue year-to-year change	(2.8		)%	(0.3		)%	(5.3		)%	(9.8		)%	(15.4		)%	(4.3		)%
Pre-tax income year-to-year change	5.2		%	152.1		%	315.1		%	(0.4		)%	(23.4		)%	19.5		%
Pre-tax income/(loss) margin	30.1		%	7.5		%	3.8		%	(13.5		)%	40.8		%	12.6		%

For the three months ended March 31, 2018:
External revenue	$	5,116	*	$	4,115	*	$	7,421	*	$	1,500		$	405		$	18,557	*
Internal revenue	931		*	89			141			153			429			1,743		*

Total revenue	$	6,047	*	$	4,204	*	$	7,562	*	$	1,653		$	834		$	20,299	*

Pre-tax income/(loss) from continuing operations	$	1,680	*	$	125	*	$	66	*	$	(203	)	$	377		$	2,045	*


Pre-tax income/(loss) margin	27.8		%*	3.0		%*	0.9		%*	(12.3		)%	45.1		%	10.1		%*

* Recast to conform to 2019 presentation.

Reconciliations to IBM as Reported:

(Dollars in millions)
For the three months ended March 31:	2019			2018
Revenue:
Total reportable segments	$	19,433		$	20,299	*
Other — divested businesses	343			446		*
Other revenue	74			69
Eliminations of internal transactions	(1,668		)	(1,743		)*

Total consolidated revenue	$	18,182		$	19,072

Pre-tax income from continuing operations:
Total reportable segments	$	2,444		$	2,045	*
Amortization of acquired intangible assets	(173		)	(203		)
Acquisition-related (charges)/income	(39		)	0
Non-operating retirement-related (costs)/income	(138		)	(402		)
Eliminations of internal transactions	(89		)	(190		)*
Other — divested businesses	(55		)	14		*
Unallocated corporate amounts	(67		)	(130		)

Total pre-tax income from continuing operations	$	1,883		$	1,136

* Recast to conform to 2019 presentation.