CEO: IBM 'well-positioned' as economy recovers

International Business Machines Corp., the biggest computer-services provider, is well- positioned to grow as the economy recovers, Chief Executive Officer Sam Palmisano said.

"I am optimistic about IBM's prospects to lead the era we are now entering," Palmisano, 58, said in a shareholder letter that will be released in the company's annual report later today.

Palmisano has spent his eight years as CEO shedding hardware units and investing in the more-profitable software and services divisions. During the recession, he bet on technology that helps customers be more efficient, such as software that analyzes and predict trends, or cloud computing, which lets them store and access information on an external server.

The focus, along with continued cost cuts, has helped IBM buoy profit through the recession, even as sales slumped. IBM's gross profit margin has expanded for nine straight quarters.

IBM, based in Armonk, New York, fell 60 cents to $126.65 at 2:03 p.m. in New York Stock Exchange composite trading. The shares had declined 2.8 percent this year before today. It had the third-best stock return of the Dow Jones Industrial Average last year.

AcquisitionsA year ago, Palmisano told shareholders in his letter that IBM would expand by going "on offense" in the weak economy, investing in cloud computing. Less than two weeks later, he tried to buy server- and software-maker Sun Microsystems Inc. for $7 billion, according to people familiar with the talks. The deal went to rival software maker Oracle Corp. for $7.4 billion.IBM has made more than 10 acquisitions since then, including SPSS Inc., a Chicago-based analytics-software maker, for $1.2 billion. Palmisano has spent more than $20 billion on 100 acquisitions since he took over in 2002.The company will continue to invest in analytics and cloud computing, as well as in its Smarter Planet initiative, the concept that anything can be digitally monitored and be made more efficient, to position itself as the economy rebounds, he said.IBM posted its first sales gain in a year last quarter, as customers resumed spending on software and farming out computer services. Global information-technology spending will climb 8.1 percent this year, according to Forrester Research Inc. in Cambridge, Massachusetts.