International Business Machines (NYSE: IBM) is a leading global technology firm that offers a variety of products and services in the information technology industry. Their current businesses consist of 5 major divisions: Global Technology Services segment; a Global Business Services segment; a Software segment; a Systems and Technology segment; and a Global Financing segment. In 2006 IBM lost its position as the number one IT company to Hewlett-Packard in terms of annual revenue (difference of $235 million between revenues of HPQ and IBM). In 2009, that lead widened as HP generated $118.3 billion in revenue while IBM's revenue came in at $95.76 billion.^{[1] [2]}

Although IBM lost its first place rank to Hewlett-Packard in terms of revenue, IBM is a far more profitable business (boasting a gross profit of $43.8 billion for FY09) than Hewlett-Packard (gross profit of $28.4 for FY08).^[1][3] There are several underlying factors that contribute to IBM's high profitability which has increased every year since 2005. One of the reasons for the increase has been upper management's active effort towards divesting from cyclical and commoditizing businesses, while concentrating on the higher value services and software sectors.^[2]

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