Many analysts have endorsed Gerstner's services-led strategy, which calls for helping clients integrate computers and Internet- related software into fast, complex networks.
Before the second quarter, services had generated two-thirds of IBM's revenue growth since 1994 -- US$20 billion of the US$32 billion total.
The services group brought a US$95 billion sales backlog out of the second quarter, representing annuity-like income from multiyear contracts.
Gerstner has scoffed at the notion that rivals can simply acquire a services arm. Hewlett-Packard said this week it plans to purchase Comdisco Inc's services business for US$610 million.
Hewlett-Packard dropped an effort last year to acquire PricewaterhouseCoopers' consulting arm.
"It takes years of discipline, of capital, of experience," Gerstner has said. "It's a totally different model from running a hardware business or a software business." Gerstner's total compensation last year was US$13.7 million. He was also granted options covering 650,000 IBM shares. If sold at today's closing price, they would be worth about US$67.8 million.
The 59-year-old Gerstner is widely expected to relinquish his chief executive's title, and perhaps that of chairman, when his contract expires March 1. Chief Operating Officer Samuel Palmisano, a 28-year IBM employee who turns 50 later this month, is widely viewed as the certain successor. Palmisano is a former head of IBM's services business.
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