5 March 2002 IBM’s 2001 annual report, released next week, will be the first of the company’s financial statements to be published under a new initiative to provide greater visibility into the computing giant’s financial affairs.

Generally considered one of the most opaque of publicly listed technology companies, IBM promised to change its accounting practices in February 2002 to appease sceptical investors that have been shaken by the Enron accounting scandal.

Unfortunately, more disclosure will doubtless bring some of IBM’s more unhealthy financial skeletons out of the closet. In the past, the company has relied on its massive size and internal complexity to justify its non-disclosure of financial details. In turn, this has lead to IBM’s stock price being upheld on growth in earnings per share alone, says Laura Conigliaro, an analyst with Goldman Sachs investment bank.

However, investors are still at the mercy of IBM’s financial “gnomes”, who still have the right to choose what to disclose and what to keep hidden in the company’s statements. So far, the company has only said that it will increase disclosure of items that boost its bottom line.

New additions to the forthcoming annual report include an “expense and other income” category that will cover income from selling or licensing intellectual property, real-estate and currency-exchange gains and losses. IBM will also include information on the impact that the company’s over-funded pension plan has had on its financial results.

Nevertheless, analysts such as Annex Research’s Bob Djurdjevic say that this will still not prevent the systems giant from continuing to cloud the performance of its various divisions. Djurdjevic wants to see IBM compelled to provide a more granular breakdown of its revenues, profits and losses in each unit.