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January 17, 2006

IBM signs $1.1bn Gap deal, reports Q4 services results

IBM Global Services on Friday signed a 10-year, $1.1bn deal to manage infrastructure and other IT services for San Francisco-based apparel retailer Gap Inc, according to a disclosure this week in a Gap SEC filing.

By CBR Staff Writer

Under the agreement, IBM will provide infrastructure services for Gap’s IT operations, including mainframe, server and network services. IBM will also handle help desk, disaster recovery, and user services, as well as store operation services, such as the technology and integration for wireless networks.

About 400 Gap staff will transfer to IBM as part of the deal. The contract includes performance standards under which Gap may cancel the contract if IBM’s work falls short. After the ten-year term expires, there is also a three-year option.

IBM on Tuesday also reported its services revenue for Q4 2005, although the Gap contract wasn’t counted in these results.

Some analysts were worried that lagging bookings during the quarter could impact IBM’s numbers, but bookings came in safely at $11.5bn, down from $12.7bn a year ago but ahead of some analysts’ forecasts. Services revenue for the quarter was $12bn, down from $12.6bn.

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