Earlier this year, IBM indicated its U.S. pension fund would be underfunded by $4.5 billion and that it would contribute $1.5 billion per year through 2005 to make up the difference. But IBM says equity markets have improved, pulling up the status of its pension fund as well. The company also says it will continue to invest about $5 billion in research and development for the year as well as spend money on companies and technology that further its E-business on-demand strategy.
"We view IBM's move as a positive one," says Philip Walker, a senior director at Fitch Ratings, an international market-rating agency. "They see a deficit and are taking responsibility for funding the plan."