IBM To Acquire Micromuse Inc.; Extends IBM's Ability to Help Customers Manage Complex IT Systems Carrying Real-Time Data, Voice and Video

Micromuse is a leading provider of network management softwareused by banks, telecommunications carriers, governments, retailers andother organizations to monitor and manage their sophisticatedtechnology infrastructures. The software helps customers manageincreasingly complex IT systems that support the proliferation ofvoice and video traffic, in addition to data, due to the growingadoption of voice over IP (VoIP), audio and video services deliveredover the Internet. The combination of Micromuse's software and IBM'sIT service management technology will provide customers with acomprehensive approach for reducing the complexity of their ITenvironments, lowering operational costs, and addressing compliancemandates.

"Today's networks are no longer just pipelines of data --customers are incorporating data, voice and video into their businessoperations at an astounding pace," said Al Zollar, General Manager,IBM Tivoli software. "The proliferation of Internet telephony andvideo-on-demand are not only changing the way people use informationtechnology, but also how companies manage it. The addition of newcapabilities raises the complexity of today's networks, which requirereal-time network and service management. The combination of Micromuseand IBM Tivoli will help companies manage these sophisticated ITenvironments, deploy new business service management solutions, anddeliver new network-based services to customers, employees and tradingpartners."

The delivery of network-based services -- such as data, voice andvideo -- over the Internet in real time is creating new avenues forcontent, such as streaming music videos delivered to cell phones. Itcan also enable workers to use mobile devices to access theircompany's network, tap into a live video feed of a sales conference,or pose a question to a group via phone or instant message.

Micromuse technology also helps companies quickly diagnose theperformance of their IT environments, allowing them to automaticallyanalyze and resolve network outages and performance problems, such assystem overloads caused by spikes in web traffic. Micromuse softwarealso complements IBM's security management software by alerting ITstaff about attempted network breaches by hackers and otherunauthorized users. These capabilities will extend IBM's self-managingautonomic technologies to the network.

Micromuse has more than 1,800 customers worldwide, includingAmerica Online, British Telecom, Cox Communications, Deutsche Telecom,eTrade, Fidelity Investments Services Ltd., Invesco Asset ManagementPlc., KeyBank, NCR Corporation, NTT, Orbitz, Shanghai Telecom, Stateof Michigan, Swisscom Mobile, Telecom Italia, U.S. Securities andExchange Commission, Verizon, and Virgin Atlantic.

The acquisition will strengthen the IT service managementcapabilities of IBM's Tivoli software portfolio, which has produceddouble-digit revenue growth for the first three quarters of 2005.Micromuse also grew rapidly this year (fiscal year ended September2005) with a reported 10 percent year-to-year revenue increase, to$160.8 million.

"Network management is an essential element of IT servicemanagement, and Micromuse offers world-class technology and expertiseto its customers and business partners," said Lloyd Carney, Chairmanand Chief Executive Officer, Micromuse. "IBM and Micromuse arededicated to building software solutions that meet the demands of theindustry's most complex IT infrastructures. Together, we will helpcustomers efficiently and effectively manage IT services in support oftheir business goals."

Following completion of the acquisition, IBM intends to:

-- Establish Micromuse's operations as a business unit within IBM's Tivoli software division led by General Manager Al Zollar.

-- Incorporate Micromuse software technology and solutions into IBM's Tivoli software offerings, as well as IBM hardware and services.

-- Market and sell Micromuse software products through IBM's and Micromuse's worldwide sales channels and IBM Business Partners.

-- Build upon the companies' existing business relationship, which includes more than 500 joint customers worldwide.

About IBM

IBM is the world's largest information technology company, with 80years of leadership in helping businesses innovate. Drawing onresources from across IBM and key Business Partners, IBM offers a widerange of services, solutions and technologies that enable customers,large and small, to take full advantage of the new era of e-business.For more information about IBM, visit www.ibm.com.

About Micromuse

Micromuse Inc. (Nasdaq: MUSE), headquartered in San Francisco,Calif., is the leading provider of real-time business and serviceassurance software solutions. The Netcool software suite providesorganizations with the assurance that their IT systems are supportingand driving the achievement of mission-critical business objectives.Netcool solutions provide real-time, end-to-end visibility andaccurate troubleshooting from a business perspective, allowingorganizations to respond to problems quickly, streamline workflowprocesses, and improve business uptime. For more information, call(415) 568-9800, or visit their website at www.micromuse.com. CSFBacted as financial advisor to Micromuse in the transaction.

IBM and Tivoli are trademarks of International Business MachinesCorporation in the United States, other countries, or both. Othercompany, product or service names may be trademarks or service marksof others.

ADDITIONAL INFORMATION ABOUT THE MERGER AND WHERE TO FIND IT

This communication may be deemed to be solicitation material inrespect of the proposed acquisition and subsequent merger (the"Merger") of Micromuse Inc. (the "Company") by and into a wholly-ownedsubsidiary of International Business Machines Corp. ("IBM"). Inconnection with the Merger and required stockholder approval, theCompany will file with the SEC a preliminary proxy statement, adefinitive proxy statement and other relevant materials that willcontain important information about the Merger. Investors and securityholders of the Company are urged to read the proxy statements and anyother relevant materials filed by the Company because they contain, orwill contain, important information about the Company and the Merger.All documents filed by the Company with the SEC, may be obtained forfree at the SEC's website at www.sec.gov. In addition, the documentsfiled with the SEC by the Company may be obtained free of charge bydirecting such request to: Ian Halifax, Micromuse Investor Relations,415-568-9909 or from the Company's website at www.micromuse.com. Suchdocuments are not currently available.

The Company and its executive officers and directors may be deemedto be participants in the solicitation of proxies from the Companystockholders in favor of the Merger. Information about the executiveofficers and directors of the Company and their ownership of theCompany's common stock is set forth in the proxy statement for theCompany's 2004 Annual Meeting of Stockholders, which was filed withthe SEC on December 21, 2004, and in Item 10 of the Company's Form10-K which was filed with the SEC on December 14, 2005. Investors andsecurity holders may obtain more detailed information regarding thedirect and indirect interests of the Company and its respectiveexecutive officers and directors in the Merger by reading thepreliminary and final proxy statements regarding the Merger, whichwill be filed with the SEC.

IBM Safe Harbor Statement under the Private Securities LitigationReform Act of 1995: This release contains forward-looking statementsbased on current expectations or beliefs, as well as a number ofassumptions about future events, and these statements are subject toimportant factors and uncertainties that could cause actual results todiffer materially from those described in the forward-lookingstatements. The forward-looking statements in this release address avariety of subjects including, for example, the functionality,characteristics, quality and performance capabilities of Micromuse'sproducts and technology; results achievable and benefits attainablethrough deployment of Micromuse's products and provision of services;the ability of Micromuse's products to help companies streamlineoperations, improve customer support, expedite business transactions,and make better tactical and strategic decisions; and improvements inoperational performance and decision-making. The following factors,among others, could cause actual results to differ materially fromthose described in these forward-looking statements: the ability ofthe company to expand its market share; growth rates for theenterprise data integration software market; general businessconditions in the software industry, the technology sector, and in thedomestic and international economies; rapid technological change inthe markets served by the company; dependence on internationaloperations; global and geopolitical instability; compliance costsassociated with regulations to which the company is subject, includingthe Sarbanes-Oxley Act of 2002, and the impact of such regulations;and difficulties that the company may experience integratingtechnologies, operations and personnel of completed or futureacquisitions. For a detailed discussion of these and other cautionarystatements, please refer to the filings made by Micromuse with theSecurities and Exchange Commission, including, without limitation, themost recent Annual Report on Form 10-K. Micromuse disclaims any intentor obligation to update any forward-looking statements made herein toreflect any change in Micromuse's expectations with regard thereto orany change in events, conditions, or circumstances on which suchstatements are based. Micromuse is not responsible for statementsattributed to third parties within this release or in any materialsreferenced herein. Partnerships described herein shall be deemed to bestrategic alliances only, and shall not imply the power of eitherpartner to bind the other partner or to incur obligations on behalf ofthe other partner.