Looking for another bounce in its stock price, IBM increased its dividend payout by 33 percent and authorized an aggressive ramp-up of its share buyback program Tuesday.
April 25, 2007 (Press Release) --
Looking for another bounce in its stock price, International Business Machines Corp. increased its dividend payout by 33 percent and authorized an aggressive ramp-up of its share buyback program Tuesday.
It had been exactly one year since IBM's last dividend increase, when the quarterly payout jumped 50 percent - to 30 cents per share from 20. The new quarterly dividend will be 40 cents per share.
IBM's shares gained $4.27, or 4.5 percent, to $99.48 in Tuesday afternoon trading on the New York Stock Exchange, which means the new dividend would produce an annual yield of 1.6 percent. Depending on the company's share count, the dividend payout could cost IBM more than $2 billion.
IBM's board also authorized the company to spend an additional $15 billion purchasing its own stock. With money left over from a previous authorization, the company now has $16.4 billion to spend on that purpose.
The plan continues a long-running effort at Armonk, N.Y.-based IBM, which spent $8 billion buying its stock last year and $3.5 billion on that during the first quarter of this year. By reducing the number of shares on the open market, the strategy has helped IBM meet one of its key financial goals: to increase earnings per share by at least 10 percent a year, even as revenue chugs along with mid-single digit growth rates.
In fact, because of the new buyback plan, which is expected to be carried out over the next few months, IBM now says it expects earnings per share to rise 12 to 14 percent in 2007, a few points above previous guidance.
This strategy appeared to work last year, as the shares rode a second-half kick to an 18 percent gain for 2006. This year, the stock has returned to treading water.
IBM's operations generated $15.3 billion in cash last year, and Greene said the company is "under-leveraged" - meaning it would be willing to take on more debt if necessary.
During the shareholder meeting, only one resolution opposed by the company was approved. The measure, which came from the United Brotherhood of Carpenters Pension Fund and got 51 percent support, asks IBM to require directors to win approval from a majority of shareholder votes cast. Intel Corp., Dell Inc., Motorola Inc., Home Depot Inc. and Gannett Co. have similar provisions. Currently, a nominated IBM director is approved unless support for the candidate is actively withheld on a majority of votes cast.
IBM technologies power everything from the latest video game consoles to the world's fastest supercomputers. Palmisano noted that IBM systems can play a role in the search for alternative fuels, imaging machines for health care, plotting the human genome and ensuring water quality.
Source: http://www.mercurynews.com/
It had been exactly one year since IBM's last dividend increase, when the quarterly payout jumped 50 percent - to 30 cents per share from 20. The new quarterly dividend will be 40 cents per share.
IBM's shares gained $4.27, or 4.5 percent, to $99.48 in Tuesday afternoon trading on the New York Stock Exchange, which means the new dividend would produce an annual yield of 1.6 percent. Depending on the company's share count, the dividend payout could cost IBM more than $2 billion.
IBM's board also authorized the company to spend an additional $15 billion purchasing its own stock. With money left over from a previous authorization, the company now has $16.4 billion to spend on that purpose.
The plan continues a long-running effort at Armonk, N.Y.-based IBM, which spent $8 billion buying its stock last year and $3.5 billion on that during the first quarter of this year. By reducing the number of shares on the open market, the strategy has helped IBM meet one of its key financial goals: to increase earnings per share by at least 10 percent a year, even as revenue chugs along with mid-single digit growth rates.
In fact, because of the new buyback plan, which is expected to be carried out over the next few months, IBM now says it expects earnings per share to rise 12 to 14 percent in 2007, a few points above previous guidance.
This strategy appeared to work last year, as the shares rode a second-half kick to an 18 percent gain for 2006. This year, the stock has returned to treading water.
IBM's operations generated $15.3 billion in cash last year, and Greene said the company is "under-leveraged" - meaning it would be willing to take on more debt if necessary.
During the shareholder meeting, only one resolution opposed by the company was approved. The measure, which came from the United Brotherhood of Carpenters Pension Fund and got 51 percent support, asks IBM to require directors to win approval from a majority of shareholder votes cast. Intel Corp., Dell Inc., Motorola Inc., Home Depot Inc. and Gannett Co. have similar provisions. Currently, a nominated IBM director is approved unless support for the candidate is actively withheld on a majority of votes cast.
IBM technologies power everything from the latest video game consoles to the world's fastest supercomputers. Palmisano noted that IBM systems can play a role in the search for alternative fuels, imaging machines for health care, plotting the human genome and ensuring water quality.
Source: http://www.mercurynews.com/
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