IBM Boosts Quarterly Dividend 15%, Buybacks by $8 Billion
April 26, 2011, 4:20 PM EDTBy Katie Hoffmann
(Updates with analyst’s comment in sixth paragraph.)
April 26 (Bloomberg) -- International Business Machines Corp., the biggest computer-services provider, increased its quarterly dividend 15 percent and set aside more money for share buybacks, sending the stock to a record.
The quarterly payout will rise by 10 cents for the second straight year, to 75 cents a share, IBM said today in a statement. IBM added $8 billion to the stock-repurchase plan, bringing the total authorized by the board to $12.7 billion.
IBM last week said earnings will be at least $13.15 a share this year, topping estimates, as it works toward a goal of at least $20 a share in earnings by 2015. Today’s increases keep the company on schedule for a goal to spend about $20 billion on dividends and $50 billion on buybacks through 2015, IBM Treasurer Martin Schroeter said in a phone interview.
IBM, based in Armonk, New York, rose 82 cents to $168.49 at 4 p.m. in New York Stock Exchange composite trading, the highest closing price in the 100-year-old company’s history. The shares have climbed 15 percent this year.
Chief Executive Officer Sam Palmisano, also plans to use about $20 billion on acquisitions through 2015 to focus on IBM’s four revenue-growth initiatives: cloud computing, analytics, emerging markets and Smarter Planet, the concept that infrastructure can be digitized to be made more efficient.
“The company’s a cash flow machine,” said Chris Whitmore, a San Francisco-based analyst for Deutsche Bank. “It’s giving people a little added confidence.”
$100 Billion
Palmisano, who took over in 2002, has increased earnings by steering the company toward software and services. IBM has spent more than $100 billion on dividends and buybacks since 2003, the year Palmisano also became the chairman.
It’s the 16th year in a row that IBM has increased its dividend. The company has boosted the payout by 10 cents each year since 2006, except for 2009, when it halved the increase amid the recession. The dividend is payable June 10 to shareholders of record May 10.
The company ended last quarter with $13.2 billion in cash and short-term investments.
--Editors: Ville Heiskanen, Peter Elstrom
To contact the reporter on this story: Katie Hoffmann in New York at khoffmann4@bloomberg.net
To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net
