Bloomberg News

IBM Raises Dividend 12%, Adds $5 Billion in Stock Buybacks (2)

April 30, 2013

IBM CEO Ginni Rometty

International Business Machines Corp. Chief Executive Officer Ginni Rometty is boosting cash returns to investors after a rare earnings disappointment. Photographer: Andrew Harrer/Bloomberg

International Business Machines Corp. (IBM:US), the biggest computer-services company, boosted its dividend 12 percent and approved $5 billion in stock buybacks, rewarding investors after a disappointing earnings report.

The dividend of 95 cents a share will be payable on June 10 to shareholders of record on May 10, IBM said today from its annual meeting in Huntsville, Alabama. With the additional buyback funds, IBM has $11.2 billion in its repurchase program.

Chief Executive Officer Ginni Rometty, who took the reins at IBM in January 2012, is returning more cash to shareholders after a rare earnings shortfall sent the stock tumbling 8.3 percent in one day. The company’s first-quarter profit, released on April 18, missed analysts’ estimates for the first time since 2005, according to data compiled by Bloomberg.

IBM rose (IBM:US) 1.7 percent to $202.54 at the close today in New York. The shares have climbed 5.7 percent this year, compared with a 12 percent gain for the Standard & Poor’s 500 Index.

The Armonk, New York-based company also is making management changes in the wake of the earnings report. Rod Adkins, the head of IBM’s hardware division, will become senior vice president of corporate strategy, a person familiar with the matter said last week.

Tom Rosamilia, who has been overseeing corporate strategy, will take charge of the hardware business, reporting to Steve Mills, senior vice president of software, the person said.

Execution Issues

Sales at the hardware division dropped 17 percent last quarter, contributing to a broader slump at the company. Chief Financial Officer Mark Loughridge told investors on a conference call that the sales force was having “execution problems.”

Loughridge and IBM’s investor-relations team are taking pains to show investors how the company is working through its challenges, Ed Maguire, an analyst at Credit Agricole Securities in New York, said last week.

“What they were trying to do is be as open as possible because they understand that disclosure is extremely important for their stakeholders,” he said.

To contact the reporters on this story: Crayton Harrison in New York at tharrison5@bloomberg.net; Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net


The Good Business Issue
LIMITED-TIME OFFER SUBSCRIBE NOW

Companies Mentioned

  • IBM
    (International Business Machines Corp)
    • $162.34 USD
    • 0.52
    • 0.32%
Market data is delayed at least 15 minutes.
 
blog comments powered by Disqus