Risk & Compliance

IBM Adds $15 Billion to Buyback Coffer

Big Blue's repurchase plan is one of many announced this week.
Stephen TaubFebruary 26, 2008

IBM announced on Tuesday that its board of directors authorized a $15 billion stock repurchase program, on top of about $400 million remaining at the end of February from a prior authorization.

The company said it may repurchase shares on the open market or in private transactions depending on market conditions, and that it expects to use cash from operations for the repurchases.

“IBM’s profitable growth and consistently strong cash flow enable the company to continue to return value to our shareholders. Stock repurchase is not only one of the ways we deliver this value, it is also one of the key elements of IBM’s 2010 roadmap for earnings-per-share growth,” said chairman and CEO Samuel Palmisano.

Big Blue said the anticipated share repurchases could add up to 5 cents to full-year earnings per share for 2008, though the final total will depend on how much stock is bought back, the timing of repurchases, and market conditions.

The news helped to send IBM’s stock up more than 4 percent on Tuesday and reverse an overall stock-market decline into the black.

Several other companies also revealed buyback plans since Monday. Sybase, the target of a proxy fight from Sandell Asset Management Corp., agreed to launch a “Dutch” tender offer for $300 million of its shares, or about 11.6 percent of its total market capitalization based on the mid-point of its tender range. In return, Sandell agreed to drop its bid to submit its own slate of directors at the software company’s upcoming annual meeting.

Other repurchase authorizations include Xilinx Inc. (up to $800 million), St. Jude Medical (up to $250 million), and Goodrich Corp. (a $300 million increase to its existing stock-repurchase plan).

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