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IBM Board Allocates $7 Billion for Share Buybacks

The board at the U.S based technology giant IBM has allocated a hefty $7 billion amount for repurchasing the company's shares, according to new and confirmed reports.

According to Business Week (opens in new tab), the allocation comes on top of the $5.2 billion which the company had set aside for buying back shares in September.

The company also plans to ask its board to authorise additional sums for buying back shares at an upcoming board meeting in April next year. IBM also announced that it plans to give shareholders the regular quarterly dividend of 75 cents which will be payable to shareholders on December 10.

Analysts believe that the buying back program, which is based on the company' cash flow, will increase its earnings per share.

UBS Analyst Maynard Um expects that the dividends will increase by almost 13% after the board clears another share buyback program which the company will pitch in April, Barrons (opens in new tab)reports.

"Overall margin expansion will likely be driven by revenue mix shift (higher software and emerging market services mix). For FY12 our EPS estimate reflects 11% growth, and while IBM continues to execute well, we believe current valuation reflects appropriate risk/reward trade-off (trading at ~12.2x our FY12 EPS)," Um said.

Ravi Mandalia

Ravi Mandalla was ITProPortal's Sub Editor (and a contributing writer) for two years from 2011. Based in Ahmedabad, India, Ravi is now the owner and founder of Parity Media Pvt. Ltd., a news and media company, which specializes in online publishing, technology news and analysis, reviews, web site traffic growth, web site UI. Ravi lists his specialist subjects as: Enterprise, IT, Technology, Gadgets, Business, High Net Worth Individuals, Online Publishing, Advertising, Marketing, Social Media, News, Reviews, Audio, Video, and Multi-Media. He has also previously worked as Dy. Manager - IT Security at (n)Code Solutions.