Skip to main content

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, 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 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.