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IBM Plans $1 Billion Stock Repurchase

Posted on: Tuesday, 4 December 2007, 12:00 CST

Computer technology giant IBM has announced the repurchase of up to $1 billion of its common stock in open market transactions by the end of February 2008 in an effort to boost its earnings per share.

IBM said that the repurchase of common stock was originally planned for March or April 2008. However, the plan was accelerated to take advantage of the stock market's current dip. It added that the buyback would not have any effect on its fourth-quarter earnings, while showing a 'small benefit' for its 2008 earnings per share (EPS).

In April this year, IBM's board of directors approved a $15 billion stock repurchase program and in May, the company announced share outstanding common stock buyback worth a $12.5 billion from three different banks. By the end of September, IBM reported that it had approximately $1.7 billion remaining for stock repurchases from the April authorization.

IBM also disclosed that it was taking on $11.5 billion in debt to finance its stock repurchase plan in May 2007. The company has spent approximately $80 billion on its stock since 1995.

"They are an element of our long-term road map for earnings per share growth through 2010 and also represent a good value at today's prices," said Sam Palmisano, chief executive at IBM.

According to Thomson Financials, IBM is expected to post fourth-quarter EPS of $2.60 and 2007 EPS of $6.97.

The company's stock has increased by about 39.2% during the period November 2006 and November 2007.

Similarly, IBM's rival Hewlett-Packard announced that its board had authorized an additional $8 billion share repurchases in November 2007.

Source: ComputerWire daily updates

Source: Datamonitor

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