Feeds

Big Blue gives Big Sam big bags of cash

Not for himself, but for stock buybacks

Boost IT visibility and business value

IBM's board of directors wants to give the company's top brass plenty of maneuvering room to engineer the earnings per share growth that they have promised Wall Street, and therefore has authorized the company to spend an additional $7bn on stock buybacks.

When combined with $5.2bn in monies left over from IBM's previous stock buyback, the board authorization gives Big Blue the ability to spend $12.2bn on its shares, albeit at a hell of a price.

"IBM’s higher value, higher margin business strategy has enabled the return of over $109 billion since 2003 to our shareholders through share repurchases and dividends," proclaimed Sam Palmisano, IBM's president, CEO, and chairman in a statement announcing the buyback. "Shareholders can expect that as IBM enters its second century we will continue to invest in new products and services, while expanding IBM’s business into new, emerging markets."

As El Reg goes to press, IBM's shares are trading at $181.94 apiece, and it has 1.2 billion shares outstanding. Spending all that cash right now, today, would take about 67 million shares off the market and that would boost earnings per share by 5.6 per cent in the coming quarter, assuming flat actual earnings.

Of course, none of this financial engineering actually does squat for actual net earnings. But IBM's execs get paid based on how EPS grows, and this is how they ensure their own bonuses and a rising share price on Wall Street that is yet another bonus to them. Imagine if IBM invested $12.2bn in product development, sales, or marketing. Or acquisitions.

With the company having only $11.3bn in cash on hand as the third quarter came to an end, the company can't even do that. But IBM will generate several billions more in free cash flow in the December and March quarters, allowing the company to spend down this authorization and pay its dividend, which comes to 75 cents per share per quarter.

In a related item, David Farr, chairman and CEO at Emerson Electric Co, will be added to IBM's board of directors, effective January 1. Among many other things, Emerson makes power distribution and cooling equipment for data centers. Farr hails from Elmira, New York, not an hour from the suburb of Binghamton called Endicott, where Big Blue was founded 100 years ago. ®

Maximizing your infrastructure through virtualization

More from The Register

next story
BBC goes offline in MASSIVE COCKUP: Stephen Fry partly muzzled
Auntie tight-lipped as major outage rolls on
Philip K Dick 'Nazi alternate reality' story to be made into TV series
Amazon Studios, Ridley Scott firm to produce The Man in the High Castle
iPad? More like iFAD: We reveal why Apple fell into IBM's arms
But never fear fanbois, you're still lapping up iPhones, Macs
Stick a 4K in them: Super high-res TVs are DONE
4,000 pixels is niche now... Don't say we didn't warn you
Bose says today is F*** With Dre Day: Beats sued in patent battle
Music gear giant seeks some of that sweet, sweet Apple pie
There's NOTHING on TV in Europe – American video DOMINATES
Even France's mega subsidies don't stop US content onslaught
You! Pirate! Stop pirating, or we shall admonish you politely. Repeatedly, if necessary
And we shall go about telling people you smell. No, not really
Too many IT conferences to cover? MICROSOFT to the RESCUE!
Yet more word of cuts emerges from Redmond
Joe Average isn't worth $10 a year to Mark Zuckerberg
The Social Network deflates the PC resurgence with mobile-only usage prediction
prev story

Whitepapers

Implementing global e-invoicing with guaranteed legal certainty
Explaining the role local tax compliance plays in successful supply chain management and e-business and how leading global brands are addressing this.
Consolidation: The Foundation for IT Business Transformation
In this whitepaper learn how effective consolidation of IT and business resources can enable multiple, meaningful business benefits.
Application security programs and practises
Follow a few strategies and your organization can gain the full benefits of open source and the cloud without compromising the security of your applications.
How modern custom applications can spur business growth
Learn how to create, deploy and manage custom applications without consuming or expanding the need for scarce, expensive IT resources.
Securing Web Applications Made Simple and Scalable
Learn how automated security testing can provide a simple and scalable way to protect your web applications.