IBM boosts stock buyback plan by $7 billion, raises dividend

April 24, 2012 05:13 AM

April 24 (Bloomberg) -- International Business Machines Corp., the world’s biggest computer-services provider, boosted its stock-buyback plan by $7 billion and raised its dividend to return cash to shareholders as earnings increase.

The quarterly payout will rise 10 cents to 85 cents a share, Armonk, New York-based IBM said today in a statement before a shareholder meeting in North Charleston, South Carolina. IBM had $5.7 billion remaining from a previous buyback plan, bringing the total available for repurchases to $12.7 billion.

IBM is making progress with a plan to increase software, which is more profitable than hardware, to account for half of earnings in 2015 as businesses and governments boost spending on programs that analyze data and project trends. Chief Executive Officer Virginia “Ginni” Rometty, who took over in January, is also seeking to expand in faster-growing economies.

The company last week raised its full-year earnings forecast after posting a 7.1% increase in first-quarter profit, helped by software margins. Operating earnings will increase to at least $15 a share this year, IBM said April 17, boosting its January forecast of at least $14.85.

IBM rose 0.9 percent to $200.40 at 9:42 a.m. New York time. Last month, the shares closed above $200 for the first time, factoring in stock splits.

Formerly IBM’s sales and marketing head, Rometty, 54, succeeded Sam Palmisano and became the first female CEO in the company’s 100-year history. Palmisano, who had been CEO since 2002, remains chairman.

Rometty inherited a five-year plan that targets annual operating earnings of at least $20 a share by 2015, up from $13.44 last year, by growing technologies, acquisitions and share buybacks. IBM is tapping a “gusher of data” through its Smarter Planet and Smarter Commerce initiatives to achieve its 2015 growth targets, Rometty said in her first letter to shareholders in the 2011 annual report.

IBM has set goals of adding $20 billion in new revenue and spending about $20 billion on acquisitions, from 2010 through 2015, as it expands offerings to business customers.

Bloomberg News

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