IBM Raises Dividend and Share Buyback, Boosting Stock

IBM said on Tuesday it will raise its quarterly dividend by a third and its share buyback program by $15 billion, sending its shares up sharply.

As a result of the higher share buyback, 2007 earnings per share growth -- excluding any gain from the recently announced sale of its printer business -- could be 12% to 14%, which is one to three points more than its previous estimates, IBM said.

The board of International Business Machines, the world's largest computer services company, eclared a regular quarterly cash dividend of 40 cents a share, payable June 9, up from 30 cents per share in the prior quarter.

It authorized $15 billion for stock repurchases, which IBM said was in addition to approximately $1.4 billion that was remaining at the end of March from a prior authorization.

Wall Street was expecting per-share profit of $6.74 for 2007, which would be a 12.3% gain from last year's $6.00, according to Reuters Estimates.

IBM said it may complete a substantial portion of the repurchases during the next several months.

"This gives us significant financial flexibility to use our capital to drive growth through investments in acquisitions and capital expenditures, and to increase returns to shareholders through dividends and stock repurchase," Samuel Palmisano, IBM's chairman, president and chief executive, said in a statement.