IBM hikes dividend 10%, ups buyback
Tech giant commits to repurchasing another $3 billion of stock, despite tepid sales in its recent quarterly report.
NEW YORK (CNNMoney.com) -- IBM said Tuesday that it will increase its quarterly dividend by 10% and will repurchase an additional $3 billion of its stock.
The Armonk, N.Y.-based tech company will pay a dividend of 55 cents per share on June 10 to shareholders of record on May 8. That's up 5 cents from its most recent dividend and marks the 14th year in a row that IBM has hiked its dividend. Last year, the company raised its quarterly payout by 25%.
IBM also said it would extend its share repurchase program after the board authorized another $3 billion of buybacks. As of March 31, the company had $3.7 billion remaining from its previous $15 billion repurchase authorization in February 2008, giving IBM authorization to buy back a total of $6.7 billion so far in 2009.
Though the company's dividend increase and share repurchase allotment is down from last year, an IBM spokesman said economic headwinds were not a factor.
"We think it's an appropriate amount that allows the company to reinvest in business," he said.
The moves come amid a slew of announcements from IBM in the past two weeks, including a commitment to cloud computing, a return to the IBM branding on its networking unit and the development of a computer that can compete on the TV game show "Jeopardy!"
After rival Oracle (ORCL, Fortune 500) snatched away Sun Microsystems (JAVA, Fortune 500) for $7.4 billion last Monday, IBM reported a modest decline in first-quarter profit and sales but said it said it is ahead of pace to meet its profit goal of $10 to $11 per share by the end of 2010.
"Our continued solid performance allows us to increase shareholder return, as we are doing today," said IBM Chief Executive Samuel Palmisano in a statement. The spokesman declined to comment about IBM's acquisition plans.