IBM sets aside US$15bn for stock repurchase

The company expects to spend up to $12bn on stock repurchases in 2008, either by repurchasing shares on the open market or in private transactions depending on market conditions.

"IBM's profitable growth and consistently strong cash flow enable the company to continue to return value to our shareholders," said Samuel Palmisano, IBM chairman, president and chief executive.

"Stock repurchase is not only one of the ways we deliver this value, it is one of the key elements of IBM's 2010 roadmap for earnings per share growth."

The current bank cover on purchases under the company's $12.5bn accelerated share repurchase programme, announced in May 2007, will conclude on 28 February.

There is approximately US$400m remaining from this last round of the programme, giving IBM approximately US$15.4bn for its 2008 stock repurchase programme.

The company said in January that it expected 2008 full-year earnings per share of between US$8.20 and US$8.30. However, the anticipated share repurchase activity could add up to five cents to this figure, reflecting year-to-year growth of 16 per cent.

Actual earnings per share will depend on the total amount spent, the timing of repurchases and market conditions.

Some analysts are sceptical about the decision, however. Steve Craggs, a director at Lustratus, said: "On the surface the decision may seem to be a positive one for shareholders,

"But on the flipside this essentially means that IBM has nothing better to spend the money on than trying to raise the share price by financial machinations rather than by selling more product."