IBM, or International Business Machines Corp. (NYSE: IBM), is on a roll. The company just raised its guidance and boosted its share buyback plan by a massive amount.
For starters the company said it had $400 million remaining on an existing share buyback plan, and it is now lifting this to be $15 BILLION more to a total of $15.4 Billion. More importantly, it plans to spend up to $12 Billion for these buybacks in 2008. That is more than 100 million shares.
Because of the share count reduction, IBM anticipates this adding $0.05 to its prior EPS target for 2008 of $8.20 to $8.30. It now sees at least $8.25 EPS.
This extra $0.05 is on a reduced share count, so net net is not as large as one might think. But the additional support of an extra 100+ million shares coming off the market won’t hurt. This represents more than 8-days worth of full average trading volume.
IBM shares are up almost 3% at $113.00, and the 52-week trading range is $88.77 to $121.46.
Jon C. Ogg
February 26, 2008