IBM’s Huge Buyback Juices 2008 EPS Targets (IBM)

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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