Amid the frantic climate of the current market, IBM Corp offered a vote of confidence to investors on Tuesday by announcing that its board has authorized the company to repurchase up to an additional $3.5bn in shares. The announcement came at a crucial time and helped fuel an amazing comeback in New York financial markets that had declined steeply on the open after more overnight carnage in the Far East. It was unclear whether the buyback decision was influenced by the recent market activity. IBM shares rose $9.375 on the day, closing at $99.375, and solid gains in other technology stocks pushed the Nasdaq up 65.25 points, or 4.25% to 1,600.34, after it had sunk as low as 1,465.84. The feeling on Wall Street seems to be that, after the early-morning fall, the necessary market corrections had been made. The situation hit a natural floor and the buyers stepped in. IBM has reduced the number of its shares in circulation by about 8% since 1995 and spent roughly $16bn doing so. The company has been using the repurchases to increase its earnings per share figures, a practice that inspires varying opinions, especially at times when the company’s own executives are selling large blocks of shares (CI No 3,216). Big Blue intends to buy the additional shares on the open market from time to time, depending upon market conditions.
Content from our partners
