IBM to Boost Dividend, Expand Buyback
IBM Corp. said it plans to boost its dividend by 10% to 22 cents a share and expand its stock buyback program by $3.5 billion. Chairman Louis V. Gerstner Jr., speaking at the annual shareholders meeting, reviewed the past year’s efforts to remake the world’s largest computer company. “We’re still working to return IBM to the top, to industry leadership,” said Gerstner, who has presided over a more than fivefold increase in the company’s stock price since taking the reins in April 1993. IBM is relying on buybacks to compensate for lagging sales and earnings. Its profit fell 13% in the first quarter as sales rose 1.8%. Several investors challenged Gerstner to explain why IBM can’t boost revenue growth. He cited price cuts in the PC industry as rival Compaq Computer Corp. offers hefty markdowns and free monitors, the economic crisis in Asia, and questions about how governments will regulate the Internet. The new buyback totals 3.1% of its shares. IBM rose 38 cents to close at $115.69 on the New York Stock Exchange, shy of its $118 record close last week.