IBM Corp. raised the low end of its 2008 earnings outlook Tuesday and said its board of directors had authorized a continuation of its massive stock buyback program.
IBM now expects earnings per share to exceed $8.25 (euro5.55) this year. Previously the company had given a range of $8.20 (euro5.51) to $8.30 (euro5.58), and analysts surveyed by Thomson Financial were expecting $8.22 (euro5.53).
IBM has spent $94 billion (euro63.2 billion) buying back shares since 1995, including $18.8 billion (euro12.64 billion) last year. Tuesday's decision by the board will let the technology company spend another $15 billion (euro10.08 billion) on share repurchases, in addition to $400 million (euro268.93 million) left over from a previous authorization.
IBM said it expects to spend $12 billion (euro8.07 billion) of that pool buying back shares in 2008.
IBM shares were up $4.86 to $114.94 in afternoon trading.
IBM's aggressive stock repurchases are expected to continue in the coming years. IBM executives have described a plan for earnings per share in 2010 to be as high as $11 (euro7.40), which would represent a gain of nearly $5 (euro3.36) from 2006. Roughly $1.10 (euro.74) of that $5 (euro3.36) increase is expected to come from taking shares off the market.
For now, the few analysts with 2010 forecasts need some convincing of IBM's plan: Thomson Financial says the consensus forecast for that year is $10.35 (euro6.96) per share.
