• The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
Menu
  • The Four Hundred
  • Subscribe
  • Media Kit
  • Contributors
  • About Us
  • Contact
  • IBM Boosts Dividend and Share Buybacks, What About i Marketing?

    May 3, 2010 Timothy Prickett Morgan

    The crack habit that is buying back its own shares to artificially prop up earnings per share numbers to appease Wall Street continued again last week as IBM‘s board of directors allocated another $8 billion in cash for this purpose. In an effort to get investors to pump up the stock, Big Blue also boosted its quarterly dividend by 10 cents to 65 cents per share.

    In the first quarter, IBM blew $4 billion on share buybacks and another $700 million on dividends, so now its quarterly dividend nut will be 18 percent larger, at $826 million, or $3.3 billion per year. That’s about a quarter of the company’s net earnings. I wholly and enthusiastically approve of any company distributing profits as a dividend–in fact, as far as I am concerned, that is precisely what a portion of profits at any corporation are for, with the remainder to be saved for a rainy day or to do acquisitions.

    “Our superior cash flow enables us to invest in the business and generate substantial returns to investors,” IBM’s president, chief executive officer, and chairman said in a statement. “Since 2003, more than $80 billion was returned through dividends and share repurchase. Our commitment to delivering value to shareholders has never wavered.”

    Well, yes and no. IBM is blowing a heck of a lot more cash on its own shares to show that EPS growth and to have shares to give to the top brass as compensation for firing tens of thousands of people in the United States and Europe and for offshoring jobs and manufacturing to cheap labor markets a job well done. Of that $80 billion, the vast majority went for share repurchases, which I think are not entirely without merit–just mostly without merit considering the other things that such large pools of money could be used for. With a tiny, miniscule, hardly noticeable fraction of those funds, the Power Systems i platform could have been revamped, opened up, and reinvigorated to a ridiculous scale over a decade ago. For instance. And been able to keep its AS/400 name, too.

    IBM went on and on about how the quarterly dividend is up 330 percent since 2003, marking the 15th straight year that IBM has boosted the dividend, a quaint idea from a time gone by. IBM has paid dividends every year since it went public on the New York Stock Exchange in 1916, which is impressive. But the $2.60 per share that IBM was bragging about last week is still nowhere near the $4.84 per share per year IBM was shelling out in 1992 before Unix and PC servers clobbered the mainframe and AS/400 businesses, nearly driving Big Blue into bankruptcy. If I wonder about anything, it is why shareholders didn’t demand that IBM pay out a similar dividend over those past seven years it was bragging about. Or, maybe even more. It is much more in line with the corporatocracy in America to buy back shares and then pay yourselves with them, as IBM’s managers and board members do. Rather than get a real and reasonable paycheck and invest savings in stock like the rest of us schmoes have to do out here in the 21st century where the word pension is another quaint idea, like dividend.

    I think IBM is looking to do a stock split next year, if its stock can get maybe above $150 or $175 a share, which would be a nice going-away present to Palmisano, who should retire next year on Big Blue’s centennial if history is any guide. Palmisano will be over 60, and the funny thing is, there is no heir apparent at least from the outside of the company. I would not be surprised if someone is named president this year, as Palmisano was in 1999 when Lou Gerstner was getting set to retire. IBM has not done a stock split since 1999, and that is one way to grow the market cap of Big Blue and make a lot of people, not just the top brass at the company, a little more wealthy.

    Here’s a fascinating history of stock splits and dividend boosts at IBM through 1999. Unless this record is incomplete, IBM has done 15 stock spits–none in the 1910s, the 1930s, or the 1980s–such that 100 shares in 1916 have grown, just through splits, to 1.1 million shares by 1999. In 1916, according to this archive article in Time magazine talking about a split IBM did in 1968, at the time IBM went public, you’d pay $27.50 for an IBM share, or $2,750 for a block of 100. Based on the market price of $129.16 at the market close on Friday (April 30) for IBM shares, those original 100 shares in that Time article have grown in value through splits and Wall Street enthusiasm to $143 million, or more than a factor of 52,000 growth. That’s a hell of a lot of money, even with inflation making a dollar worth a lot less in the past 10 decades, and just a staggering amount of growth.

    Even if the stock price shouldn’t matter more than building good computers, it is hard to not be impressed by that kind of growth.

    RELATED STORIES

    Power Systems Slammed by Power7 Transitions in Q1

    IBM Looks Back on 2000s, Sets Sites on Next Decade

    The Q4 IBM Server Drilldown: It Could Have Been Worse

    The IBM Profit Engine Keeps A-Rolling in Q4

    Let’s Take a Look Under the Hood of IBM’s Servers in Q3

    Steady as She Goes for IBM’s Third Quarter

    Servers Slammed in IBM’s Second Quarter

    Peeling Apart IBM’s Q1 Server and Storage Sales

    Power Systems Down A Bit in IBM’s First Quarter



                         Post this story to del.icio.us
                   Post this story to Digg
        Post this story to Slashdot

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Tags: Tags: mtfh_rc, Volume 19, Number 17 -- May 3, 2010

    Sponsored by
    Raz-Lee Security

    With COVID-19 wreaking havoc, cybercriminals are taking advantage of the global impact that it has had on our families, our businesses and our societies. It is more important now than ever to ensure that IT systems are protected, so that when all of this is behind us, we can get back to business as usual as quickly as possible.

    iSecurity Anti-Ransomware protects organizations against ransomware attacks and other kinds of malware that may access and change business-critical data on your IBM i. It even protects against zero-day attacks. Anti-Viruses can only report on the damage an attack has caused, but not stop it.

    iSecurity Anti-Ransomware has been recently enhanced with a Self-Test feature that allows you to simulate a ransomware attack on your IBM i. The simulated attack is limited to the test folder and cannot harm any other folders or files. This new feature lets organizations see how they are protected against known or unknown ransomware.

    Key Features:

    • Real-time scanning for known and unknown ransomware threats.
    • Blocks and disconnects the intruder.
    • Instantaneously sends alerts to SIEM as well as the offending computer.
    • Self-Test for attack simulation
    • Classification of the attack based on log.
    • Automatic updates with the most current ransomware definitions.

    Contact us at https://www.razlee.com/anti-ransomware

    Share this:

    • Reddit
    • Facebook
    • LinkedIn
    • Twitter
    • Email

    Admin Alert: Diary of a Production System Upgrade, Part 1 PTSS First to Achieve NIST Compliance for DB2/400 Encryption

    Leave a Reply Cancel reply

TFH Volume: 19 Issue: 17

This Issue Sponsored By

    Table of Contents

    • Better Than a Sharp Stick in the i
    • Power7 Blades: The i/DB2 Combo Versus AIX/Oracle
    • EMC Keeps i/OS Business Moving Forward with New IBM Agreement
    • As I See It: Life Logging
    • Global Perspective Requires CIO to Think in Transitional Terms
    • Reader Feedback on RPG Open Access Is No Panacea and As I See It: Depriving the Senses
    • The U.S. Lost Nearly a Quarter Million Tech Jobs in 2009
    • IBM Delivers Deskside HMC Console for PowerVM Management
    • IBM Boosts Dividend and Share Buybacks, What About i Marketing?
    • SMB Customers, BI Projects Lift SAP’s First Quarter

    Content archive

    • The Four Hundred
    • Four Hundred Stuff
    • Four Hundred Guru

    Recent Posts

    • DRV Brings More Automation to IBM i Message Monitoring
    • Managed Cloud Saves Money By Cutting System And People Overprovisioning
    • Multiple Security Vulnerabilities Patched on IBM i
    • Four Hundred Monitor, June 22
    • IBM i PTF Guide, Volume 24, Number 25
    • Plotting A Middle Age Career Change To IBM i
    • What Is Code Transformation Even?
    • Guru: The CALL I’ve Been Waiting For
    • A Frank Solstice
    • The Inevitable Wave Of Power9 Withdrawals Begins

    Subscribe

    To get news from IT Jungle sent to your inbox every week, subscribe to our newsletter.

    Pages

    • About Us
    • Contact
    • Contributors
    • Four Hundred Monitor
    • IBM i PTF Guide
    • Media Kit
    • Subscribe

    Search

    Copyright © 2022 IT Jungle

    loading Cancel
    Post was not sent - check your email addresses!
    Email check failed, please try again
    Sorry, your blog cannot share posts by email.