Investors pressured technology companies for larger buybacks after earnings improved earlier this decade from a slump spurred by the collapse of spending by Internet companies.
International Business Machines Corp. added $15 billion to its stock buyback program, the most ever, and raised its dividend 33 percent to reward shareholders as profit expands. (IBM has announced buybacks of at least $3.5 billion annually since 2003). IBM plans to take on debt to finance much of the buyback and probably won't be able to sustain this repurchase level in the future. Net income will be negatively affected because of interest costs for the increased debt
Microsoft Corp. boosted its buyback program to $36 billion over five years. It combined the unused funds from a tender offer into its regular buyback.
Hewlett-Packard Co., the world's largest maker of personal computers, announced an $8 billion stock repurchase plan, its largest ever.
Nokia Oyj, the top mobile-phone maker, plans to buy back 380 million shares at about 4 billion euros ($5.44 billion) in 2007.
Leaner meaner business machines may be greater. And if debt taken for buyback programs raises the cost of capital, the benefit to shareholders repaid at a high share price are evened out by the burden of the interest on debt borne by the remaining shareholders.
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