IBM: Cash is king
Wall Street has been drawn to tech companies during the recession because of their huge pools of cash and lack of debt. IBM (IBM) just proved the point of how valuable all that cash is by raising its dividend.
The big tech company showed that it can be a port in the stormy market by raising its dividend by 10 percent, to $0.55. Shareholders of record as of May 8 will qualify for the new payout.
Apparently IBM did not think the dividend increase was enough of an attraction in and of itself, so it upped the amount available to buy back its own shares by $3 billion, giving it a total of $6.7 billion available for that purpose.
IBM may have good reasons to believe that its shares are cheap. The stock trades at about $100, down from a 52-week high of almost $134. The firm has a market cap of $133 billion and $13 billion in cash on its balance sheet for which it appears to have no immediate need.
If the stock market stays down and companies continue to cut dividends at what appears to be a record pace, the one thing that may recommend big tech is if it decides to follow IBM's example and give cash back to shareholders.
Are they listening over at Apple (AAPL)?
Douglas A . McIntyre is an editor at 24/7 Wall St.