What a price management is! - IBM’s dividends publish and buyback

Dividends should be the directly income of investing in the stocks for the general investors, and the news on the dividend publishing could always be communicated to the market and incent the share price in the market. The general investors could consider their high dividends and decide join their business. Moreover, buyback should be another action to put up their share price. And the shares from the buyback would be saved as the treasury shares. And this should be used to reduce the pressure of managers in the company. In that case, at the same level of profit, their EPS would be increased. Another reason these two actions could calm down the investors, before the company does some risky acquisition or investment. Indeed, the money could let the investors forget the risk in the future. However, it should be really considered carefully, for these actions are like squeezing the value. When the company faces the troubles, it will not keep that price, and the wealth of investors could be condensed faster that how you imagine.

On 27^th April 2012, IBM published their dividend, and they promised to raise the return of investment for the general investors, and at the same time, the BOD approved $7 billion to buyback their shares in the market, for the top bosses of IBM feel so good about its financial prospects. High dividends and buyback are increased the price sharply. And I think at this moment, the managers of IBM should be one of the happiest in the market. Their pressure has been reduced. And for IBM, because of their top market position, unless the market has been destroyed, what they do now is withdraw their future expectation. To balance the risks, they company keeps to acquire new company and investment since 2000 to increase their size and capital amount. What a brilliant action for a company is! However, there is a truly risk existing. The American government has been aware of their monopoly position in the market, the future is uncertain.

Since 2000, it keeps use this method to push up the price, it is still a great risk for this action. Indeed, the market room has been created again and again, but it does not mean this could be used forever. When the acquisition and investment are stopped, the managers should face up with a great-accumulated pressure! That would be a disaster for IBM.