After IBM stunned Wall Street with an unexpected first-quarter earnings shortfall April 14, Wall Street stunned the company right back by...

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After IBM stunned Wall Street with an unexpected first-quarter earnings shortfall April 14, Wall Street stunned the company right back by lopping 14 percent off its stock price over four days.

Two weeks ago, IBM tried a different kind of shock treatment on the investment community: It announced its biggest stock-buyback program. IBM said its board approved using $5 billion to buy back shares on the open market or in private transactions over time.

Assuming the idea was to boost the stock price, the record-buyback news may have worked. IBM shares ended that week at $76.38, up nearly 3 percent for the five days. (It closed Friday at $73.16.)

Stock-buyback announcements have been a favorite tool when corporate managers have felt the need to show they’re looking out for shareholders’ interests. But experienced investors know that sometimes there is less to buyback programs than meets the eye.

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David Dreman, a veteran investor who heads Dreman Value Management in Jersey City, N.J., says buybacks are “almost a white flag” from corporate officers, an admission they can’t find anything better to do with shareholders’ capital.

When they work as advertised, buybacks take stock out of the market. The net result is that a company’s shareholders own bigger pieces of the pie.

Some companies, including IBM, have reduced their total share counts in recent years. And a number of academic studies say buybacks are a good leading indicator of above-average stock performance.