Shares of International Business Machines Corp. (NYSE:IBM) surged on rumors that activist investor, Carl Icahn, acquired a stake in the company. CNBC’s Scott Wapner looked at the reports, and it turned out that the claims were not correct.
“The rumor mill was running earlier today that Carl Icahn was involved in IBM. The stock had moved as a result of that rumor. I can tell you according to my sources that Mr. Icahn has no involvement whatsoever in IBM,” said Wapner.
Icahn is an activist investor who takes various approaches to push for the enhancement of shareholder value in the companies has a stake.
International Business Machines Corp. (NYSE:IBM) has had a practice that analysts say has in some ways kept away activist investors. The company is generous when it comes to returning value to the shareholders. It buybacks its own shares and also returns money to investors through dividends.
According to The New York Times, since 2000, International Business Machines Corp. (NYSE:IBM) has reportedly returned about $138 billion to shareholders in the form of buybacks and dividend. About $108 billion has been returned to shareholders in the form of buybacks while $30 billion paid out to investors in the form of dividends.
During the same period, International Business Machines Corp. (NYSE:IBM) has reportedly spent just about $59 billion in the form of capital expenditure to boost its operations. It has also spent about $32 billion to make acquisitions. However, it appears to analysts that the company is paying shareholders at the expense of growth, which is not something that inspires many investors.
Revenue at International Business Machines Corp. (NYSE:IBM) has remained stagnant since 2008, which raises questions about the benefits of spending more to please shareholders rather than boosting the business.
“If you want to take a look at shares here again they have been moving higher. International Business Machines Corp. (NYSE:IBM)’s problems have been well-documented over the last several months. The stock has certainly had a slide,” stated Wapner.
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