[valuearb]

It's a good policy to buy back stock whenever you have excess cash flow and the stock is undervalued compared to your other investment options. An example might be your stock has a PE ratio of 8, so it's yielding 12.5% and your other options look to yield 10% or less.

Of course I'm not saying IBM is right, or undervalued. If profits are falling a 12% yield might be a 6% yield before you know it, that's why valuations are more complex than my simplistic example. And many companies do buybacks to juice stock prices for the execs options, regardless of value, so it's not a grant signal.