Taking & Offering Stock

Moving its annual meeting into the Southwest for the first time, IBM last week gathered its stockholders in Houston. The news they heard from the world's leading computer maker was more than big enough to suit the occasion. Chairman Thomas J. Watson Jr. first announced that the company is about to split its stock for the tenth time, this time on a 3-2 basis. Moreover, announced Watson, IBM next month will issue another 1,300,000 shares worth $350 million, will give stockholders first opportunity to buy them. The offering will be the largest underwriting of new stock ever undertaken by any corporation.

IBM's spending plans are due to bullish business. The company has been so successful with its third-generation System/360 that there is now a two-year backlog in orders. IBM wants to speed up deliveries and thus make the 360 even more attractive to future customers; at the same time, the firm needs additional capital because most users take their computers on lease and IBM must write off the cost over a four-to six-year period. Because it intends to spend another $1.5 billion on new facilities and for computer manufacture this year, but is down to $665 million in cash and marketable securities, IBM has settled on the stock issue as a means of raising the necessary money.

Around the U.S. last week, stockholders in other companies heard news that was just as good. Examples:

P: International Telephone and Telegraph Corp. shareholders heartily approved a proposed acquisition of the American Broadcasting Company, which has annual sales of $400 million; the move would raise ITT from 31st largest U.S. corporation to a rank, according to Chairman Harold S. Geneen, "within the top 20."

P: Eastern Airlines announced that after turning a planeload full of red ink into profits last year, it is continuing in the same pattern; for the first quarter of '66, Eastern, under President Floyd Hall, had pretax earnings of $13.8 million, an increase of 21% .

P:Singer Co. heard President Donald P. Kircher predict that on the basis of first-quarter sales of $250 million, up 10%, Singer this year for the first time is likely to join the corporate elite of 55 firms whose sales surpass $1 billion annually.

P: American Express President Howard L. Clark announced that Amexco is about to diversify into corporate underwriting by acquiring, for 79,000 shares of stock, W. H. Morton & Co., a New York City investment banking house specializing in municipal bonds.

P: Ford Motor Co. reported record first-quarter sales of $3.2 billion and profits of $210 million. In contrast, General Motors announced a 6.6% decline in first-quarter earnings to $594 million, due to a drop in unit sales and extra spending on capital improvements and wages.

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