IBM's Super Split

Few things cheer shareholders like a stock split, and last week few share holders were as cheery as IBM's. At their annual meeting in Boston, 2,300 of the faithful (of a 359,495 total) heard Chairman Thomas J. Watson Jr. announce stockholder approval of the eleventh split in the company's 57 years.

Holders of IBM's 60 million shares will get one additional share for each one they hold, making it the biggest stock distribution in U.S. history.

IBM's split will help ensure a lively market in its stock by keeping per-share prices within reach of ordinary investors. Lately, that reach had be come a stretch. Long the highest priced issue traded on the New York Stock Exchange, IBM in the past 20 months had swept from $320 to $677.50 by last week's meeting. Even after the split takes effect this week, IBM will still be competing for top-price honors with the Big Board's current second most expensive stock, Corning Glass Works, which closed last week at $362.

Why do the buyers reach for IBM?

Not for dividends, to be sure. At cur rent prices IBM's annual dividends ($4.35 last year) amount to a mere .7% return on investment, against 4% for other manufacturing stocks and 5% for bank savings accounts. But growth is something else again. As a result of splits--including this week's--and other distributions, a 100-share investment in 1914, which would have cost $2,750, has grown to 59,320 shares worth more than $20 million.

Wall Street seemed sure that the lat est split--like the six others in the past eleven years--was not about to break the trend. Having risen $63 between the board's January proposal of the split and last week's stockholders' meeting, IBM's stock jumped another $10.50 in four days to close the week at a record $688--an extraordinary 59 times 1967 earnings. And why not? After the last split, a 3-for-2 deal in 1966, when the stock was trading around $370, IBM shares took only eight months to 1) weather the worst general market break in four years and 2) climb past its pre-split price.

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