Michael Dell appears to have worked out that the way to his shareholders’ hearts is through their wallets.
So far Dell has yet to see much movement in his company’s fortunes and shareholders have been muttering.
Now it seems that he is going to raise its target on dividends and share buybacks to 20 to 35 percent of free cash flow.
A company spokesperson said that Dell’s corporate software and services business is on track to grow by an average of 10 percent annually until fiscal 2016.
The tin box maker had set a target of 10 to 30 percent and said in a statement it expects an “initial” dividend rate of 32 cents a share annually.
CEO Michael Dell is expected to tell investors at its annual analysts’ conference in Texas that the company is delivering on a strategy of supplying everything from hardware to software for corporate customers, beefing up margins.
After the announcement was made, Dell shares climbed more than three percent to $12.35.
Dell said that it has a cunning plan to build out its data centre, software and services capabilities. In other words, do an IBM and get out of the pure hardware business and get into more lucrative services.
Dell has made $4.9 billion in cash from operations over the past four quarters, and ended fiscal 2013’s first quarter with $17.2 billion in cash and investments.