EMC, the world’s biggest maker of storage computers, expanded its share buyback plan by $5 billion and started a quarterly dividend to return cash to investors as customers restrain spending.

The stock repurchase program was increased to $6 billion over the three years ending in 2015, the Hopkinton, Massachusetts-based company said today in a statement. EMC (NYSE: EMC) also initiated a dividend of 10 cents a share, for an indicated yield of 1.6 percent, according to data compiled by Bloomberg.

To boost its server business, EMC recently launched a joint venture with Lenovo, the world’s No. 2 largest PC manufacturer.

Across the Triangle, EMC maintains research and development as well as manufacturing operations. 

EMC’s shares have lost more than 75 percent from a peak in 2000, and Chief Executive Officer Joseph Tucci is struggling to revive growth as corporations and governments curb storage- computer purchases amid an uncertain economic outlook. NetApp Inc., a competing data-storage provider, and Symantec Corp., a security-software maker, also initiated dividends this month.

“Tucci and his team look every day at the stock languishing,” Daniel Ives, an analyst at FBR Capital Markets, said in an interview. “This is a huge opportunity for them to buy the stock at attractive prices.”

In a statement, Tucci hailed the move.

“EMC has a long track record of creating value by aggressively investing in the business. Looking forward, the opportunity for EMC’s continued success has never been better,” he said. “Our strategy focused on Cloud Computing, Big Data and Trusted IT has been embraced by customers and the market, and we continue to execute extremely well. This, combined with our financial strength, enables us to continue to invest wisely in promising opportunities and also expand returns to shareholders.”

Added David Goulden, EMC’s president and chief operating officer:

“Our confidence in EMC’s business model and the strength of our operational performance and free cash flow enable us to expand our capital allocation strategy in meaningful and lasting ways. We are pleased to be able to augment the strategic investments in our business with increased returns to shareholders. Shareholders will benefit from what we’ve announced today and share in our ongoing success through our long-term plan to return approximately 50% of EMC (excluding VMware) free cash flow through a combination of buybacks and dividends.”

The shares rose 5.4 percent to $24.93 at the close in New York. The stock has dropped 1.5 percent this year, compared with a 16 percent gain from the Standard & Poor’s 500 Index.

‘Well Received’

Tucci’s move to return more cash to investors comes a month after Apple Inc., the world’s biggest technology company, boosted its quarterly dividend and alloted more cash to buybacks, announcing plans to borrow funds for what it called the largest share-repurchase program in corporate history.

In March, Qualcomm Inc., the largest seller of semiconductors for mobile phones, boosted its dividend by 40 percent and set up a $5 billion stock-buyback plan.

For EMC, results at its VMware Inc. subsidiary added pressure to consider returning cash to investors. VMware last month forecast second-quarter sales that fell short of analysts’ projections as U.S. companies and federal agencies curbed technology investments.

“We have been strong proponents of a more shareholder friendly capital allocation program and believe the new strategy will be well-received,” Brian Marshall, an analyst at analyst at ISI Group, wrote in a research report today.

New Products

EMC is introducing new products, such as its ViPR software, as corporate customers slow purchases of expensive data-storage computers and look for ways to easily manage rapidly mounting caches of information. Chief Financial Officer David Goulden said in March that EMC will boost revenue by at least 8 percent a year through 2016 as it increases market share.

The quarterly dividend will be paid on July 23 to shareholders of record as of the close on July 1, EMC said today. About $3.5 billion of common stock will be bought by the end of the second quarter next year.

EMC also plans to add debt to its capital structure in the near term, while continuing to maintain a “strong investment- grade profile” and a balance sheet that provides the financial flexibility to pursue its strategic objectives, according to the statement.
The company has a market value of about $49.7 billion, and had cash and short term investments of $6.53 billion as of March 31, according to data compiled by Bloomberg.