ACTIONS SOLIDIFY IBM STOCK : SHARE PRICE RISES $8 ON UPBEAT OUTLOOK.

Byline: Chris Newton Associated Press 

International Business Machines Corp. on Tuesday took a combination of actions to bolster its stock price, and investors lost little time snapping up shares of the world's largest computer company.

IBM stock jumped more than 5 percent, rising $8 to $158.37 -1/2 on the New York Stock Exchange. IBM was the biggest gainer in the Dow Jones industrial average, accounting for 25 of the Dow's 179-point gain in a market rally sparked by economic news.

IBM's board agreed to buy back an additional $3.5 billion in common stock, matching its repurchase of last fall and bringing total stock buybacks to nearly $17 billion over the past three years.

IBM also boosted its quarterly dividend by 14 percent. And shareholders at the company's annual meeting in Dallas gave IBM approval to split its stock for the first time in 17 years.

The actions came as Chief Executive Louis V. Gerstner gave an upbeat assessment of future results, saying that new endeavors should keep profits climbing in the near term.

IBM said it would raise its quarterly payout to stockholders to 40 cents per common share from 35 cents. After the stock split, the new dividend is 20 cents a share. But the split will double the number of IBM shares outstanding, with new shares distributed June 10 to shareholders of record May 9.

IBM's dividend increase was less than last year's 40 percent rise, and suggests that IBM will continue to use its free cash to buy back shares, according to John Jones, an analyst with Salomon Brothers Inc. in San Francisco.

In his address to stockholders at the Dallas Convention Center, Gerstner emphasized the company's ``revitalization'' from its financial slump of four years ago, when revenues were slumping and losses piling up. He said a strategic refocus on linking disparate computers has helped rejuvenate demand for its mainstay product - mainframes with the power to run networks of smaller machines.

``We believe the shift to a networked world plays very much to IBM's strengths,'' Gerstner said.

Gerstner also tied IBM's recovery to its services division, which grew more than 25 percent last year, the fourth consecutive year it grew 20 percent or more. Computer services includes consulting, running data centers and developing new systems for large customers.

Gerstner told stockholders that its products and services geared to the Internet continue to give IBM diversity.

``I hope you don't think we're on a Tarzan strategy - swinging from one vine and grabbing another,'' he said. ``Our strength is the breadth and depth of all of our businesses.''

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Photo: GERSTNER