HP, the world's top personal computer maker, and Dell Inc
The company is also casting about for a chief executive to replace Mark Hurd, who resigned as CEO on August 6 after an internal investigation found he had falsified expense reports to conceal a close personal relationship with a female contractor.
Analysts saw the announcement of the buyback as a message to investors that the company is stable and financially strong.
It's trying to demonstrate that it's on solid footing and not drifting without a leader, said Morningstar analyst Michael Holt.
HP interim CEO Cathie Lesjak said in a statement that HP plans to repurchase at least $3 billion worth of shares in its fiscal fourth quarter, which began August 1.
Jeffrey Fidacaro, analyst at Susquehanna Financial Group, said he was encouraged by the announcement and is nudging up his estimates on HP's earnings for the 2011 and 2012 fiscal years.
He now sees 2011 earnings of $5.05 per share, a penny above his earlier forecast, and 2012 profit of $5.57 a share, two cents higher than before.
HP bought back $2.6 billion of its shares in its fiscal third quarter as part of an $8 billion repurchase plan approved in November 2009. Under that authorization, HP had $4.9 billion remaining to buy back its stock as of the end of July.
There is no time limit on either program.
The company, in a statement, said that the additional $10 billion is part of an effort to manage the number of outstanding shares in existence. Programs like employee stock plans tend to increase the overall amount of stock in the market, and HP said the buyback would help counter that dilution.
HP had $14.7 billion of cash and equivalents as July 31, and a current market capitalization of nearly $90 billion.
Shares of HP were up 2.4 percent, at $38.92 in afternoon trade on the New York Stock Exchange.
(Reporting by Jennifer Saba; additional reporting by Liana B. Baker; Editing by Gerald E. McCormick and Steve Orlofsky)