IBM CEO Sam Palmisano, 60, earlier this year told a reporter
that he wasn't "going anywhere" for the foreseeable future,
implying that he would defy a long held Big Blue tradition that its
leaders step aside upon reaching their sixth decade.
Palmisano, who has overseen one of the longest growth streaks in
IBM history, apparently changed his mind. He said Tuesday that he
will retire as CEO effective Jan. 1, though he will continue to
serve as board chairman.
IBM tapped current global sales head Virginia (Ginni) Rometty,
who formerly led the company's key consulting unit, to replace
Palmisano. Rometty is a big picture type who can also talk details,
and she will come to the job armed with the sales exec's ability to
connect with key customers. She will be the first female CEO for
IBM.
"Ginni Rometty has successfully led several of IBM's most
important businesses over the past decade--from the formation of
IBM Global Business Services to the build-out of our Growth Markets
unit," said Palmisano, in a statement. For her part, Rometty, also
in a statement, said there is "no greater privilege in business
than to be asked to lead IBM."
She will have her work cut out. While IBM has seen steady growth
in earnings over the past several quarters, its top line
performance has been less stellar. Sales were USD 26.16 billion in
the most recent quarter, up just 3 percent year-over-year if gains
from currency are excluded. Much of the increase was driven by
acquisitions.
Rometty's challenge: To find new markets that can reenergize
IBM's top line. The company's middleware group and IT services unit
(whose head, Mike Daniels, was thought to also be in the running
for the CEO job,) are solid performers, but don't hold the
potential of hot new markets like mobility, social media, and
cloud-based business services.
One possibility is that Rometty could break with IBM's
longstanding refusal to enter the applications business. Germany's
SAP, which provides server and Web-based business planning tools,
has long been thought of as an acquisition target for Big Blue
should it enter the apps game.
As for Palmisano, a former sales exec who was known internally
as "the closer", he will leave behind a solid legacy. He succeeded
turnaround specialist Lou Gerstner in 2002 and quickly put his own
stamp on the company--dispatching low-margin, commodity products
like PCs and commercial printers, while aggressively steering IBM
to more profitable lines, such as specialized software that helps
companies quickly analyze and interpret large volumes of business
data. The strategy paid off. Under Palmisano's watch, IBM has seen
a fivefold increase in earnings. And over the course of his tenure,
the company's stock price has roughly doubled to its current price
of about USD182 per share.
IBM shares were roughly unchanged in after hours trading
Tuesday, a sign that investors are confident that the company can
continue to thrive under Rometty.
Source:
InformationWeek USA