IBM Tech Exec to Become a Dell Vice Chairman
By Eric Auchard
NEW YORK (Reuters) - The architect of International Business Machines Corp.'s (NYSE:IBM - news)
rebound in the data storage business has left the company to become a vice chairman at rival Dell
Computer Corp. (NasdaqNM:DELL - news), in the latest of a series of setbacks for the world's largest
computer maker.
James Vanderslice, an IBM senior vice president, head of its Technology Group and point man on
several multi-billion IBM component supply deals this year, will join Dell as one of two vice chairmen
at the world's No. 2 personal computer maker.
William Milton, a computer analyst with Brown Brothers Harriman, said Vanderslice's departure was a
blow to IBM, and a coup for Dell, which, if it maintains its current growth pace, is on track to become
the world's No. 1 PC maker, ahead of the current leader, Compaq Computer Corp. (NYSE:CPQ -
news) , and No. 3 IBM.
''Look at what Vanderslice did for the IBM disk business,'' Milton said. ''He transformed it from
nothing to something.''
In a statement, Dell said Vanderslice would replace Vice Chairman Mort Topfer, who plans to retire
from Dell at the end of 2001, when he will be 65 years old. Topfer joined Dell in 1994 from Motorola
Inc. (NYSE:MOT - news) to manage Dell's world-class PC manufacturing operations.
Separately, IBM said Vanderslice's departure came as a plan to reshuffle several senior executives
was already under way. The company said it would divide Vanderslice's prior responsibilities into two
separate businesses -- technology components and finished high-volume storage systems.
In a show of the importance IBM puts on the fast-growing data storage equipment market, the
Armonk, N.Y.-based company said it had shifted Linda Sanford, the chief of IBM's sales force, to
focus solely on the IBM storage business. Nick Donofrio, the head of IBM's research division, was
named to replace Vanderslice as head of the technology components unit.
''There will be some action in the stocks tomorrow,'' he said, referring to what believed would be
selling pressure on IBM on Tuesday. In recent months, IBM has warned investors to expect slow
growth into early next year, sapping its stock price.
However, in the wake of the news late Monday afternoon, IBM shares inched up a fraction from its
regular session closing price of 110-1/4 on the New York Stock Exchange. Dell shares were
unchanged in after-hours trading on Instinet after closing at 41-3/4 on the Nasdaq stock market, up
3/16 on the day.
Vanderslice, a 30-year IBM veteran, had for the past two years headed IBM's Technology Group,
which is made up of the company's storage systems, computer chip, network hardware and
printer-systems divisions.
Sam Albert, a computer industry consultant based in Scarsdale, N.Y., said naming a heavy-hitting
executive like Sanford to run its high-capacity data storage business, including its recently introduced
Shark systems business, showed how serious IBM was about recapturing its former lead from
faster-growing rivals like EMC Corp. (NYSE:EMC - news)
''Right now there is a concentrated effort to hit EMC between the eyes,'' Albert said. ''It appears that
Linda is the person IBM plans to have shoot the arrows.''
Milton credited Vanderslice with rebuilding IBM's hard disk drive business by speeding the
incorporation of new technology from IBM's pioneering San Jose, Calif., storage research division into
new storage products and by focusing on making selective components rather than commodity drives
themselves.
The strategy thrust IBM ahead of rivals like Seagate Technology Inc. (NYSE:SEG - news), the world's
biggest disk drive maker, in a business where product life cycles last as little as six- to nine-months,
making technology advances crucial.
Vanderslice, 59, will join Dell Chairman and Chief Executive Michael Dell and Kevin Rollins, another
company vice chairman, in the company's three-man Office of the Chief Executive.
The Round Rock, Texas-based company also said it had named Topfer and Sam Nunn, the former
U.S. senator from Georgia and one-time head of the Senate Armed Services Committee, to join Dell's
board of directors. Nunn is now a senior partner in Atlanta law firm King & Spalding.
As head of the IBM Technology Group, Vanderslice had executed a series of high-profile component
supply deals with rival computer makers, including a 7-year, $16 billion component supply pact with
Dell this spring, followed-up by a later $6 billion computer services pact between the two.
In deals totaling more than $30 billion in total, IBM Technology Group has set deals with Cisco
Systems Inc. (NasdaqNM:CSCO - news), the world's leading maker of network equipment, EMC Corp.
(EMC.N), a storage equipment maker and IBM rival, and Japanese video game maker Nintendo Co.
Ltd. (7974.OS).
Earlier Stories
IBM Technology Exec to Become a Dell Vice Chairman (December 13)
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