Tony..I told you so..illegal manipulation..the pros loaded up on the weak hands last friday.....also..Exec shuffle bodes well for IBM
By Reuters
Special to CNET News.com
September 20, 1999, 6:10 p.m. PT
NEW YORK-- IBM said today that Sam Palmisano, the rising star head of its largest
business--computer services--would replace the retiring head of its computer
hardware business.
In a letter to employees, IBM said Robert Stephenson, 61, a 38-year IBM veteran who also
once led the company's personal computer business, will retire at the end of 1999.
The company said that on October 1, the 48-year-old Palmisano will take over the IBM
Server Group, a $10.5 billion annual business that builds the powerful mainframes,
minicomputers, workstations, and personal-computer
servers for the world's largest computer maker.
The management shuffle helped fuel a 5.5-point rebound in
IBM shares today after a sell-off of more than 4.5 points
Friday, when the stock was hit by investor fears over
possible slowing growth in the mainframe business
Palmisano will now lead. IBM shares closed at 130.88 on
the New York Stock Exchange, where it was the fourth
most actively traded issue.
"Bob first told me about his intention to retire this past
January," IBM Chief Executive Louis Gerstner said in the
letter to staff. "I asked him to stay on until we could work
out a transition plan, and--always the team player--Bob
agreed."
Doug Elix, now the general manager of IBM Global Services Americas, will replace
Palmisano as group executive of IBM Global Services, the $28.9 billion business unit of the
Armonk, New York-company that is the world's largest provider of computer services and
technical consulting. He also takes the job October 1.
Combined, the two businesses affected by the executive changes generated fully half of
IBM's $82 billion in 1998 revenues.
Sam Albert, a former IBM marketing executive-turned-industry consultant, said Palmisano,
a 26-year IBM veteran, has taken a leading role within the company in carrying out
Gerstner's key strategies.
"He's proven time and time again to Gerstner that if he needs something to be
strengthened, Sam Palmisano is the guy to turn to," Albert said.
Palmisano played an active role in helping engineer a turnaround over the past six years at
the computer maker, whose core mainframe business was seen by many analysts earlier
in the decade as in danger of going the way of the dinosaurs.
Under Gerstner, aged 57, Palmisano has run IBM's personal computer business, then
global services, and now servers, which is seeing a growth revival amid an explosion in
demand for computers that are used to manage business via the Internet.
Palmisano is unusual among long-time IBM executives in that he has won a place in the
inner circle of advisors to Gerstner, who has tended to rely more on a small group of
long-time business associates who worked with him at other companies he led before he
joined IBM in March 1993.
In his new role, Palmisano is circling back to familiar territory, having helped lead the 1988
introduction of IBM's venerable but now aging line of AS/400 minicomputers used to run
key operations at medium-sized businesses, Albert noted.
Besides taking charge of Global Services, Elix, an Australian, will join the Corporate
Executive Committee, IBM's top management team, and the group formally charged with
advising Gerstner on strategy. Palmisano joined the committee in 1997.
Elix joined IBM in 1969, and has served in a variety of roles in Australia, the Asia/Pacific
region, and the Americas. In taking charge of IBM Global Services, he will head an
organization with 130,000 employees, double the number he led as head of IBM's
consulting business in the Americas.
Under Stephenson, IBM's mainframe business picked up 10 points of market share against
traditional rivals like Fujitsu's Amdahl unit and Hitachi, a spokesman said. But
minicomputers have recently acted as a drag on overall growth of the business.
He also was behind the development of Project Monterey, a multi-company effort to unify
various types of UNIX software into a single system for running business computer
systems.
Story Copyright © 1999 Reuters Limited. All rights reserved.
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