IBM 's board of directors has officially named chief executive
Louis Gerstner's longtime heir apparent, Samuel Palmisano, as the
company's next CEO.
From 1 March, Palmisano will succeed Gerstner, who will remain
chairman of IBM at least until the end of 2002, the company said.
Palmisano, currently IBM's president and chief operating officer
(COO), will remain president.
Palmisano, 50, joined IBM in 1973 as a sales representative and has
climbed steadily within the company during the past three decades.
He became favourite to replace Gerstner when IBM named him its
president and COO in September 2000.
"Sam bleeds Blue," Gerstner wrote, in a letter e-mailed to IBM
employees and released to the media. "He's an exceptional leader,
passionate about our business, committed to our principles and
values, and steeped in the disciplines that are critical to our
successes."
Gerstner, 59, was widely expected to retire when his contract
expires in March. He joined IBM in 1993, and is credited with
leading a turnaround that repositioned the lumbering Big Blue in
the lucrative professional services business.
Gerstner noted that when he joined the company in 1993, the board
"asked me to focus on one short-term objective: save the company.
Given my limited knowledge of IBM at the time, I quite honestly did
not know if that could be done".
Gerstner succeeded in bringing the company back to profitability,
although he had help: "If (chief financial officer Jerry) York had
not been with the company, Gerstner would probably have been fired
in year two," said Giga Information Group analyst Rob Enderle. "He
did the heavy lifting while Gerstner learned the business."
Palmisano has some significant challenges ahead of him, including
steering a mammoth company through a slumping market and repairing
IBM's money-draining PC business.
"Compared to Dell, which is really the big challenger, IBM moves
more slowly and lives on systems that are antiquated. The
information the executives get isn't of the same quality," Enderle
said.
Enderle doesn't expect Palmisano to make any radical changes at
IBM. "I would hope for them, but I don't expect them. That's one of
the problems with an internal [candidate]. You have a relationship
with many of the people you may have to shoot," he said.
Annex Research president Bob Djurdjevic said he also hoped for a
shakeup but did not anticipate one. Gerstner's positive influence
on IBM peaked around 1995, Djurdjevic said.
"He was brought in to stop the haemorrhaging. He did that very
well. However, since then his challenge has been to generate
growth, and in that respect his performance has been pretty
dismal," Djurdjevic said.