Commentary

IBM Keeps Its Head In The Cloud With Krishna Replacing Rometty As CEO

After eight years of leading IBM through a rocky transition, CEO Ginni Rometty will step down from that role in April but will remain executive chairwoman until the end of 2020. Arvind Krishna, the company’s senior vice president for cloud and cognitive software, will replace  her.

“Krishna becomes the fourth Indian-born head of a prominent U.S. tech company, alongside Satya Nadella of Microsoft, Sundar Pichai of Google and Shantanu Narayen of Adobe. The company also named James Whitehurst, former chief executive of open source software company Red Hat, as president. Whitehurst’s elevation highlights the importance of last year’s $34 billion Red Hat acquisition -- a deal masterminded by Krishna -- in IBM’s efforts to carve out a new strategy in a market increasingly dominated by giants such as Amazon, Microsoft and Google,” Richard Waters writes for Financial Times.

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“IBM Corp. investors are hoping that … Krishna will bring the same relentless focus on the cloud that Satya Nadella brought to help turn around Microsoft Corp.,” writes  Therese Poletti for MarketWatch. “The news that Rometty was being replaced by Krishna “helped fuel a 5% jump in IBM’s stock in after-hours trading.”

“This will be viewed as a long overdue, welcome change at the leadership level,” said Wedbush Securities analyst Moshe Katri. “IBM in the last few years has struggled with competitive positioning and losing relevance in a vastly changing tech landscape.”

“During her eight years at the helm, the Big Blue completed 65 acquisitions, culminating in the $34 billion deal for Red Hat last year -- the biggest purchase in its 108-year history -- while selling some of its legacy businesses,” writes Reuters’ Munsif Vengattil.

Rometty "leaves on a recent high note, days after IBM reported its first revenue growth in six quarters, but shares have lost about a quarter in value since she took charge, and the turnaround she began remains a work in progress,” Vengattil adds.

“Since becoming IBM’s first female CEO in 2012, Rometty had bet the company’s future on the market for hybrid cloud, which allows businesses to store data on both private and public cloud networks run by rivals such as Amazon Web Services and Microsoft Corp.’s Azure. By then Big Blue, once the world leader in technology, had lagged behind competitors for years after largely missing the initial cloud revolution under her predecessor, Sam Palmisano. Having shed its personal computer business in 2005, IBM under Palmisano struggled to position itself as a seller of high-end services, like then-emerging data analytics and cloud computing,” Bloomberg’s Olivia Carville writes.

Rometty, who is 62, “took over as IBM CEO in 2012 at a difficult time. IBM sales fell year-over-year in Ms. Rometty’s first 22 quarters in a row. After a brief three-quarter period of rising sales, they fell again for another six quarters. Sales rose in the latest quarter,” writes  Asa Fitch for The Wall Street Journal

“A native of Chicago, Ms. Rometty rose up IBM’s ranks as an executive in its fast-growing services division in the 1990s under CEO Lou Gerstner, who revived the company by shunning low-margin hardware sales and focusing on IT services and outsourcing. She made her mark under its next CEO, Sam Palmisano, by leading the integration of the consulting arm of PricewaterhouseCoopers LLP, which IBM bought for $3.5 billion for in 2002,” Fitch adds.

“Krishna, 57, is one of IBM’s top executives, having joined the company in 1990…. Earlier in his time at the company Krishna worked on security software and information management, and he is a co-author of 15 patents, according to a biography  on IBM’s website,” writes  CNBC’s Jordan Novet.

“Rometty described Krishna as a ‘brilliant technologist who has played a significant role in developing our key technologies such as artificial intelligence, cloud, quantum computing and blockchain’ as well as a ‘superb operational leader,’” in the release announcing the transition.

“At the time the announcement was made, Ms. Rometty was addressing IBM’s top 300 managers at an annual company leadership conference in downtown Manhattan. She told the assembled executives about the change and shared the stage with Mr. Krishna and Mr. Whitehurst. The three received a lengthy standing ovation, said an IBM manager who attended but was not authorized to speak about the private event,” Steve Lohr reports for The New York Times.

There are more than a few legacy pensioners out there who are no doubt cheering for an IBM turnaround, too.

“IBM said the transition was the culmination of a lengthy succession process that began more than a year ago, with Ms. Rometty collaborating closely with the rest of the IBM board,” Lohr adds.

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