IBM has named a new chief executive to replace Ginni Rometty, whose eight-year tenure was marked by the company’s struggles to rebuild itself for the new era of cloud computing.
Arvind Krishna, the head of research and development who a year ago was given a top business role running the company’s cloud and cognitive software operations, is set to become the tenth CEO in IBM’s 106-year history when he takes over on April 6.
The news prompted a bounce of nearly 5 per cent in IBM’s shares in after-market trading on Thursday.
Mr Krishna becomes the fourth Indian-born head of a prominent US 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. Mr Whitehurst’s elevation highlights the importance of last year’s $34bn Red Hat acquisition — a deal masterminded by Mr Krishna — in IBM’s efforts to carve out a new strategy in a market increasingly dominated by giants such as Amazon, Microsoft and Google.
When Ms Rometty, 62, took over in 2012, IBM was riding high on hopes that it had become a dependable profit-generator that would not be disrupted by changes in the tech landscape, prompting a big investment from Warren Buffett’s Berkshire Hathaway.
However, its shares now stand about 25 per cent below the level when Ms Rometty took over, in a period when the broader US stock market has risen more than 150 per cent. Mr Buffett bailed out of his IBM investment two years ago.
IBM’s business started to contract as customers shifted their IT spending to newer cloud services from other companies, leaving Ms Rometty struggling to bring back revenue growth. IBM edged back to growth in its latest quarter, though its sales were still 26 per cent lower than they were in the quarter before Ms Rometty became chief executive.
The change at top follows a lengthy search for a successor by IBM’s board, which is known for its painstaking approach to succession planning. One person familiar with the board’s thinking said it began more than 18 months ago, before Ms Rometty took her biggest gamble with the giant Red Hat deal.
Among those approached were Lisa Su, chief executive of chipmaker AMD though ultimately the company opted for an insider by anointing Mr Krishna, whose recent career trajectory showed he was being groomed as a potential successor.
IBM said Ms Rometty would stay on as executive chairman until the end of the year, echoing the transition in 2012 when she took over from Sam Palmisano.
Moshe Katri, an analyst at Wedbush Securities, called Mr Krishna’s appointment “a welcome, overdue leadership change”, adding that under Ms Rometty, IBM had been “going through a painful, slow transition into becoming relevant in the new technology landscape”.
However, other close observers of IBM’s gave Ms Rometty higher marks for trying to retool IBM’s operations to make it more relevant in the cloud era, including through the acquisition of Red Hat.
“IBM looks a lot better now than it did when she came in, she deserves a lot of credit for that,” said Frank Gens, an analyst at tech research firm IDC.
Longtime board members also paid tribute to Ms Rometty, who was the group’s first female chief executive after joining as a systems engineer in 1981. Ken Chenault, the former executive chairman of American Express who was on the IBM board and is now a Facebook director, said she was “a strong and courageous CEO” who had put the company on the right path.
Business Roundtable chairman Jamie Dimon, the executive chairman of JPMorgan Chase, also praised her “extremely high character and exceptional capabilities — a truly excellent partner and a trusted leader”.