IBM makes major changes to executive leadership

Written by Ruby Hinchliffe
31st January 2020

IBM has announced that its first female CEO Virginia (Ginni) Rometty, 62, is retiring at the end of 2020 after nearly 40 years with the New York-headquartered information technology company.

New CEO Arvind Krishna, 57, will take the helm, previously head of IBM’s cloud and cognitive software unit. Krishna is understood to be the principal architect of the company’s purchase of Red Hat, and Rometty describes him as a “brilliant technologist”. Jim Whitehurst, former CEO of the recently acquired Red Hat, will also take over as IBM’s president.

New CEO Arvind Krishna at IBM’s 2019 5 in 5 Science Slam at Think

During Rometty’s tenure, IBM’s stock declined by about 25% according to Silicon Angle, but following the news of her departure shares rose about 5%. When Rometty become CEO in 2012, she was heading up a company which had seen sales fall flat for six years and heavily relied on its low-cost India outsourcing model, according to Bloomberg.

She wanted to expand into cloud computing and artificial intelligence, so she divested unprofitable businesses and invested IBM in the hybrid cloud market. AI data-analytics tool Watson and IBM’s Cloud became the company’s trademark offerings.

This proved to be a more difficult move than it seemed when Amazon entered the internet computing market. IBM’s sales saw more hard times, declining for 17 quarters in a row at one point.

“If you look at the company under Ginni, it really went through some very challenging times,” Wedbush Securities analyst Moshe Katri tells Bloomberg. “This is reflected in its lackluster financial performance.”

Former CEO Virginia (Ginni) Rometty

In 2018, Rometty decided to acquire open source software provider Red Hat for $34 billion – the largest acquisition in the company’s history – to reinvigorate the business and and prevent it from being drowned out be younger tech giants. But according to Bloomberg, today sales are still down more than a quarter since the end of 2012.

“IBM’s election of Arvind Krishna as its next CEO signals that the company wanted to maintain continuity of succession and hire from within, while at the same time promoting new blood in the form of Jim Whitehurst to assist in the transformation of the company,” says analyst Dave Vellante from Wikbon.