International Business Machines Corp. named Arvind Krishna as chief executive officer, replacing longtime CEO Virginia Rometty.
Krishna, 57, is currently the head of IBM’s cloud and cognitive software unit and was a principal architect of the company’s purchase of Red Hat, which was completed last year. Rometty, 62, will continue as executive chairman and serve through the end of the year when she will retire after almost 40 years with the company, IBM said in a statement Thursday. The shares rose about 5% in extended trading.
Arvind Krishna named as IBM chief executive officer replacing Virginia Rometty
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.
The announcement comes as a “welcome and overdue leadership change,” said Wedbush Securities Inc. analyst Moshe Katri. “At least that’s how we’re looking at it — and obviously the market seems to agree.”
IBM under Palmisano struggled to position itself as a seller of high-end services
Having shed its personal computer business in 2005. However, IBM under Palmisano struggled to position itself as a seller of high-end services. Also, like then-emerging data analytics and cloud computing. Before Rometty took over, IBM’s sales had essentially flat for six years. However, and the company propped up earnings per share through stock buybacks. One of its primary ways of keeping costs in check: shifting jobs offshore, particularly to India.
Rometty embarked on ambitious plans to expand in cloud computing and artificial intelligence. She divested unprofitable businesses and bet big on an AI data-analytics tool called Watson. Yet the efforts were stymied by the emergence of a new competitor in the delivery of computing over the internet: Amazon.com Inc. During one particularly painful several-year stretch, IBM’s sales declined for 17 quarters in a row. For its part, Watson faulted by customers who said it never quite lived up to the hype. The shares lost a quarter of their value from the beginning of 2012 through today.
“If you look at the company under Ginni, it really went through some very challenging times,” Katri said, pointing to the transition from its legacy businesses into newer technologies. “This reflected in its lackluster financial performance.”