IBM stock worst performer on Dow as Whitehurst steps down as president

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MarketWatch 02 July, 2021 - 01:26pm 23 views

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IBM stock is trading sharply lower Friday after the company announced a management shuffle that included the surprise departure from the company of IBM President and former Red Hat CEO Jim Whitehurst.

IBM CEO Arvind Krishna said in a statement that Whitehurst “has been instrumental in articulating IBM’s strategy, but also, in ensuring that IBM and Red Hat work well together and that our technology platforms and innovations provide more value to our clients.” He will remain a “senior advisor” to IBM’s executive team. 

The company provided no specific reason for Whitehurst’s departure.

IBM also announced that Bridget van Kralingen, Senior VP of Global Markets, is stepping down from her current role. She will serve as Senior VP, Special Projects for a year at which time she will retire from IBM. She’ll be replaced in her previous role by Rob Thomas, currently Senior VP of Cloud and Data Platform.

Evercore ISI analyst Amit Daryanani writes in a research note Friday that the selloff in the shares is not surprising, given that Whitehurst is “a well regarded executive” who has been “instrumental to the company.”

The analyst adds that the announcements “caught investors off guard,” given Whitehurst had been expected to stay with IBM after the pending spin of Kyndryl, the new name for the company’s soon to be independent services business. “Although this is a negative from a headline perspective, we think IBM has a deep senior leadership bench that should enable the company to navigate through key executive transitions,” he writes.

IBM is off 4.3%, to $140.54.

Write to Eric J. Savitz at eric.savitz@barrons.com

IBM stock is trading sharply lower Friday after the company announced a management shuffle that included the surprise departure from the company of IBM President and former Red Hat CEO Jim Whitehurst.

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IBM President Whitehurst Exits in CEO’s Shake-Up; Shares Dip

Yahoo Finance 02 July, 2021 - 04:56pm

The departure marks one of the first major corporate reshuffles under Chief Executive Officer Arvind Krishna, who took the helm last year and has moved quickly to reshape IBM and return it to growth. Whitehurst, 53, is the former CEO of Red Hat Inc., which IBM announced it was acquiring in 2018 in a $33 billion deal orchestrated by Krishna. As CEO, Krishna has focused on fast-growing technologies like artificial intelligence and cloud-computing services in an effort to revive decades of stagnation.

Whitehurst’s departure is one of several management moves IBM announced on Friday. Whitehurst “decided to step down,” IBM said, and he will continue working as a senior adviser. IBM didn’t announce a replacement. IBM shares tumbled 4.8% to $139.83 on the news.

Whitehurst was appointed president last April, the first time in decades that IBM separated the roles of CEO and president. His experience in cloud and cognitive software was viewed as a complement to Krishna, a longtime IBM executive. The former Red Hat chief played a critical role in Krishna’s pivot to a hybrid-cloud strategy which allows customers to store data in private servers and on multiple public clouds. Even amid IBM’s struggle to achieve revenue growth, Red Hat’s performance has remained strong, posting a 17% gain in sales in the first quarter.

Whitehurst’s departure came as a surprise for many analysts who saw it as a negative.

“This feels like a setback given the fact that Jim was expected to have an important role in the transformation initiative of IBM,” said Moshe Katri, an analyst at Wedbush Securities.

Prior to Red Hat, Whitehurst was the chief operating officer at Delta Airlines and was seen as a contender for CEO at IBM before Krishna’s appointment.

Krishna has made a series of changes as he restructures the company. He announced sweeping job cuts in Europe late last year as he prepared to spin off of IBM’s business that manages corporate computer systems so it could focus on the boom in demand for cloud services. Krishna said he expects IBM to return to growth this year.

(Updates with analyst comment in sixth paragraph.)

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“Although this is a negative from a headline perspective, we think IBM has a deep senior leadership bench that should enable the company to navigate through key executive transitions,” one analyst says.

International Business Machines Inc. shares fell Friday after the company announced that Jim Whitehurst was stepping down as president. IBM (IBM) shares were last down 4.5% at $140.28 and were the worst performing stock on the Dow Jones Industrial Average (DJIA) Friday. Whitehurst became IBM president in January 2020, the same time Arvind Krishna was appointed chief executive, after the company’s $34 billion acquisition of Red Hat, which closed in July 2019.

In a surprise announcement today, IBM announced that Jim Whitehurst, who came over in the Red Hat deal, would be stepping down as company president just 14 months after taking over in that role. IBM didn't give a lot of details as to why he was stepping away, but acknowledged his key role in helping bring the 2018 $34 billion Red Hat deal to fruition and helping bring the two companies together after the deal closed. "Jim has been instrumental in articulating IBM’s strategy, but also, in ensuring that IBM and Red Hat work well together and that our technology platforms and innovations provide more value to our clients," the company stated.

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Jim Whitehurst had been the longtime CEO of Red Hat before he took over IBM when the company acquired Red Hat.

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IBM President Jim Whitehurst steps down less than two years after he joined through Red Hat acquisition

CNBC 02 July, 2021 - 04:56pm

IBM stock fell more than 4% on Friday after the enterprise software and hardware maker said that its president, Jim Whitehurst, has chosen to step down.

Whitehurst arrived in 2019 through the $34 billion acquisition of open-source software company Red Hat, IBM's largest acquisition to date, which closed in mid-2019. He had been Red Hat's president and CEO from 2008 until April 2020, when he became IBM's president.

The move reflects a new challenge for IBM, which has pursued growth in part through focusing on deploying Red Hat's products on multiple clouds, including leading providers such as Amazon and Microsoft. Before the deal, IBM promoted its own public-cloud infrastructure to customers, in addition to selling products that companies could deploy in their own data centers.

Arvind Krishna, who replaced Ginni Rometty IBM's CEO since last year, was "a principal architect" of the Red Hat deal, IBM said last year in the announcement about Whitehurst's promotion. The company praised Whitehurst for his execution. "During his tenure at Red Hat, revenue grew over eight times and market capitalization by more than 10 times," IBM said.

In the first quarter Red Hat's revenue grew 17%, while IBM as a whole grew 1%.

WATCH: IBM CEO Arvind Krishna on the company's 'hybrid cloud' strategy

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Jim Whitehurst steps down as president at IBM just 14 months after taking role

TechCrunch 02 July, 2021 - 04:56pm

In a surprise announcement today, IBM announced that Jim Whitehurst, who came over in the Red Hat deal, would be stepping down as company president just 14 months after taking over in that role.

IBM didn’t give a lot of details as to why he was stepping away, but acknowledged his key role in helping bring the 2018 $34 billion Red Hat deal to fruition and helping bring the two companies together after the deal closed. “Jim has been instrumental in articulating IBM’s strategy, but also, in ensuring that IBM and Red Hat work well together and that our technology platforms and innovations provide more value to our clients,” the company stated.

He will stay on as a senior adviser to Krishna, but it begs the question why he is leaving after such a short time in the role, and what he plans to do next. Oftentimes after a deal of this magnitude closes, there is an agreement as to how long key executives will stay. It could be simply that the period has expired and Whitehurst wants to move on, but some saw him as the heir apparent to Krishna and the move comes as a surprise when looked at in that context.

“I am surprised because I always thought Jim would be next in line as IBM CEO. I also liked the pairing between a lifer IBMer and an outsider,” Patrick Moorhead, founder and principal analyst at Moor Insight & Strategies told TechCrunch.

When IBM bought Red Hat in 2018 for $34 billion, it led to a cascading set of changes at both companies. First Ginni Rometty stepped down as CEO at IBM and Arvind Krishna took over. At the same time, Jim Whitehurst, who had been Red Hat CEO moved to IBM as president and long-time employee Paul Cormier moved into his role.

At the same time, the company also announced some other changes including that long-time IBM executive Bridget van Kralingen announced she too was stepping away, leaving her role as senior vice president of global markets. Rob Thomas, who had been senior vice president of IBM cloud and data platform, will step in to replace Van Kraligen.

IBM Shuffles Executive Ranks With Departure of President

The Wall Street Journal 02 July, 2021 - 04:56pm

Mr. Whitehurst, who has held the title of president, will continue to serve as an adviser to the company after his departure, IBM said Friday.

When Arvind Krishna was named chief executive of IBM in January 2020, Mr. Whitehurst became its first president in decades, as the company worked to boost its cloud-computing business.

Mr. Whitehurst was seen as a potential contender for the top job at IBM. The company didn’t name a new president on Friday.

IBM’s shares fell about 4% following the news.

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Whitehurst steps down at IBM but will remain 'senior advisor', CEO says

WRAL Tech Wire 02 July, 2021 - 04:56pm

by WRAL TechWire — July 2, 2021

RESEARCH TRIANGLE PARK – Jim Whitehurst, the former CEO of Red Hat who led the firm through a $34 billion acquisition by IBM and became the No. 2 exec at Big Blue, is stepping down.

CEO Arvind Krishna announced Whitehurst’s decision to leave after three years along with several other changes in a blog post.

IBM stock dropped 4% on the news.

Red Hat had been delivering strong revenue growth as IBM stepped up its cloud sales efforts built around in large part Red Hat software and services.

Whitehurst had been seen as a possible choice as CEO when Ginni Rometty resigned as CEO. Krishna got the job a year ago and has made a host of reorganizational moves since then.

“I’m proud to work as Senior Advisor at IBM, a defining hybrid cloud and AI organization that has changed and improved the world since 1911,” Whitehurst wrote in a LinkedIn post.

Whitehurst led Red Hat as CEO for 12 years. He previously had served as chief operating officer at Delta Airlines.

IBM CEO Arvind Krishna. (Photo by John O’Boyle)

“Jim Whitehurst has played a pivotal role in the IBM and Red Hat integration. In the almost three years since the acquisition was announced, Jim has been instrumental in articulating IBM’s strategy, but also, in ensuring that IBM and Red Hat work well together and that our technology platforms and innovations provide more value to our clients. Jim has decided to step down as IBM President,” Krishna wrote.

“However I am pleased he will continue working as Senior Advisor to me and the rest of the Executive Leadership Team as we continue to evolve our business,” he added.

In outlining the changes, Krishna wrote: “Our hybrid cloud and AI [artificial intelligence] strategy is strongly resonating with clients. I believe we are at a watershed moment in our journey. As the world begins to reopen, IBM has a unique opportunity to be positioned for a new and exciting era of growth, continue to accelerate the rate and pace of execution of our strategy, and strengthen our client-centric culture and our ability to provide technical expertise.”

IBM has said nothing else about the moves other than Krishna’s letter. Red Hat has remained silent.

Bloomberg news assessed the moves this way:

“The move reflects a new challenge for IBM, which has pursued growth in part through focusing on deploying Red Hat’s products on multiple clouds, including leading providers such as Amazon and Microsoft. Before the deal, IBM promoted its own public-cloud infrastructure to customers, in addition to selling products that companies could deploy in their own data centers.”

Jim Whitehurst and Ginni Rometty discuss IBM’s deal for Red Hat on CNBC in 2018.

IBM also is preparing to split off its businesses services group, which has a big presence in RTP, later this year. It will be known as Kyndryl.

No other reasosn were cited for the change.

IBM acquired Red Hat as a move to capitalize on opportunities in cloud computing.

Red Hat is based in Raleigh, and IBM operates one of its largest corporate campuses in RTP.

Krishna also said several other changes are being made. He outlined them as follows:

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IBM's Jim Whitehurst to step down as president

Yahoo Finance 02 July, 2021 - 04:56pm

July 2 (Reuters) - International Business Machines Corp (IBM.N) said on Friday President Jim Whitehurst, who played a major role in Big Blue's $34 billion acquisition of Red Hat two years ago, will step down from his position.

The company did not specify when Whitehurst, who was named President in January 2020, would leave IBM or who would replace him.

Shares of the U.S. technology firm were down nearly 3% in early trading.

Whitehurst, however, will continue to work as senior adviser to Chief Executive Officer Arvind Krishna and the rest of the executive leadership team, IBM said. (https://ibm.co/3h9FiN1)

The company has been restructuring since Krishna took the reins a year ago to focus on cloud computing and artificial intelligence.

Whitehurst, who was the former CEO of Red Hat, was supposed to lead IBM's hybrid cloud strategy.

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IBM 'Shocker:' Jim Whitehurst Is Out As President

CRN 02 July, 2021 - 04:56pm

‘This is a shocker,’ says the CEO of a top IBM partner, who did not want to be identified. ‘I can’t believe Whitehurst is leaving . This came out of nowhere. He was the heir apparent to Arvind. The big question now is who is going to make sure the IBM-Red Hat integration does not go off track? IBM really needs to make sure that the integration remains a top priority.’

Jim Whitehurst, the former Red Hat CEO who came to IBM as part of its $34 billion blockbuster acquisition of the open-source powerhouse, is stepping down suddenly as president of IBM.

Whitehurst, who played a “pivotal role” in the IBM-Red Hat integration, will continue as a “senior advisor” to IBM Chairman and CEO Arvind Krishna and the IBM executive team.

“This is a shocker,” said the CEO of a top IBM partner, who did not want to be identified. “I can’t believe Whitehurst is leaving. This came out of nowhere. He was the heir apparent to Arvind. The big question now is who is going to make sure the IBM-Red Hat integration does not go off track? IBM really needs to make sure that the integration remains a top priority.”

IBM stock declined more than 4 percent on the news and was trading at $140.82 at 11:30 a.m. ET.

Whitehurst’s departure comes just two years after IBM announced the Red Hat acquisition, one of the largest deals in tech history. Whitehurst, who was CEO of Red Hat for 12 years, is widely credited with building the company into an open-source powerhouse that forever changed the technology landscape.

Krishna appointed Whitehurst as IBM president on the very first day he took over as CEO of IBM on April 6, 2020.

Krishna, who announced Whitehurst’s departure as part of a series of leadership changes, insisted IBM’s hybrid cloud and AI strategy is resonating with customers.

“I believe we are at a watershed moment in our journey,” he said in the missive announcing the leadership changes. “As the world begins to reopen, IBM has a unique opportunity to be positioned for a new and exciting era of growth, continue to accelerate the rate and pace of execution of our strategy, and strengthen our client-centric culture and our ability to provide technical expertise. To that end, we are announcing a series of important leadership changes effective immediately.”

Among the other changes are the exit of IBM Senior Vice President of Global Markets Bridget van Kralingen, who will be replaced by IBM Senior Vice President Rob Thomas, who was overseeing the IBM software business.

The changes also include the appointment of Tom Rosamilia, who was overseeing the IBM systems business, to senior vice president of cloud and cognitive software.

In addition, former HPE Senior Vice President of Hybrid IT Ric Lewis is joining IBM as senior vice president of systems and Kelly Chambliss, an 18-year IBM veteran, is being promoted to senior vice president of Americas and strategic sales, global business services.

IBM General Manager of Corporate Strategy Roger Premo, meanwhile, will lead a newly constituted business development team, which integrates corporate strategy and will report to IBM CFO Jim Kavanaugh.

Bob Lord, who has been overseeing an ambitious effort to double IBM’s partner business over the next three to five years, will remain in that position, said Krishna.

“With these changes, I am confident that IBM will be in a stronger position to help our clients and our business thrive,” said Krishna.

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