Monday, February 4, 2002		Article

INTERNATIONAL Business Machines Corp (IBM) said that Chief Executive Louis Gerstner, who led a massive turnaround of the once-ailing computer giant in the 1990s, will step down March 1 and be replaced by President Samuel Palmisano.

Palmisano has been expected to follow in Gerstner's footsteps since being named president and chief operating officer in July of 2000. He retains his title as president.

Gerstner - who caused a storm of controversy soon after taking over in 1993 when he said he had no "vision" for IBM, but nonetheless led it through sweeping changes - will stay on as chairman through the end of 2002.

He joined IBM in April of 1993 and helped push the company to build its services business, which is now its largest division in terms of revenues.

Mr. Palmisano, 50, who joined the company in 1973 and rose to become IBM's president and chief operating officer in 2000, is known as a highly personable executive with a knack for execution, and the capacity to integrate the many facets of IBM's global business.

He also is seen as integral to the Gerstner-led transformation of IBM in the early and mid-1990s, when the company went from near also-ran in a hardware-centric world to a services-based enterprise. Mr. Gerstner was seen as the visionary behind the transformation, while Mr. Palmisano is given credit for day-to-day operations of the global services division, for which he became group executive in 1998.

IBM also said John Thompson, who is vice chairman, will retire from the company and its board on Sept. 1.

Gerstner's departure comes as his contract expires on March 1, which is also his 60th birthday, and after a year in which IBM has booked profits amid the downturn in the economy and technology spending while competitors slid into the red.

That's no coincidence, one analyst said.

"He's going out at a peak ... There's no question about that. The timing is what always happens at IBM. At age 60 give or take a little bit, you get a new CEO. They did what was expected," said Jay Stevens, an analyst at Buckingham Research Group in New York.

Stevens said he didn't expect to see many changes with the new management.

"They've worked together for so many years that I don't think there will be any changes that we can identify right now between what Gerstner did and what Palmisano will be doing. It will be very much the same," Stevens said.

In a memo to IBM's several hundred thousand employees, Gerstner said that his departure isn't related to turning 60.

"There is no rule or age limit that requires me to do this now. I am doing it because I am convinced that the time is right. The company is ready, and so is the new leader," Gerstner wrote.

Noting that "Sam bleeds Blue" -- a reference to "Big Blue," as IBM is called - Gerstner said in the memo that Palmisano "understands the character of our company at its soul, the incredible world-changing things it alone can accomplish - and how it must continue to change in the years ahead."

— Reuters