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Palmisano named IBM chief
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January 29, 2002: 1:12 p.m. ET
Company veteran will succeed Louis Gerstner in top executive spot.
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NEW YORK (CNN/Money) - IBM on Tuesday said it has named Samuel J. Palmisano its CEO, effective March 1.
Currently president and chief operating officer, Palmisano will succeed Louis V. Gerstner, Jr., who will remain IBM's chairman through the end of this year.
Palmisano, 50, joined IBM in 1973. He was named to his current position and became the heir apparent in July 2000. Before that, he held a number of positions, most recently general manager of IBM's server and enterprise storage business.
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Sam Palmisano | |
He also was the IBM executive who spearheaded the company's initiative to deploy Linux, the open-source operating system software, across all of IBM's server products.
Gerstner, who turns 60 this year, has served as IBM's top executive since 1993. He follows in a long tradition of Big Blue CEOs retiring at age 60 and leaves behind a business that has been substantially reshaped under his watch.
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CNNfn's Chris Huntington with more on IBM's new CEO.
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Since he took the helm at IBM, Gerstner has transformed the company from its traditional role as a "box-builder" into a provider of technology, services and software.
While IBM is still the world's largest supplier of computer hardware, it also now has the world's largest technology services business, which currently accounts for about 35 percent of its total revenue.
Shares of IBM (IBM: down $3.72 to $104.43, Research, Estimates) had been trading about $2 lower prior to the announcement but fell sharply shortly afterward.
"Over the last decade, Sam Palmisano has taken on a number of IBM's most significant challenges, from building the services business to transforming our server line," Gerstner said in a statement.
"In each instance, Sam has done far more than manage operations effectively," Gerstner added. "He has made it both his personal mission and that of IBM to become the number one competitor in each of these markets. Sam's unique mix of strategic vision, passion and discipline, combined with his intimate understanding of IBM, make him the right person to become IBM's next CEO."
In recent public addresses, Palmisano has suggested that he would continue in Gerstner's path, shifting the company's focus away from commodity computer hardware businesses and keying in on more profitable areas such as services.
At the company's analyst meeting last November, he highlighted IBM's strategic outsourcing and services businesses and pointed out the company's struggles in areas such as personal computers.
Separately on Tuesday, IBM announced that John M. Thompson will resign his post as Big Blue's vice chairman on Sept. 1.
Thompson, 59, currently is responsible for identifying and cultivating major growth initiatives and oversees IBM's worldwide business and technology strategy.
His recent projects included building IBM's software group into a $13 billion business. He also managed IBM's acquisitions of software makers Lotus Development Corp. and Tivoli Systems. 
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