Samuel Palmisano elected IBM chairman

IBM chief executive officer and president, Samuel Palmisano has been elected as the company's new chairman of the board, effective January 1, 2003.

Palmisano, 51, will succeed Louis Gerstner, 60, who will retire from the company and from the IBM board of directors at the end of this year.

Earlier this year, Palmisano replaced Gerstner as Big Blue's CEO after Gerstner stepped down on his 60th birthday and the day his contract expired on March 1, 2002.

Since succeeding Gerstner, Palmisano has led IBM through its $US3.5 billion acquisition of PricewaterhouseCoopers Consulting in a move that bolsters IBM's services business.

Palmisano also orchestrated the sale of IBM's struggling hard-disk drive business, a realignment of its microelectronics unit, and the outsourcing of desktop PC manufacturing.

Palmisano has been with IBM since 1973 when he joined as a sales representative fresh out of St. John Hopkins University. He has since held leadership roles in virtually all of IBM's operating units, including the services and servers group. He also worked at IBM Japan as its senior managing director of operations.

He became a director of IBM in July 2000 and prior to being appointed CEO earlier this year, Palmisano served as IBM's president and chief operating officer.

End of an era

When Gerstner came on board IBM in 1993, Big Blue was in the midst of its worst financial crisis and on the brink of being broken up by its then-CEO John Akers.

Gerstner caused some controversy in his early days when he said he had no "vision" for IBM, yet managed to clean up the books by laying off tens of thousands of employees, implementing disciplined cost controls and by selling or shutting down low-margin or money-losing business lines, such as networking and enterprise applications.

In an opinion piece in sister title Network World assessing the Gerstner era, Frank Dzubeck, president of US industry analysis firm Communications Network Architects, said that Gerstner's tenure at IBM can be best described by the phrase "in like a lion, out like a lamb."

According to Dzubeck, as an industry outsider, Gerstner first had to get an education on the state of IBM's businesses, assets, personnel and - most importantly - customer and investment banker opinions as to what was wrong or right within the company.

Next, he had to identify which key executives had the technology knowledge and skills required to adapt to his way of conducting business.

Simultaneously, Gerstner brought in key lieutenants to become his "appendages" in the company's day-to-day operations.

Reports earlier this year claimed that despite Gerstner stepping down as chairman he was expected to stick around with IBM amending his contract to include a 10-year consulting agreement to take effect after his retirement.

Of the new chairman, Dzubeck said Palmisano has proved his business acumen by guiding IBM from being an upstart player in the services industry to the dominant force, producing $US40 billion a year in revenue.

As of January 1, 2003, Palmisano's title will be IBM chairman, president and chief executive officer.

Kathleen Ohlson, Network World Fusion US, Frank Dzubeck and Ann Bednarz Network World US contributed to this story.

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