Gerstner to log off as IBM chief executive

Published on Wednesday 30 January 2002 00:00

LOUIS GERSTNER, the outsider who guided a remarkable turnaround at IBM, is stepping down as chief executive on March 1.

The timing of the announcement has surprised Wall Street, coming earlier than industry analysts had expected.

But Mr Gerstner’s move was widely foreseen within the company and the computer business, as was the decision by the IBM board to name Samuel J Palmisano, the company’s president, as the new chief executive.

Mr Gerstner turns 60 on March 1, and he had told colleagues he was aiming for that date, with final confirmation expected at the board meeting last night at company headquarters in New York.

Mr Gerstner, who will remain as chairman to advise Mr Palmisano until the end of the year, would not say what he will do next - but he made clear that stepping aside at IBM would not mean retirement.

His interests include public policy and education, as well as business. He had also been mentioned as a possible cabinet member in President George W Bush’s administration.

Mr Gerstner 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.

Once there, however, he helped push the company - which had been focused on large mainframe computers - to build its services business, now its largest division in terms of revenues.

He moved to IBM at a time when the company was hurt by market share losses, repeated restructurings and a more than 30 per cent slump in its stock price.

He leaves after a year in which IBM booked profits despite economic and technology spending downturns that drove competitors into the red and in which its stock price rose sharply.