IBM Names Successor to Retiring Chief of Its Hardware Unit

IBM Corp. said Sam Palmisano, the head of its largest business, computer services, will replace the retiring chief of its computer hardware business. Robert Stephenson, 61, a 38-year IBM veteran who also once led the company’s personal computer business, will retire at the end of 1999. Palmisano, 48, will take over the IBM Server Group, which builds IBM’s powerful mainframes, minicomputers, workstations and personal computer servers, on Oct. 1, the company said. Doug Elix, now the general manager of IBM Global Services Americas, will replace Palmisano as group executive of IBM Global Services, IBM’s business unit. Combined, the two businesses affected by the executive changes generated half of IBM’s $82 billion in 1998 revenue.

Palmisano played an active role during the last six years in engineering a turnaround at the computer maker, whose core mainframe business was seen by many analysts earlier in the decade as going the way of the dinosaurs.

The management shuffle helped fuel a rebound in IBM shares after a drop Friday, when the stock was hit by investor fears about possible slowing growth in the mainframe business Palmisano will now lead. IBM closed up $4.75 at $130.13 on the New York Stock Exchange.