IBM Reportedly Plans Big Shakeup
International Business Machines, apparently unsatisfied with its financial performance, is planning to reshuffle its top management and name a new president, industry analysts said Wednesday.
But an IBM spokesman called the reports “speculation filled with error.” He added, “It’s rumor and we won’t participate in speculation.”
The changes at IBM predicted by analysts, in which some key executives would be reassigned and others promoted, could be announced as soon as today, sources said.
There was also speculation among stock traders that IBM would accelerate its stock repurchase program to prop up its stock price.
One analyst said IBM’s use of the phrase “speculation filled with error” suggested that the rumors might be at least partially true and that some changes may be in the works.
“I’m a bit surprised by the way they responded,” he said.
Analysts said the rumors, which have been circulating throughout IBM for some time, initially boosted stock of the world’s largest computer company by nearly $3 a share. However, IBM closed up only 87.5 cents at $112.75 in New York Stock Exchange trading.
Analysts said a management shakeup may be accompanied by a new wave of business restructurings and early retirement plans similar to those IBM has used in the past two years to cut its work force by 16,000 and redeploy 21,000 workers.
Behind the changes, they said, is the company’s continuing frustration with its financial results. “Let’s face it, they didn’t have a big 1987 and Akers wants to send a message to the troops,” said a Wall Street analyst, referring to IBM Chairman John F. Akers.
Last week, IBM reported a 50% jump in fourth-quarter earnings and its first annual profit increase since 1984. Yet the results were met with disappointment as analysts calculated that the gain came largely from lower taxes, the weak dollar and cost cutting. They were also concerned that IBM’s sales rose only 5.8% for the year and actually fell once currency translations were removed.
IBM, however, put the year in a positive light. “These results demonstrate that our continuing efforts to make IBM more competitive are beginning to pay off,” Akers said in IBM’s fourth-quarter report.
The rumors Wednesday focused on the imminent promotion of Executive Vice President Jack D. Kuehler to the post of president, traditionally a grooming spot for the chairman’s successor. But an IBM spokesman told Reuters that such speculation is “inaccurate.”
Indeed, several analysts said Kuehler, 55, was an unlikely candidate because he would be ready to retire before Akers, now 53, stepped down. Akers also holds the titles of president and chief executive, but analysts say he may be ready to give up one of the posts.
They said a more probable choice was Michael Armstrong, 49, senior vice president in charge of IBM’s European, Middle East and African operations.
