IBM Names Nabisco’s Gerstner to Reverse Slide

From Associated Press

IBM ended the speculation Friday by naming Louis V. Gerstner Jr. chairman and chief executive. Now, the man who steered the cigarettes-to-cookies RJR Nabisco empire faces daunting tasks: restoring the power, prestige and profitability of the world’s biggest computer company.

First, he needs a crash course in the computer industry.

Gerstner is just the seventh chairman and the first outsider to lead International Business Machines Corp. in its 79 years.

He steps in during an unprecedented restructuring that already has overhauled IBM’s operations, ushered out tens of thousands of workers, and shaken the $65-billion company’s previously unmatched influence and morale.


“I obviously have a lot to learn,” Gerstner said at a news conference broadcast to IBM’s 300,000 employees worldwide. He declined to discuss plans or ideas for IBM, saying he hadn’t even begun working there yet.

Afterward, Gerstner went to the company’s Armonk headquarters, where he conducted a conference call with more than 100 top managers worldwide.

Gerstner’s appointment, which had been expected, pushed up IBM’s stock price. In heavy trading, IBM rose 87 1/2 cents to $51.37 1/2 on the New York Stock Exchange.

Gerstner, who takes over Thursday, succeeds John F. Akers, a 33-year IBM veteran who announced his departure in January, one week after the company reported a $5-billion loss for 1992.


RJR Nabisco moved swiftly to fill its vacancy, naming two top executives, Lawrence Ricciardi and Karl von der Heyden, as co-chairman and chief executive. Gerstner, 51, will remain on RJR Nabisco’s board.

Despite his lack of computer experience, Gerstner is no slouch. A driven, dynamic leader, the cherub-faced Gerstner is described as a quick study, a skill evident when the Harvard MBA was the youngest senior partner at the consulting firm McKinsey & Co. in the 1960s.

Gerstner joined American Express Co. in 1978, ran its core card and travel unit and was president of the parent company before leaving for RJR Nabisco in 1989.

He was chosen Friday after a corporate search unlike any other in American business history. IBM paid two recruiting firms several hundred thousand dollars each to find a new leader, and the process attracted unprecedented attention.

Gerstner was chosen by a panel of seven IBM board members who began with a list of 125 names. Gerstner was code-named Abel during the search because he was the first candidate to speak with panel chairman James E. Burke.

The field narrowed as industry candidates such as Apple Computer’s John Sculley and Motorola’s George Fisher publicly dropped out. Burke said Gerstner was the only person offered the job.

Some observers, including IBM employees, believe the company can’t turn around without a computer expert at the helm. Others say Gerstner’s outside status is just what tradition-bound, bureaucracy-thick IBM needs.

“It’s a strong positive that he doesn’t come with any computer biases,” said Mark Stahlman, a financial adviser who has written about IBM. “They need technical leadership and even visionaries at head of the individual businesses and not in the corner office in Armonk.”