IBM’s Top Cloud Expert Suddenly Resigns, Shares Dip To 5-Month Low (But Why?)
In the latest development, the International Business Machines Corp.(IBM) President Jim Whitehurst is stepping down after serving for three years at the century-old technology company, affecting shares as they fell the most in five months.
It looks like the first major corporate reshuffles under Chief Executive Officer Arvind Krishna.
As he took the helm last year and has moved quickly to reshape IBM and return it to growth.
Mr. Whitehurst, 53, was acquired by IBM in 2018 in a $33 billion deal orchestrated by Krishna, is the former CEO of Red Hat Inc.
In an effort to revive decades of stagnation, the CEO, Krishna has focused on fast-growing technologies like artificial intelligence and cloud-computing services.
On Friday, several management moves were announced by IBM announced and Whitehurst’s departure is one of them.
According to IBM, Whitehurst “decided to step down,” as he will continue working as a senior adviser.
Changes Affecting IBM Shares
So far, IBM didn’t announce a replacement for the position. But this move definitely affected IBM shares, as they tumbled by 4.8% to $139.83 on the news.
Last April, the first time in decades that IBM separated the roles of CEO and president with the appointment of Whitehurst as president.
At that time, his experience in cloud and cognitive software was viewed as a complement to Krishna, a longtime IBM executive.
Apart from that, Whitehurst played a critical role in Krishna’s pivot to a hybrid-cloud strategy allowing customers to store data in private servers and on multiple public clouds.
Surprise For Analysts
When IBM struggle to achieve revenue growth, Red Hat’s performance has remained strong, posting a 17% gain in sales in the first quarter.
That is why, Whitehurst’s departure came as a surprise for many analysts and they saw it as a negative.
An analyst at Wedbush Securities, Moshe Katri said, “this feels like a setback given the fact that Jim was expected to have an important role in the transformation initiative of IBM,”.
Before Red Hat, Whitehurst was the chief operating officer at Delta Airlines and was seen as a contender for CEO at IBM before Krishna’s appointment.