WOMEN SPECIAL.... IBM WILL HAVE THE FIRST FEMALE CEO

IBM’s Rometty is Co’s First Female CEO

Virginia ‘Ginni’ Rometty to succeed CEO Sam Palmisano in January

International Business Machines' (IBM) Virginia ‘Ginni’ Rometty has grown throughout her career by taking on challenges she’s never faced before. Now she’ll tackle something no one has ever done.

Rometty, 54, will become the first female chief executive officer in IBM’s 100-year history.

The Armonk, New York-based company said she will succeed Sam Palmisano in the role effective January 1. Palmisano, who has been CEO since 2002, will remain chairman.

In an interview, Rometty said she has grown the most in her career through “experiential” learning. “I learned to always take on things I'd never done before,” she said. She takes the reins as steady profit growth pushes IBM shares this year to the highest level since the company went public in 1915. Her experience in sales, services and acquisitions fits with the strategic direction set by Palmisano, who said last year the company will add $20 billion to revenue between 2010 and 2015 by expanding in markets such as cloud computing and analytics.

Rometty made it clear she would follow the road map the company has laid out because she helped construct it. “I've been head of strategy at IBM and together with my colleagues built our five-year plan,” she said. “My priorities are going to be to continue to execute on that.”

The 30-year IBM veteran caught Palmisano’s attention in 2002 when she helped integrate the $3.9-billion acquisition of PwC Consulting, IBM’s largest deal ever at the time. Rometty, then a general manager of the consulting unit, said she knew from the start the acquisition would be challenging. “It was the first and only time a professional services firm of that size has been integrated into another large company,” she said.

Rometty is credited with helping retain PwC’s principal consultants, who didn’t always mesh with IBM’s cost-cutting culture. When Palmisano wanted to cut travel budgets, making consultants stay at Holiday Inns, she helped them fight — and win, said Ric Andersen, a former PwC consultant who joined IBM in the deal.

Palmisano promoted her to senior vice president of the group in 2005, and she boosted profit at the unit 42% in her first two years on the job. During her three decades at IBM, she became known as a polished executive who can close a sale, expanding relationships with companies from State Farm Insurance to Prudential Financial.

“She’s an engaging woman — great with customers,” said Fred Amoroso, who was her boss in the financial-services consulting division during the 1990s. “Customers just love Ginni.” Amid the recession, Palmisano put her in charge of running the company’s almost $100 billion in sales.

Last year, she added marketing and strategy to her responsibilities.

“She is more than a superb operational executive,” Palmisano said in the statement. “With every leadership role, she has strengthened our ability to integrate IBM's capabilities for our clients.”

The succession at IBM has been the result of careful, long- term planning by the company’s board, said Rosabeth Kanter, a Harvard Business School professor who knows Rometty and other IBM executives. Rometty not only held many key positions at IBM during her career, she also has received mentoring and exposure to global leaders important to IBM’s future, she said. “In contrast to other companies that have abruptly named new CEOs recently, such as Hewlett-Packard, IBM handled this very smoothly over several years,” Kanter said in an interview.

Palmisano turned 60 in July, the age at which three of the past four IBM chiefs have stepped down. He's IBM's longest- serving CEO who doesn't share the surname of the company's founder, Thomas J. Watson. He will leave a business vastly different than the one he took over. In his first year at the helm, he bought PwC Consulting, and two years later, he sold off the PC business. Those moves coupled with more than $25 billion in software acquisitions helped Palmisano realign what was once the largest computer company into a services and software powerhouse. The maneuvers made the company predictably profitable, boosting per-share profit for more than 30 straight quarters. Since 2001, Palmisano's boosted sales by 20%, while keeping costs of the 4,26,000-employee behemoth little changed.
( CAROL HYMOWITZ & SARAH FRIER NEW YORK ET27OCT11)