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The New York Times

August 15, 2001

Waiting to Call Plays for IBM

By BARNABY FEDDER

Here are some excerpts from the Aug. 15 New York Times story on the succession rites at IBM, where Sam Palmisano is widely expected to be the next Big Blue Boss. For the full article, click on the Times URL at the end.

Big Blue is moving toward the retirement of Louis V. Gerstner Jr., its chairman and chief executive since 1993, in an exceptionally methodical fashion.

The appointment of Samuel J. Palmisano nearly a year ago to president and chief operating officer made him the clear front-runner to succeed Mr. Gerstner. In May, Mr. Gerstner made his thinking explicit when he said during a television interview that Mr. Palmisano was "emerging as the leader" of the management team that would "take I.B.M. to the future."

Mr. Palmisano, who joined I.B.M. right out of college in 1973, is one of a cadre of top executives who proved flexible enough to thrive in both the old I.B.M., with its legendary buttoned-down bureaucracy, and the higher velocity, hard-edged corporate culture that emerged under Mr. Gerstner during the 1990's. Notably, according to I.B.M. watchers, he managed to hang on to his nice-guy reputation during that cultural revolution and his climb toward the top. [...]

But Mr. Palmisano, who at 6-foot-2 played center and was co-captain of the Johns Hopkins University football team during his college days, is not known as Mr. Gerstner is for screaming or angry outbursts calculated to intimidate employees, consultants or critics. "The first attribute that comes to mind with Palmisano is `nice guy,'" said Bob Djurdjevic, president of Annex Research in Phoenix, who is one of I.B.M.'s most unstinting and caustic critics.

[...]

Yet skeptics say that Mr. Palmisano's accomplishments are also testimony to his skills as a corporate politician Mr. Djurdjevic calls him "Teflon Sam" and his fortunate arrival at units like global services just as they were taking off.

And even some analysts who speak highly of Mr. Palmisano add that I.B.M.'s practice of moving promising managers like him rapidly through many assignments makes it hard for outsiders to assess their capabilities. Mr. Palmisano's brief sojourn from the spring of 1996 to the end of 1997 through the tough personal computer business, for example, coincided with one of the industry's stronger growth periods. And some wonder whether aggressive stuffing of sales channels to meet short-term performance goals during that period may have contributed to the troubles his successor, David M. Thomas, encountered. Analysts estimate that I.B.M. lost more than $1 billion in the personal computer business in 1998.

Mr. Thomas, who left I.B.M. last year, was among the former colleagues who declined requests to discuss Mr. Palmisano. [...]

As you can see, Lou Gerstner still seems to be guarding his throne jealously, along with the limelight that comes with it. He refused to be interviewed for this story, and never allowed Palmisano to do so, either. Plus, see a comment inside the Times story about an industry analyst meeting this spring, at which Gerstner virtually gagged Palmisano.

For the full story, click on the following URL:  http://www.nytimes.com/2001/08/15/business/15SAM.html 

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