IBM Board Elects Virginia Rometty As Chairman

The IBM board of directors today elected Virginia M. Rometty chairman of the board, effective October 1, 2012.

Today, the IBM board of directors appointed Virginia M. Rometty chairman of the board, effective October 1, 2012. Rometty currently serves as President and Chief Executive Officer of IBM. Ms. Rometty was appointed to these positions effective January 1, 2012. Ms. Rometty began her career with IBM in 1981 in Detroit, Michigan. Since then she has held a series of leadership positions in IBM, most recently as Senior Vice President and Group Executive, IBM Sales, Marketing and Strategy. Ms. Rometty is a leader in diversity initiatives including IBM’s Women in Technology Council and the Women’s Leadership Council, and is one of the senior sponsors of the Women’s Executive Council. She is a frequent speaker at industry and business conferences, and has been named to Fortune magazine’s “50 Most Powerful Women in Business” for seven consecutive years, including most recently in 2011. Ms. Rometty serves on the Council on Foreign Relations; the Board of Trustees of Northwestern University; and the Board of Overseers and Board of Managers of Memorial Sloan-Kettering Cancer Center. She holds a Bachelor of Science degree with high honors in computer science and electrical engineering from Northwestern University.

Mrs. Rometty succeeds Samuel J. Palmisano, who is stepping down from the board effective October 1, 2012.

Mr. Palmisano will become Senior Adviser to the company until he retires on December 1, 2012.

As of October 1, 2012, Mrs. Rometty’s title will be IBM chairman, president and chief executive officer. Mrs. Rometty, 55, is currently IBM’s president and chief executive officer.

She succeeded Mr. Palmisano as IBM’s ninth CEO in January of this year, after holding senior leadership positions in IBM’s services, sales, strategy and marketing units.

Mrs. Rometty led the successful integration of PricewaterhouseCoopers Consulting — the largest acquisition in professional services history, building a team of more than 100,000 business consultants and services experts.

She became a director of IBM in January.

Mr. Palmisano, 61, became IBM chief executive officer in 2002 and chairman of the board in 2003.

During his tenure, IBM transformed its product and services portfolio, exiting commoditizing businesses, including PCs, printers and hard disk drives, and greatly increasing investments in analytics, cloud computing and other high-value businesses and technologies.

He has overseen the transformation of IBM from a multinational into a globally integrated enterprise. During Mr. Palmisano’s tenure as CEO, IBM created over $100 billion of total shareholder value.

Blame It On Rio

IBM CEO Sam Palmisano attended a forum in Rio de Janeiro today which had a special focus on Latin America and the world's growth markets, and which convened forward-thinking government and business leaders to examine real-world approaches on how cities can tackle serious urban issues and improve the quality of life of their citizens.

Rio de Janeiro.  One of my favorite cities in the world.

The land of churrascaria (eat meat until you tell them to stop feeding it to you!) and caipirinhas, Ipanema and Copacabana beaches…oh, man, I’d better stop daydreaming.

True story: I was giving a presentation in an IBM building one time in Rio, and the view behind the people I was presenting to was breathtaking.  I was presenting to a crowd of IBMers with the backdrop of the Cristo Redentor statue atop Corcovado, when someone had the big idea of closing the curtains because the view was too distracting!

Flash forward to today: With both the 2016 Summer Olympics and the 2014 World Cup being hosted in Brazil, IBM has partnered with the city of Rio de Janeiro to add new capabilities that improve the city’s emergency response system (not much unlike what IBM did for the City of Madrid), and also to give Rio citizens access to information that will help them better manage their daily lives.

The new automated alert system will notify city officials and emergency personnel when changes occur in the flood and landslide forecast. This is expected to dramatically reduce emergency response times using mobile communications.  Details of these expanded capabilities were revealed today at SmarterCities Rio, a two-day forum hosted by IBM Chairman, President and CEO Samuel J. Palmisano.

With a special focus on Latin America and the world’s growth markets, the forum convenes forward-thinking government and business leaders to examine real-world approaches on how cities can tackle serious urban issues and improve the quality of life of their citizens.

 

Also in Rio today, IBM announced the finalists for its SmartCamp in Brazil.

IBM’s Smart Camp, scheduled for November 10th and 11^th in Rio, brings startups together with senior government and business leaders from Latin America’s most progressive cities to mentor them and examine how we can spur economic development, modernize infrastructures and transform our cities to create a new urban model. The five finalists have developed technology solutions that address some of the world’s most pressing issues – such as traffic, healthcare and food safety.

The SmartCamp in Brazil is the most recent of nine global SmartCamps this year. The winner will be invited to the next SmartCamp World Finals to square off against other winners from around the globe to claim the title of “IBM Global Entrepreneur of the Year.”

Here are the finalists from Brazil:

• Easy Taxi: With Easy Taxi’s mobile transportation solution people can call a taxi with a click on their smartphone. The application locates and calls the nearest taxi, calculates the fare and processes the payment online.
• IDXP: IDXP’s consumer behavior solution installs sensors in stores and shopping carts to help retailers understand consumer behavior in real time.
• Mobwise: Mobwise’s mobile application combines various sources of information on traffic conditions including real time data generated by users to suggest best routes and to offer rewards and discounts at partner establishments.
• Opara: Opara‘s food traceability system for fruit monitors the entire production chain, from farm to supermarket shelf, in a more automated fashion and allows for food origination tracking end-to-end.
• Prime Health: Prime Health uses business analytics to help improve patient health and reduce the cost of treating chronic diseases.

The event will be webcast November 10 and 11 at www.livestream.com/ibmsoftware. You can also follow the action on People for a Smarter Planet on Facebook at http://on.fb.me/9S1Jp8, and share your thoughts on Twitter at #IBMSmartCamp.

Consider this the official point at which I volunteer to fly down to Rio to be a judge.

Viva Brasil!

IBM Board Names Ginny Rometty New IBM President & CEO

The IBM board of directors has elected Virginia M. Rometty president and chief executive officer of the company, effective January 1, 2012.

She was also elected a member of the board of directors, effective at that time. Ms. Rometty is currently IBM senior vice president and group executive for sales, marketing and strategy. She succeeds Samuel J. Palmisano, who currently is IBM chairman, president and chief executive officer. Mr. Palmisano will remain chairman of the board.

“Ginni Rometty has successfully led several of IBM’s most important businesses over the past decade – from the formation of IBM Global Business Services to the build-out of our Growth Markets.”

“Ginni Rometty has successfully led several of IBM’s most important businesses over the past decade – from the formation of IBM Global Business Services to the build-out of our Growth Markets Unit,” Mr. Palmisano said.

“But she is more than a superb operational executive. With every leadership role, she has strengthened our ability to integrate IBM’s capabilities for our clients. She has spurred us to keep pace with the needs and aspirations of our clients by deepening our expertise and industry knowledge. Ginni’s long-term strategic thinking and client focus are seen in our growth initiatives, from cloud computing and analytics to the commercialization of Watson. She brings to the role of CEO a unique combination of vision, client focus, unrelenting drive, and passion for IBMers and the company’s future. I know the board agrees with me that Ginni is the ideal CEO to lead IBM into its second century.”

IBM Board of Directors Elects Virginia M. “Ginni” Rometty President and CEO of IBM: Samuel J. Palmisano and Virginia M. “Ginni” Rometty at IBM’s corporate headquarters in Armonk, N.Y.  Rometty, an IBM senior vice president, was elected by the IBM board of directors to become the company’s president and ninth CEO on January 1, 2012.  Palmisano, currently IBM chairman, president and CEO, has significantly transformed IBM.  During his tenure as CEO, the company has delivered record financial performance and breakthrough innovations, such as Watson. Mr. Palmisano will remain IBM’s chairman. [Photo: Jon Iwata/IBM]

Ms. Rometty said: “There is no greater privilege in business than to be asked to lead IBM, especially at this moment. Sam had the courage to transform the company based on his belief that computing technology, our industry, even world economies would shift in historic ways. All of that has come to pass. Today, IBM’s strategies and business model are correct. Our ability to execute and deliver consistent results for clients and shareholders is strong. This is due to Sam’s leadership, his discipline, and his unshakable belief in the ability of IBM and IBMers to lead into the future. Sam taught us, above all, that we must never stop reinventing IBM.”

Mr. Palmisano, 60, became IBM chief executive officer in 2002 and chairman of the board in 2003. During his tenure, IBM exited commoditizing businesses, including PCs, printers and hard disk drives, and greatly increased investments in high-value businesses and technologies. He has overseen the significant expansion of IBM in the emerging markets of China, India, Brazil, Russia and dozens of other developing countries, transforming IBM from a multinational into a globally integrated enterprise. In 2008, he launched IBM’s Smarter Planet strategy, which describes the company’s view of the next era of information technology and its impact on business and society.

Since Mr. Palmisano became CEO, IBM has set records in pre-tax earnings, earnings per share, and free cash flow. During Mr. Palmisano’s tenure, IBM increased EPS by almost five times, generated over $100 billion in free cash flow, and invested more than $50 billion in research and development – creating over $100 billion of shareholder value since 2002 through an increase in market capitalization and dividends paid.

As global sales leader for IBM, Ms. Rometty, 54, is accountable for revenue, profit, and client satisfaction in the 170 global markets in which IBM does business. She is responsible for IBM’s worldwide results, which exceeded $99 billion in 2010. She also is responsible for leading IBM’s global strategy, marketing and communications functions. Previously, Ms. Rometty was senior vice president of IBM Global Business Services. In that role, she led the successful integration of PricewaterhouseCoopers Consulting — the largest acquisition in professional services history, building a global team of more than 100,000 business consultants and services experts. She has also served as general manager of IBM Global Services, Americas, and of IBM’s Global Insurance and Financial Services Sector.

Ms. Rometty joined IBM in 1981 as a systems engineer. She holds a Bachelor of Science degree with high honors in computer science and electrical engineering from Northwestern University.

IBM 3Q 2011 Earnings: Revenue Up 8%

IBM’s earnings for third quarter 2011 just came across the wire.

Here’s the topline:

• • Diluted EPS:
    • GAAP: $3.19, up 13 percent;
    • Operating (non-GAAP): $3.28, up 15 percent;
  • Revenue: $26.2 billion, up 8 percent, up 3 percent adjusting for currency;
  • Net income:
    • GAAP: $3.8 billion, up 7 percent;
    • Operating (non-GAAP): $4.0 billion, up 9 percent;
  • Pre-tax income:
    • GAAP: $5.0 billion, up 7 percent;
    • Operating (non-GAAP): $5.2 billion, up 10 percent;
  • Gross profit margin:
    • GAAP: 46.5 percent, up 1.2 points;
    • Operating (non-GAAP): 46.8 percent, up 1.5 points;
  • Software revenue up 13 percent, 8 percent adjusting for currency;
  • Services revenue up 8 percent, 2 percent adjusting for currency;
    • Services backlog of $137 billion, up $2.4 billion;
  • Systems and Technology revenue up 4 percent, 1 percent adjusting for currency:
    • Power Systems up 15 percent;
  • Growth markets revenue up 19 percent, 13 percent adjusting for currency;
  • Business analytics revenue up 19 percent year to date;
  • Smarter Planet revenue up 50 percent year to date;
  • Cloud revenue year to date has doubled full-year 2010 revenue;
  • Full-year 2011 Operating (non-GAAP) EPS expectations raised to at least $13.35 from at least $13.25.

IBM today announced third-quarter 2011 diluted earnings of $3.19 per share, compared with diluted earnings of $2.82 per share in the third quarter of 2010, an increase of 13 percent. Operating (non-GAAP) diluted earnings were $3.28 per share, compared with operating diluted earnings of $2.85 per share in the third quarter of 2010, an increase of 15 percent.

Third-quarter net income was $3.8 billion compared with $3.6 billion in the third quarter of 2010, an increase of 7 percent. Operating (non-GAAP) net income was $4.0 billion compared with $3.6 billion in the third quarter of 2010, an increase of 9 percent.

Total revenues for the third quarter of 2011 of $26.2 billion increased 8 percent (3 percent, adjusting for currency) from the third quarter of 2010.

“In the third quarter, we drove revenue growth, margin expansion and increased earnings as a result of our innovation-based strategy and continued investment in growth initiatives,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer. “Growth markets delivered outstanding revenue performance across software, hardware, and services and contributed to the company’s expanded margins. We also achieved strong results in Smarter Planet, business analytics and cloud.

IBM First Quarter 2011 Earnings Debrief

IBM’s earnings for first quarter 2011 just came across the wire.

Here’s the topline:

• Diluted EPS: GAAP: $2.31, up 17 percent; Operating (non-GAAP): $2.41, up 21 percent
• Revenue: $24.6 billion, up 8 percent, up 5 percent adjusting for currency
• Net income: GAAP: $2.9 billion, up 10 percent; Operating (non-GAAP): $3.0 billion, up 13 percent
• Pre-tax income: GAAP: $3.8 billion, up 9 percent; Operating (non-GAAP): $4.0 billion, up 12 percent
• Gross profit margin: GAAP: 44.1 percent, up 0.5 points
• Operating (non-GAAP): 44.5 percent, up 0.8 points
• Software revenue excluding divested PLM operations up 10 percent, 8 percent adjusting for currency; 6 percent including PLM, 4 percent adjusting for currency
• Systems and Technology revenue up 19 percent, 16 percent adjusting for currency
• System z mainframe revenue up 41 percent; MIPS up 34 percent
• Services revenue up 6 percent, 3 percent adjusting for currency
• Services backlog of $142 billion, up $8 billion
• Growth markets revenue up 18 percent, 12 percent adjusting for currency
• Business analytics revenue up 20 percent
• Smarter Planet revenue up 20 percent
• Cloud revenue 5 times first-quarter 2010 revenue

IBM announced first-quarter 2011 diluted earnings of $2.31 per share, compared with diluted earnings of $1.97 per share in the first quarter of 2010, an increase of 17 percent.  Operating (non-GAAP) diluted earnings were $2.41 per share, compared with operating diluted earnings of $2.00 per share in the first quarter of 2010, an increase of 21 percent.

First-quarter net income was $2.9 billion compared with $2.6 billion in the first quarter of 2010, an increase of 10 percent.  Operating (non-GAAP) net income was $3.0 billion compared with $2.6 billion in the first quarter of 2010, an increase of 13 percent.

Total revenues for the first quarter of 2011 of $24.6 billion increased 8 percent (5 percent, adjusting for currency) from the first quarter of 2010.

“We delivered a strong first quarter with revenue growth across hardware, software and services and with more than 40 countries growing in double digits.  We continued to see excellent momentum in our growth initiatives – smarter planet, cloud, business analytics, and growth markets – which bring together the full value of the IBM  portfolio,” said Samuel J. Palmisano, IBM chairman, president and chief executive officer.  “We achieved broad-based margin improvement, while our cash flow and strong financial position enabled us to continue to return value to our shareholders.

“On the strength of this performance, we are raising our full-year 2011 operating earnings per share expectations to at least $13.15.”

IBM 2009 Annual Report: The Landscape For Growth

The 2009 IBM Annual Report was released yesterday.

It includes a letter from our chairman and CEO, Sam Palmisano, which very clearly articulates both where IBM has been over the past decade, and probably more importantly, outlines the direction it’s going this year and beyond.

I would encourage you to check out the full IBM annual report package online firsthand here.

In the letter, Sam outlines “the landscape for growth,” which suggests that IBM is positioning itself aggressively for an upswing in the business cycle.

Specifically, he outlines four key areas (which I’ll come to in a moment), but he prefaces it by stating that IBM doesn’t believe that clients will, as they may have in the past, simply invest in IT because history is destined to repeat itself and they’re going to open their wallets for the new, new IT thing as the recessionary clouds lift.

No, rather, he asserts that IBM’s position is that clients will invest where they believe they can gain value (preferably quickly), and where they can continue to gain efficiencies and competitive advantage.

And he asserts that IBM is well positioned as a company to uniquely take advantage of that opportunity.

Now, to the four areas of emphasis and IBM investment in 2010.

They include the growth markets, which have expanded their contribution to IBM’s geographic revenue by a point a year since 2005, and at least 8 points faster than major markets over the past three years.

Going forward, both mature and emerging markets are building out and integrating their physical and digital infrastructures, and in­fusing the resulting systems with intelligence. More than $2 trillion in fiscal stimulus has already been earmarked by governments around the world, and IBM is uniquely positioned to benefit from these large business and technology opportunities.

Second, data captured across a new spectrum of inputs (including data ranging from the “Internet of Things” [think sensors, RFID, etc.] and even the social media) is already leading to immense new business analytics opportunities.

Hence IBM’s $10B investment over the past couple of years in acquiring Cognos, SPSS, and investing in the 4,000+ strong Business Analytics and Optimization practice.

All this information—the knowledge of the world, the flow of markets, the pulse of societies—can now be turned into insight through sophisticated mathematical models — where once we inferred, now we know.

Where once we interpolated and extrapolated, now we can determine.

The historical is giving way to the real-time, and even the predictive.

Next, the opportunity presented by the Cloud and Next-Generation Data Center.  As the planet becomes instrumented, interconnected and intelligent, the computing model is evolving to support it.

Think of it as the industrialization of IT.

Over the past generation, digital infrastructures have become complex and inefficient, so it’s time to optimize them through automation, creating systems that are highly tuned to the specific workloads they run and to new consumption and delivery models, such as clouds.

The data center is shifting from being a single physical place to something more like the Internet, a diverse set of services fueled by IT.

This provides far more choice and flexibility, which is of particular interest to the many businesses and governments that want simply to consume some services they once built, maintained and provided themselves.

And fourth, and finally, all of these growth strategies come together in the opportunity IBM calls the “smarter planet.”

This is not a metaphor. It describes the infusion of intelligence into the way the world actually works, the way that almost anything—any person, any object, any process or any service, for any organization, large or small—can now become digitally aware, networked and intelligent.

This means that industries, infrastructures, processes, cities and entire societies can be more productive, efficient and responsive.

IBM developed this agenda and strategic initiative in the summer of 2008, and  launched it that autumn—at the peak of the economic crisis. We did so because we believed it represented a pragmatic way to address the very problems that were transfixing the world.

After just a year, it is clear that our belief was correct. The idea of “smarter systems” is resonating with decision-makers in both the private and public sectors. We are seeing these systems being implemented in every major industry and across every region of both the developed and developing worlds.

And they are creating measurable economic and societal value.

So, I would invite you to learn more and read the full report — it can certainly tell you where IBM went recently.

But, it’s the roadmap for building a smarter planet at a company on the verge of its centennial — which continues to be one of the most interesting, vibrant, and yes, even relevant places to work in the world and on the world — that it gets really interesting.