International Business Machines (IBM) - Get Report said Thursday that CEO Ginni Rometty is stepping down in April and will be replaced by Arvind Krishna, head of the company’s cloud computing business.
Rometty has been CEO since January of 2012.
Krishna is currently IBM Senior Vice President for Cloud and Cognitive Software, and oversees IBM Cloud, IBM Security and Cognitive Applications business, as well as IBM Research. He was also a principal architect of the company's acquisition of Red Hat, according to a company statement.
"Arvind is the right CEO for the next era at IBM," Rometty said in the statement. "He is a brilliant technologist who has played a significant role in developing our key technologies such as artificial intelligence, cloud, quantum computing and blockchain. He is also a superb operational leader, able to win today while building the business of tomorrow.”
Shares of IBM rose about 4% in after-hours trading following news of Krishna's appointment. Jim Whitehurst, CEO of RedHat, was also appointed as IBM's President.
"I am looking forward to working with IBMers, Red Hatters and clients around the world at this unique time of fast-paced change in the IT industry," added Krishna in a statement. "We have great opportunities ahead to help our clients advance the transformation of their business while also remaining the global leader in the trusted stewardship of technology. Jim will be a great partner in the next step of this journey."
For the December quarter, IBM reported non-GAAP earnings of $4.71 per share and group revenues of $21.78 billion, both of which exceeded Wall Street's forecasts. Revenues from its cloud and cognitive software division, one of two new group reporting structures established last year, rose 8.7% to $7.2 billion. Cloud revenues alone rose 21.8% to $6.8 billion thanks to the 2019 acquisition of Red Hat. IBM also forecast non-GAAP earnings of at least $13.57 per share for the full year 2020, firmly ahead of the Refinitiv forecast of $13.29 per share.
"With this trajectory, in 2020, we expect to grow revenue, operating earnings per share and free cash flow, and expand operating gross margin," said IBM's CFO James Kavanaugh on a Jan. 22 shareholder call.
Analysts view IBM's cloud business, and revenues from Red Hat, as a potential growth driver over the longer term.
"Fourth-quarter results are a step in the right direction, giving us confidence in our view that IBM + Red Hat brings together the platform, incumbency, and expertise to help customers on the journey to hybrid cloud," wrote Credit Suisse analyst Matthew Cabral following IBM's December quarter earnings release.