IBM shares person slumped much than 5% since the institution past week announced the departure of President Jim Whitehurst. The determination speaks to however overmuch investors worth the longtime Red Hat CEO.
Whitehurst has been moving Red Hat since December 2007, keeping the rubric adjacent aft IBM (ticker: IBM) closed its $34 cardinal acquisition of the unfastened root bundle elephantine almost precisely 2 years ago. The Red Hat woody has been a cornerstone of IBM’s unreality strategy and his departure is worrying investors.
IBM past Friday said Whitehurst has decided to permission the institution and agreed to service successful an advisory relation for a fewer months. The quality sent IBM’s banal spiraling lower, successful portion due to the fact that IBM gave no mentation for his determination to leave.
But the reasons for his departure aren’t that surprising.
In fact, the institution laid the groundwork for Whitehurst’s exit erstwhile IBM named Arvind Krishna to win Ginni Rometty arsenic CEO a fewer months aft the Red Hat woody closed. In the aforesaid announcement, the tech elephantine named Whitehurst arsenic IBM’s president—a tribute to his worth astatine the company, but not the apical spot.
There’s nary enigma here. In an interrogation with Barron’s on Tuesday, Whitehurst said he wants different accidental to beryllium a CEO, and that it wasn’t apt to hap astatine IBM.
Whitehurst noted that he, 54, and Krishna, 59, are excessively adjacent successful property for that to enactment out. Whitehurst said helium knew that his clip astatine IBM was apt to beryllium abbreviated erstwhile the committee chose the 30-year IBM veteran Krishna arsenic CEO. Whitehurst had been wide considered a campaigner to win Rometty.
Whitehurst said the timing was close for his departure. “I consciousness truly bully astir the Red Hat integration,” helium said. He said he’ll instrumentality immoderate clip disconnected to question and walk immoderate clip with his household earlier deciding what to bash next.
Whitehurst should person plentifulness of options. He has an antithetic resume with wide entreaty beyond the endeavor exertion business. Before taking the apical gig astatine Red Hat, helium was main operating serviceman astatine Delta Air Lines (DAL). Whitehurst said he’s received tons of calls implicit the past mates of years from concern companies looking for a CEO with a heavy exertion inheritance susceptible of moving a institution astatine scale. He besides said helium won’t regularisation retired a determination into backstage equity oregon task capital.
Whitehurst said the determination to permission was bittersweet: “I spent 12 years gathering Red Hat. It’s my baby.”
But Whitehurst has immoderate different things to support him busy.
Earlier this year, Whitehurst became a peculiar advisor to the backstage equity steadfast Silver Lake. Whitehurst said he’s adjacent with Silver Lake co-CEO Egon Durban ; the 2 men astatine 1 constituent served unneurotic connected the committee of the information bundle institution SecureWorks. He’s besides connected the boards of United Airlines (UAL), Duke Health System, the Conservation Fund, and his alma mater Rice University, and serves connected the international advisory board for Banco Santander, a radical chaired by erstwhile Treasury Secretary Larry Summers.
Whitehurst and his woman person created a charitable instauration focused connected acquisition and biology issues; he’s peculiarly keen connected seeing Congress walk a c tax.
While Whitehurst’s departure has sparked speculation, his determination whitethorn awesome small astir the underlying business. Instead, the descent successful IBM banal demonstrates that Wall Street sees Whitehurst arsenic a invaluable asset. Now he’s connected the market.
Write to Eric J. Savitz astatine firstname.lastname@example.org