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  ARMONK, N.Y. -- International Business Machines Corp. named Samuel J.
Palmisano chief executive, effective March 1, to replace Louis V.
Gerstner, who will remain chairman through the end of the year.

The news resolves speculation about IBM's succession plans, as Mr.
Gerstner turns 60 years old March 1.

Mr. Gerstner, who is credited with creating a remarkable turnaround at
IBM since he took the CEO job in 1993, had ducked questions on just when
he planned to step down.

Mr. Gerstner's succession team was already in place. Mr. Palmisano, an
IBM lifer named president in 2000, was widely seen as the heir apparent.

Although IBM's board will have the final say, company officials expect
50-year-old Mr. Palmisano to replace Mr. Gerstner as chairman at the end
of 2002, a company spokeswoman said. Mr. Palmisano became president and
chief operating officer of the company in September 2000 after holding
leadership positions in almost all of IBM's operating units.

In another executive change, IBM's John M. Thompson will retire as vice
chairman Sept. 1. His duties will be shared among "senior leaders" at
the company, the spokeswoman added.

During his tenure, Mr. Thompson, 59 years old, also served as president
and chief executive of IBM Canada during the late 1980s.

In midday trading on the New York Stock Exchange, shares of IBM (IBM)
fell $3.65, or 3.4%, to $104.50.

Some IBM watchers had said they saw signs that Mr. Gerstner may stick
around past his 60th birthday, when his contract expires. The latest
indication: Mr. Gerstner sent an e-mail to executives Wednesday saying
that IBM's general counsel, Lawrence R. Ricciardi, 61 years old, is
retiring in July. Mr. Ricciardi is widely known as Mr. Gerstner's

Mr. Gerstner joined IBM in 1993 in the midst of a financial crisis. He
is widely credited with transforming the company into a
"customer-focused global enterprise," according to an IBM press release.
 From April 1993, when he joined Big Blue, through year-end 2001, the
company's stock price increased by more than 800% and the market value
grew by $180 billion.

Mr. Palmisano is credited with building up services, which has become
IBM's most significant business, and with developing a unifying strategy
for IBM's various server lines. During his tenure as head of IBM Global
Services, the unit's revenue grew nearly 30% to $32.2 billion.

People who have watched the two men say their management styles are very
different. Mr. Gerstner is imposing and autocratic, Mr. Palmisano
gregarious but overtly competitive. With previous stints at management
consultant McKinsey & Co., American Express Co. and RJR Nabisco, Mr.
Gerstner was a computer-industry neophyte when he arrived in 1993 to
rescue IBM in the throes of a financial crisis.

Mr. Palmisano, on the other hand, is an IBM lifer, having spent nearly
30 years selling and developing information technology. He will take
over what is now one of the industry's most financially sound companies.

Mr. Thompson was largely responsible for building IBM's software group
into a $13 billion business. He managed the company's acquisitions of
Lotus Development Corp. and Tivoli Systems.

Copyright (c) 2002 Dow Jones & Company, Inc.

Pete Massiello
OS Solutions International
Phone: (203)-744-7854  Ext 11.


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