IBM reassigning unit head after sales drop
18 Oct 2013
International Business Machines Corp (IBM) is reassigning James Bramante, who has overseen its emerging-markets business, following a drop in unit sales, Bloomberg reported citing a person with knowledge of the matter.
Bruno Di Leo, who formerly was in charge of IBM's growth markets and was now head of sales, would now be tasked with setting up a new team to oversee the unit, according to the person, who asked not to be identified because the information was private.
Bramante's new position has yet to be announced.
Revenue in the division was down 9 per cent in the third quarter from a year earlier, pulled down by a 22 per cent decline in China, where the government was revamping its economic policy, Armonk, New York-based IBM said yesterday.
With the performance, IBM reported the sixth straight quarterly decline in total sales for the world's biggest computer-services company.
IBM chief financial officer Mark Loughridge said yesterday on a conference call that in the growth markets organisation, the leadership team that established that to begin with and drove that organisation was now back in the cockpit, led by Bruno Di Leo and his leadership team. He added that they knew how to get this done.
Loughridge blamed much of the revenue decline on China, which accounted for 5 per cent of IBM's business, with around 40 per cent of that business being hardware.
He added the country was working on a nationwide economic reform plan ahead of a major government plenary session in November, which depressed sales.
Much of the corporate sector in China has been dominated by the state in a centrally planned economy, with government enterprises often holding back on spending as the government readied to push through major nationwide policy changes.
He however also admitted that about half of the decline stemmed from "execution" issues, noting that Di Leo's appointment was aimed at addressing a "leadership differential."
IBM shares were down 6.4 per cent at $174.83 on the New York Stock Exchange hitting a two-year low of $172.57.
This came as the steepest one-day slide since 19 April, which too was triggered by disappointing sales.
Even as the world's largest technology services company continued to stick to its full-year profit outlook, analysts continued to raise doubts about the company's ability to convert services backlog to revenue.
"Software has been the growth engine for IBM and has been one of the key reasons investors held the stock. However, it appears that the engine may have stalled and no longer can outgrow the broader software market," JP Morgan analysts said in a note.
