Smarter Planet

IBM's Sam Palmisano: A super second act

March 4, 2011: 5:00 AM ET

CEO Sam Palmisano took a revitalized IBM and made it the envy of the tech world and darling of investors. His secret? He's restored Big Blue's focus on innovation and set it up for an even brighter future. (Move over, Lou Gerstner.)

Here is what you probably know about IBM. You know International Business Machines was one of America's first tech companies, and in the 1960s and 1970s became the world's leading computer maker on the strength and power of its huge mainframes. It all went to hell in the 1980s, when personal computers and servers supplanted those mainframes, and an arrogant and bloated IBM was caught flat-footed. The board brought in Lou Gerstner, who famously stabilized the company (in part by firing tens of thousands of employees) and got it to grow again by steering IBM into the unsexy -- but high-margin -- business of systems integration and services. Perhaps you recently watched an IBM computer, Watson, trounce a couple of brainiacs on the game show Jeopardy.

Now, here's what you might not know: Nine years after Gerstner stepped down as CEO, IBM (IBM) is financially and strategically stronger and, yes, sexier than ever -- all thanks to Sam Palmisano, Gerstner's successor. Under Palmisano, earnings have quadrupled and the stock is up 57%. He's not merely cutting costs (though he's done plenty of that, including shifting work from the U.S. to India). He's remaking the company by pushing into new countries and expanding hot businesses such as supercomputing and analytics that require heavy-duty lab innovations. Last year's R&D spending? Some $6 billion, or 6% of IBM's nearly $100 billion in annual sales. Its 5,896 patents in 2010 -- more than any company in the world -- help explain why it lands at No. 12 on Fortune's annual list of the World's Most Admired Companies. That Jeopardy-playing computer isn't just a gimmick; it is at the heart of IBM's long-term growth strategy.

More

  • Smart phones. Smart networks. Smart packages?

    FedEx jumps on the "smart" wagon with a new web-based service.

    FedEx Corp. (FDX) today is announcing a sensor-enabled device that can wirelessly feed real-time data about a package's whereabouts, condition and other metrics to the Internet.

    The service, called SenseAware, will launch this spring. Its initial target markets are the health-care and life-sciences businesses, industries that often need to know the precise location of the products (drugs, test results, samples) they ship.

    The MORE

    - Nov 17, 2009 6:01 AM ET
    Posted in: ,
  • IBM's Smarter Planet: the roadshow

    Live from New York, it's Sam Palmisano.

    The business strategy made possible by $50 billion in acquisitions, hundreds of millions on marketing, and various forms of ecological disaster, is taking the show on the road–to Manhattan's Lincoln Center.

    For the next day and a half, IBM's (IBM) Smarter Planet initiative will occupy New York City's Lincoln Center in the form of a conference on developing smarter cities. IBM CEO Sam Palmisano and MORE

    - Oct 1, 2009 7:03 AM ET
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.