IBM’s Services Chief Will Step Down

International Business Machines Corp. (IBM) said Senior Vice President Mike Daniels is retiring after 36 years with the company, leaving two lieutenants in charge of services, the company’s biggest division.

Daniels, 58, will leave Armonk, New York-based IBM on March 31. Instead of replacing him, Erich Clementi, senior vice president for global technology services, and Bridget van Kralingen, senior vice president for global business services, will now report to the chief executive officer, said Ed Barbini, a company spokesman.

Daniels ran a business that accounted for about 60 percent of revenue at IBM, the world’s largest provider of computer services. He also was seen as a potential CEO candidate before Ginni Rometty took the post a year ago. Daniels made his mark as a cost cutter, helping boost IBM’s margins in recent years.

Daniels joined IBM straight out of college, with a trajectory similar to Rometty’s through experience in sales and services. In 2005, when then-CEO Sam Palmisano split the services business into consulting and technology units, Daniels first took over only the latter.

Cost Cutter

Daniels fired thousands of employees and moved jobs to lower-cost regions such as India to trim expenses and boost profits. IBM has a five-year plan to reach annual operating earnings of at least $20 a share by 2015, up from $13.44 in 2011.

Rometty took the reins at IBM in January of last year, becoming the company’s ninth CEO and first female leader. In October, she became chairman of IBM’s board, replacing Palmisano.

During her tenure, she has filled two other senior executive positions with internal candidates. Bruno Di Leo took the head of sales job she held before becoming CEO. Van Kralingen was promoted to head of business services a year ago, replacing Frank Kern, who retired after 35 years at the company. Kern in October became CEO at Aricent Group, a technology consulting firm.

IBM shares fell 0.7 percent to $193.99 at the close in New York. The stock climbed 4.2 percent in 2012, marking its fourth straight year of gains.

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Nick Turner at nturner7@bloomberg.net