Red Hat CEO to move up in IBM as Big Blue announces leadership shakeup

Jim Whitehurst, the leader of open-source software giant Red Hat, is taking a new leadership role at IBM six months after that company bought Raleigh-based Red Hat for $34 billion.

The promotion comes as IBM’s longtime CEO Ginni Rometty unexpectedly announced her retirement in a Thursday evening news release. She has been chairman, president and CEO of IBM since 2012.

Rometty, 62, will be replaced as CEO by Arvind Krishna, who currently leads IBM’s cloud business, one of the company’s more successful sectors in recent years. Krishna, 57, also has been credited as the principal architect of IBM’s move to acquire Red Hat, the company’s largest-ever acquisition.

Whitehurst, 52, will take on one of Rometty’s old roles, with IBM naming him the company’s new president.

The shakeup means IBM will have a split leadership structure with a separate CEO and president for the first time in more than 100 years, The Wall Street Journal reported.

Krishna and Whitehurst will assume their new positions April 6. Rometty will remain executive chairman of IBM’s board through the end of the year.

There had been speculation among industry insiders that Whitehurst, currently CEO of Red Hat and IBM senior vice president, might be named CEO after IBM bought Red Hat last year.

It’s not clear what the new role will mean for Whitehurst’s role at Red Hat, or whether the promotion will prompt him to move from his home base of Raleigh. He has been with Red Hat since late 2007, after moving to the company from Delta Air Lines.

A spokesman for IBM did not answer questions Thursday evening about the management structure at Red Hat.

There could be more management changes to come. But in Krishna, IBM has named a big believer in Red Hat, and the company is pitching Whitehurst’s new role as key for growing the combined Red Hat-IBM business.

“[Whitehurst] has been a great addition to IBM’s leadership team,” Alex Gorsky, chairman of the IBM’s Executive Compensation and Management Resources Committee, said in a statement. “His considerable business and leadership skills will help IBM grow and flourish, and as president he will help [Krishna] and IBM continue to accelerate and scale the benefits of Red Hat, while ensuring that Red Hat also preserves its unique culture and commitment to open source innovation.”

Red Hat-IBM merger growth

So far, the Red Hat-IBM marriage has been a financial success. Red Hat’s revenue grew by 24% in the last quarter, eclipsing a billion dollars in a quarter for the first time, IBM said during its earning call earlier this month.

The company said the growth was driven by increased demand to pair IBM and Red Hat’s products. The decision to buy Red Hat was driven, in part, by IBM’s desire to be more competitive in the cloud software space, where it competes with tech giants like Amazon and Microsoft.

“We’re off to a great start with Red Hat, with solid revenue trajectory and expanding client base, both good indicators of our clients’ confidence in the value of IBM and Red Hat together,” Jim Kavanaugh, IBM’s chief financial officer, told analysts.

The merger helped IBM grow its fourth-quarter revenue by 0.1%, which was good news for IBM. That was the first quarter of growth it had seen after five straight quarters of year-over-year revenue declines.

The success of the IBM-Red Hat merger will have significant implications for the Triangle region. Red Hat is one of the largest employers in downtown Raleigh, where its headcount has surged into the thousands, and IBM still has a large office in Research Triangle Park.

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This story was produced with financial support from a coalition of partners led by Innovate Raleigh as part of an independent journalism fellowship program. The N&O maintains full editorial control of the work. Learn more; go to bit.ly/newsinnovate