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IBM
shares have slumped more than 5% since the company last week announced the departure of President
Jim Whitehurst.
The move speaks to how much investors value the longtime Red Hat CEO.
Whitehurst has been running Red Hat since December 2007, keeping the title even after IBM (ticker: IBM) closed its $34 billion acquisition of the open source software giant almost exactly two years ago. The Red Hat deal has been a cornerstone of IBM’s cloud strategy and his departure is worrying investors.
IBM last Friday said Whitehurst has decided to leave the company and agreed to serve in an advisory role for a few months. The news sent IBM’s stock spiraling lower, in part because IBM gave no explanation for his decision to leave.
But the reasons for his departure aren’t that surprising.
In fact, the company laid the groundwork for Whitehurst’s exit when IBM named Arvind Krishna to succeed
Ginni Rometty
as CEO a few months after the Red Hat deal closed. In the same announcement, the tech giant named Whitehurst as IBM’s president—a tribute to his value at the company, but not the top spot.
There’s no mystery here. In an interview with Barron’s on Tuesday, Whitehurst said he wants another chance to be a CEO, and that it wasn’t likely to happen at IBM.
Whitehurst noted that he, 54, and Krishna, 59, are too close in age for that to work out. Whitehurst said he knew that his time at IBM was likely to be short when the board chose the 30-year IBM veteran Krishna as CEO. Whitehurst had been widely considered a candidate to succeed Rometty.
Whitehurst said the timing was right for his departure. “I feel really good about the Red Hat integration,” he said. He said he’ll take some time off to travel and spend some time with his family before deciding what to do next.
Whitehurst should have plenty of options. He has an unusual resume with broad appeal beyond the enterprise technology business. Before taking the top gig at Red Hat, he was chief operating officer at
Delta Air Lines
(DAL). Whitehurst said he’s received lots of calls over the last couple of years from industrial companies looking for a CEO with a deep technology background capable of running a company at scale. He also said he won’t rule out a move into private equity or venture capital.
Whitehurst said the decision to leave was bittersweet: “I spent 12 years building Red Hat. It’s my baby.”
But Whitehurst has some other things to keep him busy.
Earlier this year, Whitehurst became a special advisor to the private equity firm Silver Lake. Whitehurst said he’s close with Silver Lake co-CEO
Egon Durban
; the two men at one point served together on the board of the security software company
SecureWorks.
He’s also on the boards of
United Airlines
(UAL), Duke Health System, the Conservation Fund, and his alma mater Rice University, and serves on the international advisory board for
Banco Santander,
a group chaired by former Treasury Secretary
Larry Summers.
Whitehurst and his wife have created a charitable foundation focused on education and environmental issues; he’s particularly keen on seeing Congress pass a carbon tax.
While Whitehurst’s departure has sparked speculation, his move may signal little about the underlying business. Instead, the slide in IBM stock demonstrates that Wall Street sees Whitehurst as a valuable asset. Now he’s on the market.
Write to Eric J. Savitz at [email protected]