IBM's Rometty Could Be Next Female CEO to Leave

Technology

Published: August 7, 2018 6:35 am

Last Updated: January 11, 2020 7:48 pm

With the announced departure of PepsiCo Inc. (NYSE: PEP) CEO Indra Nooyi, only 23 Fortune 500 companies will be led by a woman. The next female CEO to exit may well be International Business Machines Corp.’s (NYSE: IBM) Virginia Rometty, who is more likely to be pushed out by her board.

Rometty’s tenure has been at risk for some time. Weak results at IBM and its slow pace to enter cloud computing have pulled its shares down 21% in the past five years, while the S&P 500 is up 72% in that time.

IBM announced another challenging quarter recently. Revenue was up 4% to $20 billion. In the second quarter, earnings rose only from $2.49 per share to $2.63. The results pale in comparison to more successful rivals, particularly in the cloud space, Amazon.com Inc. (NASDAQ: AMZN) and Microsoft Corp. (NASDAQ: MSFT). One measure tells almost the entire story. While Amazon’s market cap is $901 billion and Microsoft’s is $831 billion, at IBM it is $133 billion.

Rometty continues to plug along with a similar message quarter after quarter. In her comments for the most recent quarter she said:

We delivered strong revenue and profit growth in the quarter, underscoring IBM’s progress and momentum in the emerging, high-value segments of the IT industry. More clients are engaging IBM on their journey to the cloud, and deploying IBM Cloud, Watson AI, analytics, blockchain and security solutions. This demonstrates IBM’s unique leadership in providing innovative technology coupled with deep industry expertise, trust and security.

Investors did not buy it. IBM’s shares are down another 4% this year. Microsoft, another Dow component, has posted a stock price increase of over 24% for the same period.

Most analysis of female CEO departures comes from a look at age and retirement dates. In Rometty’s case, neither matter. Performance will drive her departure.