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Why IBM Stock Popped 5% Today

By Rich Smith - Updated Jan 31, 2020 at 3:08PM

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New and improved leadership deserves a new and improved stock price.

What happened

Yesterday after close of trading, IBM (IBM 2.62%) announced that its president and current CEO, Virginia Rometty, will leave her post on April 6 to be replaced by Arvind Krishna. Today, before trading closed for the day, IBM stock is up 4.7% in response (as of 3:30 p.m. EST).  

Glowing red arrow trending down

IBM stock has not fared particularly well under Virginia Rometty's leadership. Image source: Getty Images.

So what

Krishna is currently IBM's senior vice president for cloud and cognitive software. He will be joined at the top of the company by James Whitehurst -- currently the CEO of Red Hat, the open-source software provider that IBM bought last summer -- who will become IBM's president.

Both executives will assume their posts on April 6. Rometty will remain executive chairman of the board of IBM through the end of 2020, then retire.

Now what

In its press release on the management changes, IBM praised Rometty for the "bold changes" she made "to reposition IBM for the future," including the acquisition of 65 companies and the building up of IBM's businesses in hybrid cloud, security, industry and data, and AI.

Receiving less attention is the fact that, since Rometty took the helm in 2012, blue-chip IBM stock has lost about 22% of its market value -- while the S&P 500 has surged ahead 157%. Investors today are betting that a new CEO might change those dynamics.

Fingers crossed.

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