What happened
Shares of International Business Machines (IBM 1.05%) were down 4.7% as of late Friday, largely in response to reports that president Jim Whitehurst will be stepping down from that role in the near future. Whitehurst is the former CEO of Red Hat -- which IBM acquired in 2019 -- and was leading the company's hybrid cloud efforts made possible by the Red Hat deal.
So what
Although no specific reason for the move was offered, the decision appears to be an amicable one. Whitehurst will continue to serve as an advisor to IBM's CEO Arvind Krishna and other executives. He's also going to remain at the post until further notice, presumably until a replacement is found.
Still, investors are understandably rattled.
Image source: Getty Images.
At the time of the Red Hat acquisition, then-CEO Ginni Rometty touted that the deal would make IBM the world's biggest hybrid cloud service provider, and Krishna has kept it as a priority. In his preface to the company's 2020 annual report he plainly explained, "we have made decisive moves to help our clients thrive by tapping into the immense power of hybrid cloud and [artificial intelligence]."
Sales of the hybrid cloud platform are also known to drive even greater related software and service revenue.
Now what
It remains to be seen just how critical Whitehurst is to IBM's hybrid cloud computing success. But given he led Red Hat as it became the big name in the business to beat, his absence will certainly be noticed.
His impending exit, however, isn't necessarily a reason to bail out of the stock. A company is bigger than any single person working for it, and anyone can be replaced. In fact, Whitehurst's eventual replacement may be even better suited to lead IBM's hybrid cloud business now that Red Hat is integrated with its parent.
