IBM Tuesday said Samuel Palmisano will become CEO effective March 1, replacing Louis Gerstner.
Gerstner, whose contract expires on March 1 when he turns 60, will remain chairman through 2002. He is widely credited with turning the computer maker around in the 1990s.
Palmisano has been expected to follow in Gerstner's footsteps since Palmisano was named president and COO in September 2000. He retains his president title, IBM said. During his tenure as head of IBM Global Services, the business unit's revenue grew nearly 30 percent to $32.2 billion. Palmisano has been with IBM since 1973.
IBM also said John M. Thompson, its vice chairman, will retire from the company and board on Sept. 1.
"Over the last decade, Sam Palmisano has taken on a number of IBM's most significant challenges, from building the services business to transforming our server line," Gerstner said in a prepared statement. "In each instance Sam has done far more than manage operations effectively. He has made it both his personal mission and that of IBM to become the No. 1 competitor in each of these markets. Sam's unique mix of strategic vision, passion and discipline, combined with his intimate understanding of IBM, make him the right person to become IBM's next CEO."
IBM shares were off 4 percent, or $4.36, at $103.79 in midday trading.