Mea culpa. I didn't see this coming. I know Red Hat well; I personally know Jim Whitehurst, who seemed very happy as President of IBM; and I know a thing or two about IBM. Despite all that, I had no clue that Whitehurst, who had been named IBM's President in late January 2020, would be leaving.
But Whitehurst is stepping to one side to become an IBM advisor. In a press release by Arvind Krishna, IBM Chairman and CEO, Krishna said, "Jim Whitehurst has played a pivotal role in the IBM and Red Hat integration. In the almost three years since the acquisition was announced, Jim has been instrumental in articulating IBM's strategy, but also, in ensuring that IBM and Red Hat work well together and that our technology platforms and innovations provide more value to our clients. Jim has decided to step down as IBM President, however, I am pleased he will continue working as Senior Advisor to me and the rest of the Executive Leadership Team as we continue to evolve our business."
Whitehurst played more than a pivotal role in getting IBM and Red Hat working on the same hybrid cloud page. He was essential. After IBM acquired Red Hat for $34 billion in October 2018, it was Whitehurst who calmed down both Red Hat's employees' and customers' fears that Red Hat would lose its identity to the IBM way of doing business.
As the deal neared completion, then IBM CEO Ginni Rometty said in a conversation with Whitehurst, "I'm not buying them to destroy them. It's a win-win for our clients. It's a way to drive more innovation." Therefore, "Jim and I have both agreed -- Red Hat should stay an independent unit."
That wasn't an idle promise. Red Hat has remained an independent division of IBM.
IBM had reason to allow Red Hat its freedom. Under Whitehurst, Red Hat became the first billion-dollar Linux company. Not long after that, Red Hat became the first two-billion-dollar Linux company.
Under Whitehurst's guidance, in the fiscal year 2020, IBM's total cloud revenue of $25.1 billion went up by 20%. Much of this was driven by Red Hat's hybrid cloud programs. Red Hat itself saw its revenue go up by 18%. Clearly, Whitehurst was doing a great job. Whitehurst is widely respected by Red Hat's ISV partners and investors, and his departure raised concerns on Wall Street. Indeed, IBM's stock fell roughly 4.4% amid the departure news.
But, and this is pure speculation on my part, as well as he was doing, Whitehurst wasn't moving up to the position of IBM CEO. It had long been assumed by IBM and Red Hat watchers, that Whitehurst would eventually move into the top position so that he could bring Red Hat's winning culture into the rest of IBM. That did not prove to be the case. Instead, in April 2020, Krishna, who had been with IBM since 1990, replaced Rometty as IBM's CEO.
The market was not happy with this move. Whitehurst is widely respected by independent software vendors (ISV), partners, and investors. In the hours since the news broke, IBM's stock dropped by 4.75%. If IBM hoped the news wouldn't be noticed by being released on the eve of the 4th of July weekend, the company lost its bet.
In other IBM executive moves, Bridget van Kralingen is stepping down from her current role as Senior Vice President, Global Markets. Kralingen will be replaced by Rob Thomas. She will remain Senior Vice President, Special Projects for a year and then retire from IBM.
Krishna concluded, "Bringing value to our clients is -- and must continue to be -- our north star. For our clients as well as for IBM, our technology platform and services serve as an important driver of business growth. With these changes, I am confident that IBM will be in a stronger position to help our clients and our business thrive."
We'll see. Personally, I find this move disturbing. Whitehurst was a charismatic and effective leader during a time of turmoil and led Red Hat and then IBM to major market advances both in Linux and the cloud. In this new IBM executive shuffle, no Red Hat personnel were brought over to IBM leadership positions.