Big Blue Shows 'Em How It's Done

There's no drama in Armonk as IBM (NYS: IBM) prepares for life without longtime CEO Sam Palmisano. It's just a simple, smooth transition to a proven performer with a decade-long history of managing multibillion-dollar operations.

Following IBM CEOs' tradition of moving on at age 60, Palmisano retires from Big Blue's CEO office at the end of the year, to be replaced by inveterate Senior VP Virginia "Ginni" Rometty. This choice was no surprise; fellow Fool Cindy Johnson noted a few months ago that Rometty was on the short list of heirs to the throne. The head of sales, marketing, and -- crucially, in my opinion -- strategy surely has a handle on what IBM can, can't, and should do. She should hit the ground running.

This is different from the Apple (NAS: AAPL) succession in that Steve Jobs had no choice but Palmisano is stepping over to the chairman's seat voluntarily. However, it's similar in that Rometty, like new Apple CEO Tim Cook, comes in as a trusted lieutenant with years of hands-on experience with running much of the business.

It's also a dramatically different scene compared to the chaotic string of CEOs parading through the Hewlett-Packard (NYS: HPQ) corner office. If there's one other tech titan with a succession picture like Big Blue's, it would be Oracle (NAS: ORCL) , where a small handful of top-caliber talent vies to replace CEO Larry Ellison when he leaves to take up competitive yacht sailing or the Bushido lifestyle full-time.

As highly recommended as Rometty comes, Palmisano will surely be missed. Sam made the controversial but hugely successful moves of leaving the businesses around PC hardware to refocus on the more-profitable server, software, and services triple-S strategy. He's made large inroads in emerging markets, making IBM shares into a bona fide international investment. IBM has become a role model for other tech giants to follow; the erstwhile clones include such luminaries as Oracle, HP, and Cisco Systems (NAS: CSCO) . Not a bad legacy to leave behind.

So Rometty becomes arguably the most powerful woman in the business world, leaping ahead of HP's Meg Whitman, Xerox CEO Ursula Burns, and PepsiCo leader Indra Nooyi -- maybe even in front of Lady Gaga and Oprah. Palmisano swears that her appointment "[has] got zero to do with progressive social policies" and everything to do with her deserving the job on equal terms. And I'm buying that explanation. But it's still cool to see the notoriously stodgy IBM making such a forward-thinking move, especially against the backdrop of Occupy Wall Street demonstrations demanding changes in the world of corporate suits.

IBM has paid dividends every year since 1962, with an unbroken string of annual payout boosts going back 15 years. Ginni Rometty will surely keep that shareholder-friendly tradition going, moving the 100-year-old company closer to true Dividend Aristocrat status. The Fool has prepared a special report on 11 other rock-solid dividend stocks, available right here for the irresistible price of free. Get your copy right now!

At the time thisarticle was published

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