International Business Machines Corp. (IBM:US) Chief Financial Officer Mark Loughridge, who helped the company maintain its relentless profit goals during his decade on the job, will retire at the end of the year.
Martin Schroeter, 49, general manager of IBM’s global financing, will succeed Loughridge on Jan. 1, the Armonk, New York-based company said in a statement yesterday.
Loughridge, the longest-serving CFO in IBM’s 102-year history, managed the company’s finances as it shifted to high-margin products -- an effort to steadily increase profits at the cost of sales growth. Even as revenue (IBM:US) has stalled, IBM remains on target for earnings of $20 a share in 2015. Loughridge, who will be 60 when he retires, joined the company in 1977.
“The organic growth has been non-existent,” said Ivan Feinseth, chief investment officer at Tigress Financial Partners, who doesn’t own IBM shares. “Overall the company has to transition and evolve. The CEO has to drive and Martin is going to have to navigate.”
Schroeter will be stepping into the new position after six reported quarters of falling sales and a loss in the company’s hardware business in the first nine months of $713 million. Meanwhile, IBM’s traditional growth markets business -- developing economies overseas, including China -- posted its first revenue decrease in its history in the three months-ended in September.
To make up for the slowdown, the company is looking to cloud computing -- the delivery of software and sales online. It generated more than $1 billion in revenue from cloud products and services in the third quarter. IBM has also sold less-profitable businesses, acquired more lucrative software companies and lowered its tax rate.
As the stock has dropped this year, Chief Executive Officer Ginni Rometty is rewarding shareholders who have held on. Last month the board authorized an additional $15 billion to IBM’s buyback (IBM:US) plan, bringing the total to $20.6 billion, as the company reduces stock in circulation to increase earnings per share.
IBM shares fell less than 1 percent to $179.99 at the close in New York. The stock has fallen 6 percent this year, compared with a 24 percent gain in the Standard & Poor’s 500 Index.
Schroeter, who has been at IBM since 1992, was treasurer from 2007 to 2011, before taking on his current post, the job Loughridge held before becoming CFO. Schroeter’s experience has prepared him for the executive position, Andrew Bartels, an analyst at Forrester Research Inc. (FORR:US), said.
“Martin has the same set of skills to play that roll,” Bartels said. “It’s a logical up-step for him.”
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