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IBM Global Exec on Medical Leave

January 7, 1998

NEW YORK (AP) _ Health problems have indefinitely sidelined the head of IBM Corp.’s fastest growing division and triggered a reshuffling of executive ranks at the world’s largest computer company.

Dennie Welsh, 55, on Wednesday took a medical leave of absence from IBM Global Services and was replaced by rising executive star Samuel Palmisano. Palmisano, 46, had headed IBM’s personal systems group, leading the PC, consumer and network computing businesses.

The reshuffling also resulted in new leaders for the company’s mainframe and global industries businesses.

Welsh was instrumental in starting the global services unit six years ago and building it into IBM’s fastest-growing business, posting revenue increases of at least 20 percent each quarter for the past five years.

The global services division advises companies on how to set up computer systems and networks and sells hardware and software for building the networks.

IBM’s stock fell nearly 1 percent, down $1 to $104.25 per share, in trading on the New York Stock Exchange.

IBM declined through a spokesman to detail Welsh’s health problem, which was disclosed by IBM chairman and chief executive Louis V. Gerstner in an internal memorandum to employees this week. The spokesman, Rob Wilson, said Welsh’s medical condition was a personal matter.

Gerstner wrote that Welsh’s leave was ``open ended and will last for as long as Dennie needs to recuperate ...″ While Welsh would be available to advise IBM, ``this challenge is going to require 100 percent of his energy,″ he said.

Palmisano was replaced as head of the personal systems group by David Thomas, 48, head of IBM’s global industries unit, which markets and sells IBM products to corporate customers.

Thomas was replaced by Linda Sanford, 44, head of IBM’s mainframe business. Sanford was replaced by Dave Carlucci, 43, IBM’s chief information officer.

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