IBM denies it's ready to kill Lotus subsidiary

March 29, 2001 —

IBM Corp. on Thursday strongly denied European media reports it is ready to wholly
integrate the corporate identity and staff of Lotus Development Corp. into Big
Blue, saying instead that the company is still studying what to do with its groupware
subsidiary.

"The information in the articles was seriously misquoted. There still
are no firm decisions about how to proceed with Lotus and while (integrating
Lotus) is a possibility, we are still looking at various different scenarios.
It is not a done deal," said Tony Occleshaw, IBM Software's European marketing
manager in a telephone interview with IDG News Service.

Occleshaw was quoted in two separate reports as saying that IBM had firmly
decided to restructure Lotus by absorbing it into IBM's corporate structure,
leaving only the brand name and products, and having the employees responsible
for Lotus product development, sales, marketing and support report directly
or indirectly to a boss within IBM Software. The restructuring according to
the reports, began last month in the U.S. and would begin next month in Europe,
with the restructuring expected to be completed by the end of the third quarter.

The new structure would have Lotus President and Chief Executive Officer (CEO)
Al Zollar staying with IBM and continuing to report to Steven Mills, IBM's senior
vice president and group executive in charge of software, according to the reports.
Furthermore, Lotus U.K. Managing Director John O'Hara would report to Steve
Cowley, vice president northern region, IBM Software, while Fritz Fleischmann,
European vice president and general manager for Lotus would be reporting to
Maurizio Carli, the vice president of IBM Software Europe, the reports said.

Representatives from O'Hara's office referred all questions directly to Occleshaw,
who declined to comment on any of the details in the media reports.

"We're still in the middle of a study on (Lotus)," Occleshaw said.
IBM-owned software products include WebSphere, DB2, Tivoli, and Lotus.

Earlier this month, Lotus -- which currently has about 7,500 employees -- announced
it was laying off 183 U.S.-based employees as part of a restructuring plan to
eliminate redundancies and align its management structure more closely with
IBM.

Under the Lotus restructuring, which first came to light in January, those
working in the sales and marketing communications departments would now work
under the IBM software group, though they would still be Lotus employees, Lotus
spokeswoman Mary Rose Greenough told IDG News Service on March 2.

The Lotus software development team would remain intact and Lotus would also
retain sales and marketing staff for its own brand. "The Lotus brand is
extremely important to IBM software," Greenough said.

IBM bought Lotus in 1995 and officially moved 24-year IBM veteran Zollar into
the top job at Lotus on Feb. 1, 2000 after he had served as general manager
of the company's network computing software division.

Speaking at Lotusphere in Florida shortly after his appointment had been announced,
Zollar said his stewardship did not mark the beginning of the end for Lotus
as an independent brand. "I want to answer that for what I hope will be
the last time with a simple but resounding, 'No, it isn't,'" said Zollar
at the time.

George A. Chidi Jr. contributed to this report.

ITworld.com