IBM absorbs Lotus

An IBM Corp. official has confirmed that Cambridge, Mass., subsidiary Lotus Development Corp. will be absorbed into IBM's corporate structure, losing its status as a subsidiary.

"What we're doing is moving them from a wholly owned subsidiary to be one of the four power brands" in IBM's software division, said Tony Occleshaw, product manager for IBM software.

He said the Lotus brand name and all Lotus products will remain for the time being, but from a legal standpoint "it will cease to be a wholly owned subsidiary," Occleshaw said.

A Lotus source who contacted SearchDomino but declined to provide her identity said Lotus would remain a subsidiary and was unaware of such a change.

Occleshaw said Lotus CEO Al Zollar would remain with the company, and continue to report to Steven Mills, IBM's senior vice president and group executive in charge of software.

Decision made last year

He said IBM made the decision to absorb Lotus at the end of 2000. Efforts in the U.S. to do so began about a month ago, but are ongoing in Europe because of the varying laws in each country. The deadline for the worldwide transition to be completed is the end of the third quarter.

One of the goals of the move is to present one point of contact for all IBM-owned software products, which include WebSphere, DB2, Tivoli, and Lotus.

"At the moment, because Lotus is a wholly-owned subsidiary, if there's a business partner that does business with Lotus and IBM, they probably have two account representatives. That will change. Each account will have one account representative that covers all products, the IBM the lotus and the Tivoli," Occleshaw said.

He said Lotus would likely retain 99% of its staff, with the only possible job losses being in account executive areas. Lotus will also remain in its Cambridge headquarters, and its own internal structure will remain largely unchanged.

Job cuts earlier

This change comes just weeks after Lotus eliminated nearly 200 jobs, mostly in marketing and sales. At the time there was speculation among industry watchers that Lotus would need to cut hundreds more employees and make other corporate changes in order to contribute more revenue to IBM.

"This has nothing to do with redundancies in head count or economic situations," said Occleshaw. "It allows us to plan our activities with our business partners a lot more efficiently. It's not a heavier hand, it's just a different hand."

IBM purchased Lotus in 1995 and it remained relatively autonomous, but last year when Zollar, a 23-year IBM veteran, took the reigns as Lotus CEO, many saw that as the first sign that IBM would being to assert more control over Lotus.

At Lotusphere in January, Zollar told reporters that Lotus would remain independent from IBM, both in name and in culture.

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