IBM has suffered a blow as Xerox announced that Mr Richard Thoman, the number two executive at International Business Machines, is to be its next president and chief operating officer.

Mr Thoman joined IBM in 1994 and was named chief financial officer in 1995. He is widely credited with turning around IBM's personal computer business.

In a statement, Xerox said Mr Thoman would feed profit directly to Xerox chairman and chief executive officer Mr Paul Allaire in a newly formed office of the chairman.

IBM said its senior vice president and chief counsel, Mr Lawrence Ricciardi, would assume Thoman's responsibilities on an interim basis.

He would continue to be responsible for IBM's legal, government and intellectual property functions.

News of Thoman's departure sent shares of IBM lower.