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During the Depression-ridden 1930s, with the United States circling the financial abyss, an American industrialist named Thomas J. Watson Jr. gambled the future of his business-equipment company on an expansion plan that included wholesale hiring, investments in technology, and the construction of new factories.
For six years, Watson had his factories at full bore – churning out tabulating equipment there were no buyers for. But he believed in his plan and stayed with his strategy.
When the Social Security Act of 1935 came up for bid – billed as "the biggest accounting operation of all time" – Watson's company was the only firm able to supply the equipment needed to maintain the employment records of 26 million people.
The successful execution on this contract led to other government pacts. Not only did this allow Watson's company to navigate the Depression; it set it up for long-term success.
That company went on to become one of the most-successful computer firms in history – the venture we now know as International Business Machines Corp. (NYSE: IBM).
"Big Blue," as the company is also known, has been experiencing some tough problems in recent months. But its successful years made fortunes for many investors.
We believe investors can reap the same windfall from the company that's poised to replace IBM as the new king of the computer industry.
We've identified that successor – and it's one of the best stocks to buy in tech today.
IBM: From Leader to Laggard
Back on Jan. 21, IBM announced that fourth-quarter sales had fallen 5%.
That sounds like the kind of small decline that really shouldn't worry investors. After all, profits rose about 6% from the year-ago quarter to about $6.2 billion.
But this was the seventh straight quarter that revenue fell. And Big Blue said it was taking a $1 billion first-quarter hit to cover restructuring costs.
Even as IBM tries to make itself over – which it has successfully done before – another firm is poised to take its place at the head of the sector table.
About the Author
Michael A. Robinson is a 35-year Silicon Valley veteran and one of the top technology financial analysts working today. He regularly delivers winning trade recommendations to the Members of his monthly tech investing newsletter, Nova-X Report, and small-cap tech service, Radical Technology Profits. In the past two years alone, his subscribers have seen over 100 double- and triple-digit gains from his recommendations.
As a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs and high-profile industry insiders. In fact, he was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon. And he was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
In addition to being a regular guest and panelist on CNBC and Fox Business Network, Michael is also a Pulitzer Prize-nominated writer and reporter. His first book, "Overdrawn: The Bailout of American Savings" warned people about the coming financial collapse - years before "bailout" became a household word.
You can follow Michael's tech insight and product updates for free with his Strategic Tech Investor newsletter.