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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.
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About the Author
Michael A. Robinson is one of the top financial analysts working today. His book "Overdrawn: The Bailout of American Savings" was a prescient look at the anatomy of the nation's S&L crisis, long before the word "bailout" became part of our daily lexicon. He's a Pulitzer Prize-nominated writer and reporter, lauded by the Columbia Journalism Review for his aggressive style. His 30-year track record as a leading tech analyst has garnered him rave reviews, too. Today he is the editor of the monthly tech investing newsletter Nova-X Report as well as Radical Technology Profits, where he covers truly radical technologies – ones that have the power to sweep across the globe and change the very fabric of our lives – and profit opportunities they give rise to. He also explores "what's next" in the tech investing world at Strategic Tech Investor.