IBM (IBM), known by many on Wall Street by its nickname Big Blue, was regarded by the last two generations of investors as a computer hardware company. Big Blue has made money for investors for decades but did not start out by manufacturing hardware and software for large mainframe computers.
Rather, IBM has its origins in making and selling tabulating machines as the CTR Company. These machines were invented by William Hollerith, who developed punch cards which many people refer to as Hollerith cards, which I used in high school in the 1970s and which . I used them when programming in Fortran on an old IBM 1130 while in Stuyvesant High School in the 1970s. These cards are still used today as toll cards on highways or election cards. (Remember the hanging chad? -- you can blame William Hollerith for that.)Eventually, Thomas Watson Sr. moved over from National Cash Register to take over at CTR. Watson changed the name to International Business Machines, built the business machine and tabulating business and most notably designed the famous company culture. Watson Sr. was replaced in the 1950s by his son, Thomas Watson Jr., who went on the take IBM into the computer age. After Watson Jr. retired in 1971, the company slogged through a couple of challenging years. Then John Opel took over in 1981 on the cusp of the desktop computing age as IBM pioneered the personal computer. IBM's big mistake was focusing on the hardware and allowing Microsoft (MSFT) to engineer and control the operating system. Now IBM is focused entirely on information technology consulting, systems integration and software. Now Sam Palmisano is being replaced by Virginia "Ginni"Rometty as CEO, making her IBM's first female CEO. Rommety has had a hand in building IBM's consulting businesses over the last two decades. The stock is trading near its all-time highs and is the largest constituent stock in the Dow Jones Industrial Average. To me this tells me that the market has given Rometty its stamp of approval. IBM, one of Warren Buffett's top stocks, also shows up on a recent list of 3 Tech Stocks to Buy on a Pullback. I featured it in a previous article, "6 Tech Stocks That Rate Better Than Apple."
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