TCS Daily

If I Had to Pick One Tech Stock. . .

By James K. Glassman - July 17, 2000 12:00 AM

Let's assume for a moment that you have a variety of stocks in your portfolio, spread across multiple industries (I recommend owning stock in at least eight companies in different fields). You have a pharmaceutical firm, a consumer products company, maybe a restaurant chain, a financial services firm and a few others. You've decided, given your appetite for risk, that you want to add just one information technology company into the mix.

So, which tech stock will outperform all others during the next five years? Given recent history, the odds are pretty good that this company does not exist yet. And even for the established firms, it's difficult to plot the next 12 months, never mind the next five years. The rapid pace of change in tech markets means that today's big names will be selling a completely different set of products in 2005.

Therefore, in choosing my favorite tech stock for the next five years, it's not just a question of cutting-edge technology and meaningful patents. It's also about corporate culture and attitude. Which firm has shown an ability to respond to changes in the marketplace? Which company is opportunistic and resilient, with the right attitude to capitalize on its advantages?

Several years ago I was interviewing the Chairman and CEO of Motorola, Christopher Galvin, when I asked him, "Which product or products will be generating most of your revenues in five years?" Galvin's response: "I have no idea." Good answer. It's not that Galvin lacks vision. He just understands the importance of listening to the market and seizing opportunities.

And there are plenty of opportunities for Motorola. The company has a large and rapidly expanding business selling computer chips for wireless phones, markets its own popular wireless phones, is the leader in digital set-top boxes for cable television, and makes the modems for people who want fast Internet access via cable television lines. Throw in a large business selling the computer chips that manage today's smart cars, chips for video games, satellite technology, and wireless broadband equipment, and you have a lot of ways for MOT shareholders to prosper. The company stands to benefit from several powerful technology trends, and history says that it will.

Motorola became well-known to World War II GI's for its rugged and reliable walkie-talkies. The company continued on the leading edge of wireless communications and became conspicuous in the 1980s for its ability to compete with Japanese firms. At the time Japan, Inc. seemed to be taking over the electronics industry. Motorola stumbled a bit in the late 1990s - the Iridium satellite venture was an embarrassing failure - but the company has pulled off an impressive turnaround by focusing on broadband Internet and wireless technologies.

Fans of George Gilder's terrific newsletter, the Gilder Technology Report, know that he has a great track record of picking companies with "ascendant technologies." Gilder doesn't make any judgments about a company's management, marketing or financial prowess - he simply highlights the innovative firms creating powerful technologies, and very often they turn out to be great investments as well. Gilder has Motorola on his list both for their broadband innovations and for their wireless phone business.

This may be an opportune moment to buy MOT, because despite some recent good news, the company's shares are still trading well below their 52-week high of $61.54.

If I had to pick one tech stock for the next five years, I'd pick Motorola.

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