Back in the early 1990s IBM - known as Big Blue - was regarded as a lumbering giant.

Now it is seen as a hot technology company, leading the charge into the 21st century.

The rebirth of 'International Business Machines' is due in large part to the huge expansion of the Internet - a quarter of IBM's revenue, about $20bn, now comes from Internet-related sales.

Lou Gerstner: Has revived IBM's fortunes

But that did not happen by accident. The company, under Chairman and Chief Executive Lou Gerstner, made sure it was prepared for the Net explosion.

Lessons had been learned - it was a lack of readiness that had nearly brought the company to its knees during the personal computer revolution.

The best thing since sliced ham

International Business Machines was incorporated in 1911, and made everything from scales and timeclocks to meat and cheese slicers.

It soon realised that there was a bigger future in computing and tabulating equipment than in neat slices of ham. The refocused company grew rapidly.

IBM was at the forefront of computer development in the years after World War II, refining mainframe systems and changing the way the technology was sold, resulting in the separate software and services industries of today.

PC revolution caused turmoil

But the PC revolution of the 1980s put the focus on individual desktops rather than business applications at a corporate level.

IBM was thrown into turmoil - by 1993 annual net losses reached $8bn.

When Mr Gerstner took over, there was pressure to split IBM into separate companies. He resisted it, preferring to continue IBM's tradition of delivering integrated systems to customers.

And he made sure the company was ready to handle the challenges of the Internet and network computing.

Dinosaur now sleek operator

"Of all the things we have reason to feel good about, perhaps most encouraging is the fact that a new world we first described four years ago is becoming a reality," he told stockholders in February.

"As early as 1995 we said the Net would be about business and commerce, and that it would be a vocational medium, where real work - work that matters - gets done.

"At that time we expected some people to yawn. We were wrong. They laughed. Today our competitors aren't laughing."

Under Mr Gerstner's guidance, the dinosaur of recent years has become a sleek and innovative operator.

On the cutting edge

It still produces mainframes, which are now back in favour as they can handle complex Internet operations by computing up to 1.6 billion instructions a second.

Nearly half of all laptops contain an IBM hard-disk drive

But the company is also producing breakthroughs in computer chip technology, speeding up operations and reducing energy consumption.

And it has worked to explore the field of "pervasive computing".

Computer-like devices are embedded in phones, cars and household appliances, able to talk to each other and even tell suppliers when faulty parts need replacing.

Predicting double digit growth in earnings, Lou Gerstner now tells Wall Street investors that IBM generates more revenue, and decidedly more profits from the Internet, than the world's top 25 Internet stocks combined.

"Gerstner was uncharacteristically positive," said analyst Gary Helmig of SoundView Technology Group. "His discussion really had no storm clouds in it at all.

"He talked about huge pent-up demand for computer applications which haven't been done in 1999 and that there's also e-commerce demand fuelling IBM's growth", Mr Helmig said. "So he's looking for a very strong 2000."

Certainly IBM enters the new millennium in fine shape and perhaps with some of its best days still ahead of it.

Upbeat message

IBM's recent history shows how even big players can get crumpled by the crashing waves of new technology. But its revival is a lesson in playing to a company's strengths and being bold enough to predict the next big thing.

Lou Gerstner was perhaps entitled to feel upbeat in his message to stockholders this year.

"When we started this journey in the spring of 1993 our future was uncertain," he said.