Today’s disturbing announcement by IBM that it is abandoning its profit targets for 2015 is further proof that a tech company without an innogration strategy is like a ship without a sail. This admission comes on the heels of Hewlett Packard’s announcement earlier this month that it will be splitting the company in two, which Leo Boeckl dissects in this month’s In Focus article. Although we talk a lot about our concept of innogration, we are now seeing the companies that need to catch up engaging in “reverse innogration” as a means of paring themselves down in order to grow back up.

In our Sector Spotlight article, Rob DeFrancesco identifies five companies that could be attractive acquisition candidates for the new H-P Enterprise company that Leo describes. Now that HP CEO Meg Whitman has essentially undone all of her predecessor’s bad moves, the pressure is on her to prove she can move the company forward. The quickest way to do that is to begin innograting by buying what you do not already have, and right now HP doesn’t have much.

If you’d prefer to avoid large cap tech stocks until the market settles down then Rob has a new small cap stock that he feels may eventually qualify for inclusion in our Next Wave portfolio. Although it’s sad to see big companies like IBM and HP suffer, their loss is someone else’s gain and many of those beneficiaries can be found in this portfolio.

The much higher than usual volatility of the past few weeks has changed the STR scores for many of the tech stocks we cover, so you may want to take a look at the Portfolios table at the bottom of this issue to see if any of your personal favorites are now back within buying range. Just last we reopened buy recommendations for Western Digital (WDC) and Seagate Technologies (STX) with strict buy limits, as we suspect the extreme volatility isn’t over yet so you may be able to pick up some of these stocks at bargain prices.