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Yesterday, Dow Jones announced it was making changes to its famed industrial average. One of those changes was the addition of Cisco. The press release announcing the changes provided little insight into exactly why Cisco was chosen over, say, Apple or Google – two other companies thought to be on the short list of those considered. But last night, John Prestbo, editor and executive director of Dow Jones Indexes, shed some (but not a lot of) light on the decision.

In response to the question of why Cisco instead of Apple or Google, Prestbo said they both “certainly qualify as blue chips, but we chose Cisco this time.”

OK, that doesn’t exactly clear things up, but one interesting tidbit was in regard to what role bloggers may have played in the decision. An interviewer pointed out to Prestbo that Cisco had long been on bloggers’ suggestion list of companies that belonged in the index and asked if Dow Jones paid attention to their recommendations. His answer? “Yes. They and many others take the Dow seriously enough to complain when they think we are doing something wrong and to offer their ideas. So, we take them seriously in return.”

But bloggers shouldn’t necessarily feel too empowered by Cisco’s inclusion. Prestbo said those offering up their opinions on who should and shouldn’t be in the index are mostly “looking at things from an investor's point of view, as though the Dow was a portfolio they owned (and maybe some of them really do). But our goal is to maintain an index to accurately reflect the market as whole, and by extension the U.S. economy. That is a different purpose, which sometimes leads us in a different direction.”

 

Comments (4)

	1. 06-02-2009 18:03
	If Apple and Google are the tech area alternatives to Cisco for Dow inclusion at this time, I would vote for Cisco because it has the stable outlook. The search engine market has been undergoing some changes and Apple sure is with Steve Jobs situation. John Chambers outfit maybe isn't as flashy as the other two, but it should remain a long term player. Registered

John Stevenson

	2. 06-02-2009 18:18
	Cisco is also more adept at acquiring companies than most other F500 Tech Cos with the possible exception of Oracle. This makes them better long term survivors.. Registered

Bill Wilson

	3. 06-03-2009 09:28
	What's good for Cisco; isn't exactly good for the US, as suggested by the former president of GM. Still, it certainly has a better understanding of acquiring companies and may be the best long term play for the Dow out of the considered set. Registered

Ron Kost

	4. 06-03-2009 15:36
	All good points on Cisco. Still, despite it's original moniker, the DJIA is supposed to tell the daily story of the stock market--and thus serve as a bellwether for the broader American economy (and not just pureplay manufacturers; thus the inclusion of non-industrials like B of A and Travelers).    Thus, by my lights, the DJIA should emphasize innovation as well as stability, since innovation is what drives earnings--and ultimately stock prices. And while Cisco is certainly a fine company, it's hard to see past Google and Apple when you're talking about corporate innovation. Both of the companies are also at the forefront of digital commerce, which is where the U.S. economy is headed. Registered

John Goff

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