Dow Jones announced Monday that Cisco Systems will replace General Motors in its prestigious industrial average. The switch leaves the Dow Jones Industrial Average (DJIA) without a single automotive company among its 30 constituent stocks.
Robert Thomson, managing editor of the Wall Street Journal and editor-in-chief for all of Dow Jones, said in a statement that Cisco is a fitting addition "because its communications and computer-networking products are vital to an economy and culture still adapting to the Information Age—just as automobiles were essential to America in the 20th Century."
Tech companies will now make up one-sixth of the industrial average, with Cisco joining H-P, IBM, Intel and Microsoft.
The news sent Cisco's share price up as much as 5.5% in morning trading.
“Cisco is honored to be included in the Dow Jones Industrial Average,” the San Jose, Calif.-based company said in a press release. “We believe our inclusion in the Dow demonstrates not only Cisco’s role as a broad technology indicator, but how remarkably the Internet and networking have transformed the way businesses and consumers connect, communicate and collaborate.”
As the index plummeted in the early months of the year, analysts had been calling for an update of the Dow. Many index-watchers had predicted Cisco, Google or Apple would be the next stock to make the DJIA.
GM was kicked out of the index due to its bankruptcy filing on Monday. In an ironic twist, Dow Jones also announced that the Travelers Companies will replace Citigroup in the index.
Citi and Travelers merged in 1998 in a deal valued at $140 billion. Citi later spun off Travelers in 2002.
Last year, the Dow had its first update since 2004. In that rejiggering, AIG, Altria Group and Honeywell International were replaced by Kraft Foods, Bank of America and Chevron.
The latest revision to the Dow-with Cisco and Travelers now on the roster—will go into effect June 8.
Dow List as of June 8:
Alcoa
American Express
AT&T
Boeing
Bank of America
Caterpillar
Cisco Systems
Chevron
Coca Cola
Walt Disney
DuPont
Exxon Mobil
General Electric
Home Depot
Hewlett-Packard
IBM
Intel
Johnson & Johnson
Kraft Foods
JP Morgan Chase
McDonald's
3M
Merck
Microsoft
Pfizer
Procter & Gamble
Travelers Group
United Technologies
Verizon
Wal-Mart
Comments (1)
1. 06-02-2009 10:47
Given that the US taxpayer now has substantial interests in both GM and Citigroup this isn't something I'm particularly happy to see, but Cisco and Travelers are fine additions to the Index. It will be interesting to see when an Internet company like Google secures a place in the Index; it's still dominated by fairly traditional consumer products/services companies but the 21st Century will demand a place for information companies.
Registered
Only registered users can write comments. Please login or register.
