GE Loses Spot on Dow
For the first time in 110 years, General Electric will not be a member of the elite Dow Jones Industrial Average. S&P Dow Jones Indices announced on Tuesday that the iconic maker of light bulbs and jet engines will be replaced in the 30-stock index by Walgreens Boots Alliance. GE was an original member of the Dow in 1896 and has been in it continuously since November 7, 1907.
Being ousted from the Dow is the latest indignity for GE, which is dealing with a serious cash crisis caused by years of bad deals. GE has replaced its CEO, slashed thousands of jobs and cut its coveted stock dividend in half. Last year, GE was the worst-performing stock in the Dow, losing almost half of its value. GE is down by another 25% this year.
“We are focused on executing against the plan we’ve laid out to improve GE’s performance,” a GE spokesperson said in a statement. “Today’s announcement does nothing to change those commitments or our focus in creating in a stronger, simpler GE.”
Shares of GE fell 1.4% in afterhours trading. While investors don’t expect the company’s departure from the Dow to be a long-term drag on its share price, some said its exit was a potent symbol of how far the company’s elevated status in the U.S. economy has fallen.
“I think it tells you that GE no longer qualifies as one of the most important companies in our country,” said Michael Farr, president of investment management firm Farr, Miller & Washington. “In a technology driven world, it has been challenging for manufacturing companies to remain relevant.”
GE’s market capitalization peaked at $594 billion in 2000, making it the most valued U.S. company. It has shrunk over the years. Under former CEO Jeff Immelt, the company shed its NBCUniversal media business and sold off most of its GE Capital arm, which was once of the biggest U.S. lenders.