General Electric booted from Dow Jones stock-index after a century
Slumping US industrial giant General Electric will be booted from the iconic Dow Jones stock index next week, S&P Dow Jones Indices has announced. It added that GE will be replaced on June 26 by pharmacy chain Walgreens Boots Alliance. GE was an original member of the Dow in 1896 and has been in the index continuously since 1907. Here's more.
GE saw shares tumble nearly 60% in last 2 years
The move comes on the heels of a two-year slump for GE, which has seen shares tumble nearly 60% over the last 24 months. S&P Dow Jones noted that the Dow index is weighted by stock-price, which means that GE accounts for less than 1% of the overall benchmark. Walgreens Boots has a higher stock-price and will have more influence on the index.
Thomas Edison launched GE in the 19th century
Thomas Edison launched GE in the 19th century. Over time, the company has an intermittent presence in a sprawling array of industries, including entertainment and finance. The company has pared back some of these businesses in recent years, selling NBC Universal to Comcast and divesting most of its finance business. GE's best performing units of late have been healthcare and aviation.
GE reported loss of $1.2bn since Flannery became chief executive
Under pressure from Wall Street, GE last year replaced Jeffrey Immelt with John Flannery as chief executive. GE has since trimmed costs, streamlined its board, cut its dividend and revamped employee compensation. It has also announced plans to sell $20bn in industrial assets. In April, GE reported a loss of $1.2bn in the first quarter due to $1.5bn in reserves to cover legal settlements.
GE says turnaround efforts on track
Flannery warned at the time that outlook for the power sector was even worse than previously thought. Analysts have praised Flannery, but some speculate whether a break-up of the company would make sense. GE said its turnaround efforts were on track. "We are focused on executing against the plan we've laid out to improve GE's performance," the company said.
Finance, tech companies more prominent today: S&P Dow Jones MD
The Dow's membership has over time added more tech companies like Apple and cut many former manufacturing giants like Alcoa. "Since the founding of the index, the US economy has changed; consumer, finance, and tech companies are more prominent today," said David Blitzer, MD and Index Committee Chairman, S&P Dow Jones. "Walgreens is a national retail drug-store chain offering related health services" he added.
