General Electric booted from Dow Jones stock-index after a century
20 Jun 2018 |
- 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.
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GE saw shares tumble nearly 60% in last 2 years
Sinking shares |
- 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.
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Thomas Edison launched GE in the 19th century
History |
- 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.
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GE reported loss of $1.2bn since Flannery became chief executive
CEO Flannery |
- 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.
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GE says turnaround efforts on track
Turnaround efforts |
- 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.
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Finance, tech companies more prominent today: S&P Dow Jones MD
Dow Jones |
- 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.
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