HP to be dropped from Dow: report

HP to be dropped from Dow: report

Summary: Alcoa, Hewlett Packard and Bank of America will be dropped from the Dow Jones Industrial Average. Goldman Sachs, Visa and Nike will replace them.

TOPICS: Banking
HP's stock has underperformed the broader Dow Jones Industrial Average in recent years, putting it at risk. (Chart courtesy Google)

Aluminum producer Alcoa, tech stalwart Hewlett Packard and Bank of America will be dropped from the Dow Jones Industrial Average, according to an Associated Press news alert published this morning.

In their place, investment banking firm Goldman Sachs, global payments provider Visa and athletic apparel maker Nike will be added. The changes will take affect after the close of trading on Friday, September 20.

The Dow Jones Industrial Average is a major U.S. stock market index and among the most closely watched benchmark indices in the country. It aims to properly represent the major areas of the U.S. economy at a given moment in time, and debuted in 1896 with just 12 companies spanning cotton, sugar, oil, tobacco, gas, leather and other interests.

Over the years, technology companies such as AT&T (telecom), Cisco Systems (networking), General Electric (industry), HP (computing), Intel (processors), IBM (information services), Microsoft (computing) and Verizon (telecom) made their way onto the list.

The decision by S&P Dow Jones Indices LLC, the company that oversees the index, to drop Palo Alto, Calif.-based HP demonstrates the company's recent and relative weakness.

Indeed, the changes "were prompted by the low stock price of the three companies slated for removal and the Index Committee's desire to diversify the sector and industry group representation of the index," according to an official statement made available shortly after the news hit the wire.

Though HP's stock price has doubled since this time a year ago, to $22.36, it has underperformed the broader stock market, putting it at risk to be dropped. The company appointed former eBay chief executive Meg Whitman as president and CEO in Sept. 2011.

The last time S&P Dow Jones made such a sweeping change to the index was in 2004, when it replaced AT&T, Eastman Kodak and International Paper with AIG, Pfizer and Verizon. In June 2009, in the depths of a global recession, the company replaced General Motors with Cisco.

S&P Dow Jones said the moves won't have any effect on the level of the index, which closed yesterday evening at 15,063.12.

Topic: Banking

Andrew Nusca

About Andrew Nusca

Andrew Nusca is a former writer-editor for ZDNet and contributor to CNET. During his tenure, he was the editor of SmartPlanet, ZDNet's sister site about innovation.

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  • no surprise here

    after a string a beancounters at the helm, that were only concerned about their own pockets and offshoring American jobs, that's the expected outcome.
    LlNUX Geek
    • +1

      This is one of the rare times I agree with you.
      Ram U
    • Funny to see a Linux Geek that is protectionist...

      Linux Geek: I would advice fewer programing classes and more about economics & free markets.
      • Capitalism is not a free market

        FREE markets do not offshore for fear of bankrupting the customers. FREE markets do not allow monopolies for fear of price fixing and market divisions, kickbacks and bribery. FREE markets have police watching the profiteers.
        And in free markets, there is always someone nipping at your heels with their own hard work, instead of stealing your IP to resell.
    • Funny to see a Linux Geek that is protectionist...

      Do my eyes deceive me or the OP really wrote "American jobs"?

      Do you have an idea about the number of programmers who have played a role in the development of Linux? That you have no problemo taking advantage of, n'est pas?

      Tip: If you a partial to countries where jobs can be inherited and have owners, may I suggest Britain, Venezuela, India, North Korea??
      • American jobs

        There is a difference between open source linux collaboration and a company parading as "American" while exploiting inferior working conditions and non-existent civil rights in other countries. Still, I doubt there is anyone who has clean hands since even our tooth brushes are made in China.
  • Never should have carved out Agilent

    HP is just turning into a burning rump.
    Alan Smithie
  • Too many acquisitions

    They bought garbage like Opsware for way too much money instead of focusing on hardware. They tried getting into software, but their software is not enterprise-ready.
    • Seems Californians chose wisely

      if this is the kind of 'leadershp' Meg Witless offers
  • It is just Carly's legacy come to roost.

    She is personally responsible for the destruction of several companies and HP is just another in a long list of business that have died -- or nearly died -- to line her pockets.

    I find it humorous that Goldman Sachs, one of the criminal groups responsible for breaking the world economy and dumping the USA into an extended recession, is one of those replacing the outgoing group. I guess crime DOES pay.

    • Bingo

      Ram U
    • Goldman Sachs was just a co-conspirator; the biggest culprit was the U.S.

      government, with its Fannie Mae and Freddie Mac and the Community Reinvestment Act, which was the trigger for all of the malfeasance that followed. In a way, Goldman Sachs just followed the leadership of the federal government. Two wrongs don't make a right, but Goldman Sachs was just the biggest scapegoat.
    • It's not just Carly, the HP board ...

      ... has made a string of bad mistakes. They have only one viable business left - enterprise-class printers - and they are not taking good care of it. Like the boards of most long-lived companies, they (like Congress) are mostly made up of old white men. Baby Boomers who, as they near retirement, do not understand how to innovate in the twenty-first century.

      Such organizations (including Congress) need new blood, and a constant turn-over of new ideas and those daring enough to take huge risks in exchange for huge potential payoffs.

      HP and others like them, cannot survive on the status quo any longer.
      M Wagner
  • HP sure value

    HP prefers NASDAQ because it serves well to its interests, it is "better treated" and it is also preferably how index Tech. Of HP big advances they are expected and all the indications coming from R&D or future projections are good, HP offering "more for less"
    luis river
  • Who cares... Wall street are all thieves that should be in jail.

    What would be better..... NO STOCK EXCHANGE.. Since compulsive addicted gamblers, thieves and parasites are of ZERO use to mankind.

    Tax every single bank and wall street transaction at the same rate they all want to tax pot... 25% see how long the parasites last.

    Paypal and Bitcoin is perfectly well setup to completely replace the parasites running the banking fraud system.
    Reality Bites
    • You must be one of those idealistic dummies I keep hearing about...

    • Time to re-invent companies

      NO STOCK required. The days of HP way are long gone, which had a rule regarding compensation
      spread over the organization. I would like to see an innovative company that provides a product or
      service that is a non-profit, employee owned, that distributes all it's profits back to all it's employees
      as bonuses. The Feds still collect taxes either via income or better a national sales tax without any
      income tax, fair tax. But only greed would make this approach unrealistic.

      HP demise ownership rests with the complete risk adverse, management chain, long before Carly
      arrived. Many suggestions from the technical staff were ignored over the years. HP only entered
      the market place after someone else had established it. The only product invented by HP was the
      plotter family to produce CAD drawing, leading to the DeskJet printer. HP locked up the
      market for a time by engineering including an integrated circuit as part of the ink cartridge. HP
      and others have tried this strategy of including inhouse, non standard parts with less success.
      Frank W. Bennett
  • So, in other words, Dow Jones drops any poorly performing

    business from its index so that it can present an unrealistically optimistic view of economic strength.
    • The Fed is doing a better job of presenting an unrealistic and

      optimistic view of the economy, by propping up the stock market via its huge amounts of bond purchases. Without the fed spending, the market would probably still be around 2007-2008 levels.
  • Figures

    HP's support of Microsoft put them over the cliff. Enjoy the fall!