Arthur J. Villasanta – Fourth Estate Contributor
New York, NY, United States (4E) – Heavily indebted GE (General Electric), once the darling of Wall Street and a rock solid powerhouse of American industry, has suffered the ignominious indignity of being removed from the elite Dow Jones Industrial Average, of which it has been a part for 110 years.
The hard times battering the once mighty maker of light bulbs and jet engines were caused by a serious cash crisis caused by years of bad deals. GE has fired its CEO; cut thousands of jobs and reduced its coveted stock dividend in half. In 2017, GE was the worst-performing stock in the Dow, losing almost half of its value. GE is down by another 25% thus far this year.
GE is selling off long-held businesses to slash its massive mountain of debt. In May, GE agreed to sell its century-old railroad division, and is also searching for a buyer for its moribund light bulb division.
S&P Dow Jones Indices announced the ejection of GE and its replacement by Walgreens Boots Alliance, Inc in the 30-stock index on June 26. Walgreens Boots Alliance is a holding company headquartered in Deerfield, Illinois that owns Walgreens, Boots, and a number of pharmaceutical manufacturing, wholesale and distribution companies.
David Blitzer, chairman of S&P’s index committee, said industrial companies like GE are no longer as prominent in the American economy. Banks, healthcare, tech and consumer companies play a larger role today.
“Today’s change to the DJIA will make the index a better measure of the economy and the stock market,” said Blitzer.
GE was an original member of the Dow in 1896 and has been in it continuously since Nov. 7, 1907. It took the announcement of its ejection with defiance.
“We are focused on executing against the plan we’ve laid out to improve GE’s performance,” said a GE spokeswoman. “Today’s announcement does nothing to change those commitments or our focus in creating in a stronger, simpler GE.”
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