The Wall Street Journal announced that GE will be replaced by Walgreens in the Dow Jones Industrial Average (DJIA). GE was the only remaining member of the original DJIA that was created in 1896. GE was once ranked as one of the Bluest of Blue Chips. It has fallen 55% over the last 12 months and is down 25% year-to-date.
As a result of the decline in the share price, and because of the way the index is calculated, GE has had very little impact on level of the DJIA. What this means to shareholders in the short term remains to be seen. Over the longer term, management decisions about the direction of the company will be much more important.
Reacting to the decision, management stated that:
“We are focused on executing against the plan we’ve laid out to improve GE’s performance…. Today’s announcement does nothing to change those commitments or our focus in creating a stronger, simpler GE.”
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