The troubled industrial behemoth General Electric (GE) has been kicked out of the Dow Jones Industrial Average (DJIA) index effective before the bell on June 26 and it will be replaced by drugstore chain Walgreens Boots Alliance (WBA). The continuous low price and its poor performance for a long time drove the last 19th-century company out of the DJIA index, which became the member of the DJIA in 1896 and was a continuous member since 1907.
While reporting this swap in the index, S&P Dow Jones Indices stated that GE has a weight in the index of less than 0.5 percentage point due to its low share price. It also added that Walgreens share price is higher and the Deerfield, Illinois-based company will contribute more meaningfully to the index.
Last year’s assets sale didn’t help the company much. Also, in last November, GE cut the dividend by 50% to $0.12 per share, which was another blow to the already wounded investors. Despite the divestiture spree, the shares of GE prolonged its downward trend and hit a 20-year low on April 2. CEO John Flannery’s plans to raise $20 billion through selling non-core businesses didn’t pay off well for the Boston, Massachusetts-based company.
On Monday, GE announced that it will axe 1,200 of its Switzerland employees as part of its cost-cutting measures. The only positive news in the recent times has been its upbeat results for Q1 in which revenue grew 7% to $28.66 billion and adjusted earnings rose to $0.16 per share compared to $0.14 per share in the prior year quarter.
Shares of General Electric dropped about 2% when the market ended today and continued to bleed further after the bell. Meanwhile, Walgreens stock traded positive both in the regular trading session and extended-hours of trading.