General Electric, the last original member of the Dow Jones industrial average, was dropped from the blue-chip index late Tuesday and replaced by the Walgreens Boots Alliance drugstore chain.
Now, don’t even get me started as to the idiocy of following a price-weighted stock index in the age of computers, but being part of the DJIA is a huge badge of honor that G.E. has now lost.
The decision is a fresh blow to General Electric, which has stumbled badly in recent years. Last fall, John L. Flannery, the company’s new chief executive, warned that the power-generation unit was reeling. G.E. cut its dividend for only the second time since the Great Depression. In January, G.E. surprised investors by taking a big charge and setting aside $15 billion over seven years to pay for obligations held by GE Capital, the company’s financial services unit, mainly on long-term care insurance policies.
The recent decline of G.E. has been shocking to me. When I was at business school in Connecticut, G.E. was, rightly, considered a giant of industry and of financial services. Now it appears to be a lumbering giant, a lion in winter. I wonder what it will take to turn the company around.