GM's loss is Cisco's gain

Posted June 1, 2009

When the Dow Jones Industrial Average drops General Motors, it will add a company with Triangle ties to the roster.

Cisco Systems, a maker of computer networking gear, employs about 3,400 people in Research Triangle Park.

The company issued this statement Monday:

"Cisco is honored to be included in the Dow Jones Industrial Average. We believe our inclusion in the Dow demonstrates not only Cisco's role as a broad technology indicator, but how remarkably the Internet and networking have transformed the way businesses and consumers connect, communicate and collaborate."

Dow Jones & Co. said Monday it would add Cisco Systems Inc. (Nasdaq: CSCO), the world's largest maker of computer networking hardware, to the 30-stock industrial average, replacing General Motors Corp. The change takes effect June 8.

The automotive giant filed for bankruptcy protection Monday. Meanwhile, Cisco has been weathering the recession without major layoffs, and has kept acquiring companies to expand its technology portfolio.

Shares of San Jose, Calif.-based Cisco rose 96 cents, or 5.2 percent, to $19.46 in midday trading. Investment funds that track the Dow Jones industrials are now forced to buy Cisco shares to match the index.

The addition of Cisco reflects the increasing importance of information technology in the U.S. economy. IBM Corp. was added to the list in 1979. It was followed by Hewlett-Packard Co. in 1997, then Intel Corp. and Microsoft Corp. in 1999.

Intel and Microsoft were the first Dow components that are listed on the Nasdaq Stock Market rather than the New York Stock Exchange. Cisco will be the third.

The Dow Jones industrial average also includes the two largest telecommunications services providers in the U.S., AT&T Inc. and Verizon Communications Inc., which both are major Cisco customers.

Dow Jones also said it will drop Citigroup Inc. in favor of Travelers Cos.

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  • CrewMax Jun 1, 2009

    Well, investment funds that want to track the Dow are "forced" to buy twenty-nine other stocks, as well!