At long last, Dow gets a taste for Apple

Fri Mar 6, 2015 5:08pm EST
 
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By David Gaffen

NEW YORK (Reuters) - Apple Inc (AAPL.O: Quote), the largest U.S. company by market value, will join the Dow Jones industrial average .DJI, replacing AT&T Inc (T.N: Quote), in a change that reflects the dominant position of the iPhone maker in the U.S. consumer economy.

The decision to nudge aside AT&T, which has been part of the Dow for the better part of a century, is a recognition of how communications and technology have evolved. It's also a marker of Apple's transformation, from a struggling company with a small, fervent following two decades ago, into the nation's predominant consumer tech company.

"This is a sign of the times, and it might get everyone to look at the Dow more than they have been," said Richard Sichel, who oversees $2 billion as chief investment officer at Philadelphia Trust Co. "It would be difficult to pick any 30 companies that would cover the entire economy, especially compared with the S&P 500, but it does give the Dow more credibility."

The action, by S&P Dow Jones Indices, had been widely expected since Apple split its shares seven-for-one in June of last year.

AT&T declined to comment on its removal from the average, of which it has been a member for most of the last 100 years. The stock was added to the Dow in 1916, the year after the first-ever transcontinental telephone call. It was removed in 2004, but after SBC Communications renamed itself AT&T following a 2005 merger, it was reinstated.

"It was a new way of life: telephones, back then 100 years ago, these talking machines," said Howard Silverblatt, index analyst at S&P Dow Jones Indices. "Back then, AT&T was it, end of story."

TWIST OF FATE   Continued...

 
A police officer is silhouetted against the Apple logo in Grand Central Terminal in the Manhattan borough of New York January 13, 2015.  REUTERS/Carlo Allegri