Apple Inc. (NASDAQ:AAPL), a company known for its technology products like the iPhone and iPad is going to join Dow Jones industrial average. One of the largest technology players in the world was not able join the prestigious Dow Jones index since years due to share issues. Split in stocks of Apple has now made palatable shares to price-weighted measure.
The change has resulted in exit of AT&T, the telecom giant from the 30 member group of companies. The remaining technology firms on board now are Microsoft Corp., Intel Corp., International Business Machines Corp., Cisco Systems Inc. and Visa Inc along with Apple Inc.
The main reason behind the exit of AT&T’s exit is a drop of 4.5% last year. Implementation of these changes, which brings down number of technology companies on a group of six, will take place after the close of trading on March 16.
According to the Chairman David Blitzer from the Index Committee at S&P Dow Jones Indices, Apples own split of 7-1 in June last year and Visa’s scheduled split of 4-1 on March 19 resulted in the addition of Apple Inc. on the Dow Jones index.
As per its weighting methodology, Dow Jones index joins stock’s influence to its share price. This stopped Apple from joining the index.
According to companies’ relevance for the investors, grow rates and reputation, committee comprising experts from the Wall Street Journal and S&P Dow Jones Indices selects stocks for the index.
On being asked about the selection of Apple Inc. to the index, Blitzer said, “Being the leader in a technology arena in the world Apple deserves to be on the list. It is also the largest corporation in the world, which made it clear choice.”
In September 2013, Dow Jones index was reshuffled resulted in replacement of Bank of America Corp., Hewlett-Packard Co. And Alcoa Inc. by Goldman Sachs Group Inc., Visa Inc. and Nike Inc.