General Electric’s (GE) 111-year run as one of the Dow Jones industrial average’s 30 components is coming to a close. S&P Dow Jones Indices announced Tuesday that Walgreens Boots Alliance (WBA) will replace the conglomerate in the blue-chip index on June 26.
GE had been the only remaining original member of the Dow — it joined in 1896 but was booted twice in its early years — and had been a regular in the index since 1907.
“Walgreens is a national retail drugstore chain offering prescription and nonprescription drugs, related health services and general goods,” David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said in a statement. “Today’s change to the DJIA will make the index a better measure of the economy and the stock market.”
A better measure indeed. GE’s lackluster performance in recent years has made it an outlier compared with other Dow components, heightening expectations on Wall Street that an exit from the index was likely.
GE has struggled with a turnaround under new CEO John Flannery Jr., who has called the company a “self-help story” and referred to 2018 as a “reset year.” The question is whether he has the capability and determination to achieve the seemingly impossible goal of revamping the venerable company.
Although GE gradually climbed its way out of a hole following the Great Recession, its results have left much to be desired for investors. Among its chief problems: dwindling demand for its gas turbines, earnings far below estimates and a cash shortage that prompted it to slash its stock dividend.
Adding to its woes, the company disclosed in January that it faces a probe of its accounting by securities regulators, and it announced a month later that it was reshuffling its board.
Kate Gibson contributed reporting.
© 2018 CBS Interactive Inc.. All Rights Reserved.
