General Electric Removed From Dow Jones

One of the best-known American companies will leave the Dow Jones Industrial Average next week, after more than a hundred years as a member and being one of the founding companies in the average.  General Electric was removed this week and is to be replaced by Walgreens Boots Alliance, the drugstore chain.

From The Street, the news concludes:

…a miserable year for the once-powerful conglomerate that has seen its share price fall more than 25% and it CEO publicly talk about breaking up the 126-year old portfolio bellwether. GE first entered the Dow in 1896 and has been continuous member since 1907.

GE expert Rob McCarthy at Stifel Financial told TheStreet the news is “sad”, but reflects the actions of prior management.

More from CNBC:

GE’s stock has fallen more than 55 percent over the last 12 months, losing more than 25 percent this year alone. This move will put further pressure on GE shares as some index funds will no longer be required to own the stock.

Two ongoing federal investigations are also hanging over the company. The Securities and Exchange Commission is probing GE’s accounting practices and the Justice Department is investigating GE’s connection with subprime mortgages.

General Electric had moved away from its traditional operational base of consumer appliances toward renewable energy, and was continuing that trend through last year with acquisitions such as wind turbine blade manufacturers. (GE)  They sold NBC, one of their highest-profile and most influential properties, to Comcast in 2013.  (Forbes)

G.E.’s business model leaned heavily on political involvement in recent years.  The CEO, Jeffrey Immelt, worked closely with President Obama, pushing hard on renewable energy investment (which helped G.E.) and even directing economic recovery efforts. (Forbes)  He then decided to work closely with President Trump in much the same way.

The friction between Immelt and Trump indicated that trusting politics to carry the business was not a model for long-term success.

The Boston Globe carried the story of their tumultuous relationship:

General Electric chairman Jeff Immelt Wednesday morning joined the exodus of executives quitting the manufacturing council that had been advising President Trump — before Trump issued a declaration over Twitter that he would disband the group and a second panel of business advisers.

Immelt, in a statement, said he found Trump’s statements Tuesday about the weekend incidents in Charlottesville, Va., to be “deeply troubling.” There would be no GE, Immelt said, without employees of all races, religions, genders, and sexual orientations.

As did The Hill:

The chief executive officer of General Electric responded to President Trump’s decision to withdraw from the Paris climate agreement on Thursday, flatly stating, “Climate change is real.”

“Disappointed with today’s decision on the Paris Agreement. Climate change is real. Industry must now lead and not depend on government,” GE Chairman and CEO Jeff Immelt wrote on Twitter minutes after Trump announced his decision.

After leaving Trump’s advisory council, the GE head was removed in favor of a new CEO.  That has not stopped the government from starting investigations into the company that are further damaging it, leading to questions of whether this is political payback from a vengeful Trump administration, or merely an indication of a CEO encouraging bad business practices for decades because he believed he political cover.

 

 

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About AlienMotives 1992 Articles
Ex-Navy Reactor Operator turned bookseller. Father of an amazing girl and husband to an amazing wife. Tired of willful political blindness, but never tired of politics. Hopeful for the future.