Dow Changes on the Horizon - Black Enterprise
Black Enterprise Magazine September/October 2018 Issue

Beginning Feb. 19, 2008, The Dow Jones Industrial Average will open with two new component stocks: Bank of America Corp. and Chevron Corp., which are replacing Altria Group Inc. and Honeywell International Inc. These mark the first changes to the Dow since April 8, 2004.

The restructuring of Altria is what created the opportunity to review all of the stocks in the index. Last year, Altria, formerly Philip Morris Cos., spun off Kraft Foods, and this year it is planning to spin off Philip Morris International Inc. “As a result, the company that is left is substantially different and substantially smaller than the company we’ve had in the Dow [since Oct. of 1985],” says John A. Prestbo, editor and executive director of the Dow Jones Indexes.

In a telephone conference call with Prestbo, reporters questioned why the Dow didn’t add Kraft Foods rather than Chevron. Kraft currently has a market cap of $45 billion. “We did not consider Kraft because we were looking at shortfalls in financials and oil and gas,” Prestbo responded. The Dow only had one company representing the oil and gas industry—ExxonMobil Corp. “We felt that with oil pushing $100 a barrel and its importance in the global economy, we could benefit from having another representative from that industry in the Index,” he explained.

In the financial sector, Bank of America, having grown significantly through acquisitions, was an obvious addition. They hold the No. 2 position in the banking arena for 2007. Honeywell is being dropped because it is the smallest of the industrials in terms of revenue and earnings.

For the sake of continuity, composition changes are intentionally rare,” says Prestbo. As of Sept. 30, 2007, there was $53 billion in assets tied to the 111-year-old, 30-stock index. As of Feb. 8, 2008, the market cap of the added and exiting companies was $358.6 billion and $192.9 billion, respectively. Prestbo says the changes will make a difference but only temporarily.

Honeywell spokesperson Rob Ferris had this to say: “We were surprised by the criteria used in making today’s decision. Since 2003, Honeywell’s sales are up 11% CAGR [Compound Annual Growth Rate] from $23.1 billion to $34.6 billion in 2007, and net income was up 17% CAGR from $1.3 billion to $2.4 billion. We’ve also broadened our portfolio globally through organic growth and acquisitions. Our stock price was up 36% last year, making Honeywell the Dow Jones Industrial Averages’ top performing stock in 2007.”

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Marcia Wade Talbert

Marcia is a multimedia content producer focusing on technology at Black Enterprise Magazine. In this capacity she writes and assigns stories to educate readers about social media; digital integration; gadgets, apps, and software for business and professional development; minority tech startups; and careers in STEM (Science, Technology, Engineering, and Mathematics). In 2012, she received two Salute to Excellence Awards from the National Association of Black Journalists and was recognized by Blacks in Technology (BiT) as one of the Top 10 Black achievers in the tech arena for 2011 at SXSW in Austin, Texas. She has spoken about technology on panels for New York Social Media Week, at The 2012 Rainbow/PUSH Wall Street Summit, as well as at Black Enterprise’s Entrepreneurs Conference and Women of Power Summit. In 2011, chose her as one of 28 People of Color Impacting the Social Web, and through crowdsourcing she was listed as one of BlackWeb2.0's/HP's 50 Most Notable African American Tastemakers in Social Media and Technology for 2010. Since taking on the role of Tech editor in September 2010, she has conceived and produced five cover stories on Technology and/or STEM and countless articles, videos, and slideshows online. Before joining as an interactive general assignment reporter in 2008, she freelanced with Black Enterprise beginning in 2003 while working as the technical editor at Prepared Foods magazine. There she further honed her writing skills and became an authority on food ingredients, including ingredients used in food fortification and enrichment. Meanwhile, her freelancing with Black Enterprise and helped her stay current on issues pertaining to the financial and business welfare of African Americans. As a general reporter for Black Enterprise she attended and reported on the Democratic and Republican National Conventions, where she interviewed Valerie Jarrett, senior advisor and assistant to President Barack Obama and U.S. Attorney General Eric Holder. Marcia has a Bachelor of Science degree in Agriculture with an emphasis in food science from the University of Minnesota, and a Master of Science degree in journalism from Roosevelt University in Chicago. En route to her secondary degree, she served as the editor-in-chief of the Roosevelt University Torch, a weekly, student-run newspaper. An avid photographer and videographer, Marcia is one of several employees at BLACK ENTERPRISE who interned for the publishing company as a college student. She lives in New Jersey with her husband, a food scientist; her seventeen-month-old daughter; and “The Cat”, but still considers Chicago home.