Reuters: Technology News: Apple, Google could join Dow index: Barron's

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Apple, Google could join Dow index: Barron's Apr 29th 2012, 20:45 Tweet Share this Email Print Related News Wall Street pops on Apple's results, Fed's reassurance Wed, Apr 25 2012 Global shares rise on Apple, Bernanke's comments Wed, Apr 25 2012 Apple crushes Street targets, dispels iPhone fears Wed, Apr 25 2012 Dow, S&P rise on earnings, Apple jumps late Tue, Apr 24 2012 Chinese investors scramble for a bite of Apple Tue, Apr 24 2012 Analysis & Opinion Investing in the wretched: James Saft SAFT ON WEALTH: Investing in the wretched An Apple logo is reflected in the screen of a new Apple iPad at an electronics store in Mumbai April 27, 2012. Credit: Reuters/Vivek Prakash Sun Apr 29, 2012 4:45pm EDT (Reuters) - The Dow Jones Industrial Average stock index is due for an overhaul, and new-tech giants like Apple Inc and Google have good arguments for joining the elite 30 companies at the expense of old-industry stalwarts like Alcoa Inc, Barron's said on Sunday. The business weekly said the Dow has no timetable, but a new company or two could be added in the next year. The three most likely stocks to be replaced in the index are aluminum maker Alcoa, Bank of America and Hewlett-Packard, Barron's said in its latest edition. "The guardians of the Dow need to ensure that this benchmark, created in the 19th century, stays relevant for a 21st century market," it wrote. Yet admitting Apple, the world's most valuable company with a market capitalization of roughly $563 billion, or Google, would be difficult, Barron's said, because of the way the index is calculated. Unlike the Standard & Poor's 500 and other major indexes, the Dow weighs its 30 components based on the absolute price of their shares. Apple, whose shares on Friday closed at $603, would overwhelm the index with a 26 percent weighting. That is double the influence of current Dow component IBM, whose $207 stock price gives it a 12 percent weighting in the index, Barron's said. Barron's said the heavy weighting that Apple would command at its current share price could prove a barrier to becoming a Dow component. To guarantee a Dow spot, Barron's said, Apple would have to split its shares by five-for-one or 10-to-one. But Barron's noted that Apple has not split its stock since 2005. The lack of splits poses difficulties for the Dow because high-priced components like IBM exercise a growing impact while low-priced members like Alcoa, Bank of America and General Electric get marginalized. (Reporting By Steve James; Editing by Leslie Adler) Related Quotes and News Company Price Related News Tweet this Link this Share this Digg this Email Reprints We welcome comments that advance the story through relevant opinion, anecdotes, links and data. If you see a comment that you believe is irrelevant or inappropriate, you can flag it to our editors by using the report abuse links. Views expressed in the comments do not represent those of Reuters. For more information on our comment policy, see http://blogs.reuters.com/fulldisclosure/2010/09/27/toward-a-more-thoughtful-conversation-on-stories/ Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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