Tomahawk, WI 9/12/2013 (BasicsMedia) – The hammer has finally landed and Hewlett-Packard Company (NYSE:HPQ) will no longer be a member of one of the world’s largest and important stock indexes, Dow Jones. This is part of Dow Jones major clearing up as it tries to release the so not performing stocks from its indexes. Other companies that have also been given the whip by the Dow include: Bank of America and Alcoa Inc. Visa Inc Corporation will be the official replacement of HP. The changes have also been prompted by the desire of the Dow to diversify its sector and group representation.

Official announcement from Dow Jones was quick to quote that the changes will be effective as from the September 23. The removal of Hewlett-Packard from Dow Jones is attributed to a series of poor results in the past few months. Its 3rd quarter financial results announced on the August 21, indicated a decline in net revenue by 8% from the previous year $27.2 billion. HP cash flow were also down to $2.7 billion

Dow Jones noted the following in their official announcement that affected HP “The index changes were prompted by the low stock price of the three companies slated for removal and the Index Committee’s desire to diversify the sector and industry group representation of the Index” As noted by an official from Dow Jones, the new changes won’t affect the level of the index in any way. The additions to the Dow are aimed at improving its sector representation according to S&P Dow Jones indices

The Dow is made up of 30 stocks which are usually chosen by a small committee; this is a 116 year old list that is considered a fundamental indicator of the world economy in many aspects. This is a major shake up by Dow as three companies were essentially removed from the list at ones. This move brings an end of an era of 16 years for Hewlett-Packard in the Dow. The tech companies that make up the list at Dow Jones include IBM, Cisco systems, AT&T Microsoft and Verizon

This move was coming for HP as it has been trading at low values less than it has ever been seen since 2005. After the news came up that HP was being kicked out, a spokesperson from HP gave out the following response “HP remains confident that we are making progress in our turnaround we have delivered financial performance in line with or better than our expectations throughout this fiscal year, and remain focused on delivering shareholder value.”

The Dow is considered an average index in that the higher the price a component has, the greater it gets ranked. Stocks with low per share prices are usually dwarfed by those with a large per share price. With these, the Dow normally ends up acting as the mirror of the market.

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