Move will leave Verizon as only telecom operator among 30 companies in the Dow Jones Industrial Average
In a historic move, AT&T is set to be bumped from the Dow Jones Industrial Average in favor of Apple. AT&T has reportedly been part of the Dow for most of the past 100 years.
The NYSE is the world’s largest stock exchange by market capitalization, and the Dow Jones Industrial Average is one of its key barometers. The Dow should be bolstered by Apple’s (AAPL) current $737 billion in total market capitalization when it joins on March 18. AT&T (T), by comparison, has a current market capitalization of $174 billion.
The move leaves Verizon Communications as the only telecommunications operator trading amongst the Dow 30 companies. Verizon’s (VZ) market capitalization currently sits at just over $200 billion.
Apple recently reported record-breaking quarterly sales and profits, boosted by the late 2014 launch of its latest iPhone 6 and 6 Plus devices. AT&T, on the other hand, reported flat company profits impacted by legacy operations and pricing pressure in the mobile industry.
Apple’s surging valuation can in part be tied to AT&T, which was the exclusive mobile operator to offer Apple’s iPhone lineup when it launched in 2007. That domestic exclusivity lasted through early 2011, when Verizon Wireless began offering the device. However, AT&T continues to be linked heavily with the iPhone product line, which still accounts for a vast majority of new smartphone sales at the carrier.
“We’ll undoubtedly see a lot of news stories knocking AT&T for its last-century industrial dominance vs. Apple’s this-century new tech sheen. Of course the real story isn’t that clean – with its massive [capital expense] and [operating expense] requirements, AT&T will never be able to keep up with the growth trajectory of a software and premium hardware-driven juggernaut like Apple,” noted Rich Karpinski, principal analyst at 451 Research. “But AT&T is far from a cloistered dinosaur either, aggressively pursuing many next-generation markets from digital home to connected car to ‘Internet of Things’.”
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