Intel Likely To Get Booted From The Dow Jones Industrial Average (DJIA) Owing To The Stock’s ~60 Percent Loss This Year
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These days, it is fairly simple to predict Intel's stock price trajectory: the stock is down on an otherwise up day, and it is down on a generally red day. This chronic underperformance, which has seen Intel shares sink around 60 percent so far this year, is now likely to deprive the stock from a key source of passive inflows: the Dow Jones Industrial Average (DJIA) index.
To wit, Reuters is now reporting that Intel is likely to get booted off the Dow Jones index. Bear in mind that the DJIA rebalances quarterly, when stocks are added or removed systematically from the market cap-weighed index based on an extensive criteria.
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Of course, such a removal would be particularly ignominious for Intel, which was one of only two tech stocks - the other being Microsoft - to join the Dow Jones Industrial Average during the dot-com bubble of the 90s. Intel's removal from the index will deprive the stock of a key source of passive funding that a blue chip index component typically receives, potentially leading to further losses.
This development comes as Intel is preparing to pitch a broad-based revival plan at its upcoming board meeting. As we noted recently, the chipmaker reportedly plans to unload its majority stake in its FPGA arm, Altera, and institute a construction freeze on its $30 billion facility in Germany.
However, the broad-based reforms will likely not see the struggling company divest its chip manufacturing arm, formally known as the Intel Foundry.
Intel is reportedly working with a number of financial advisers, including the Wall Street behemoth Morgan Stanley, to come up with strategic options for its upcoming board meeting. These advisors are presumably also aiding Intel in fending off a rumored
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