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Apple to Join the Blue-Chip Dow Jones Industrial Index, Replacing AT&T

The Cupertino company, which in January set a record for public companies with earnings of $18 billion, has achieved another milestone.

Anthony Quintano for Re/code

Apple will join the Dow Jones Industrial Average later this month, bumping the iPhone launch partner AT&T, which ironically helped turn the computer and gadget maker into the world’s most valuable company.

The Cupertino giant’s addition to the blue-chip stock index signifies the dominance of the technology sector in the U.S. economy. Apple in January set a record for public companies with earnings of $18 billion.

“As the largest corporation in the world and a leader in technology, Apple is the clear choice for the Dow Jones Industrial Average,” said David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices.

Apple will surely help boost the Index’s performance. Apple has jumped 68 percent in the past year, compared with Dow Jones’ 9.3 percent. The only other significant consumer technology company in the list of 30 stocks making up the index is Microsoft.

The timing of Apple’s addition to the Dow hinged on two stock splits, Apple’s seven-for-one split last June and Visa’s four-for-one on March 19. The Dow only allows stocks of similar price into its index, and Apple’s split brought its price down closer to the median price of other stocks listed in the Dow. The Visa split reduced the weight of the technology sector — making room for Apple.

Meanwhile, the index determined it was over-represented in the telecommunications sector and AT&T and Verizon are quite similar, though AT&T has a smaller market capitalization. It also signifies the growing value of smartphones over the services they run on, especially as wireless services have started to more fiercely compete over pricing.

Sanford Bernstein technology analyst Toni Sacconaghi forecast the inclusion of Apple in the Dow, noting in 2012 that the explosion in mobile technologies such as smartphones and tablets that were not reflected in the lineup of Dow’s stocks. He said at the time that software giant Microsoft and chipmaker Intel were added to the index in 1999, at a time when the PC was at the heart of the digital economy.

Apple will be added at the close of trading March 18.

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