Cisco joins the DOW at GM’s expense

From the ‘General Motors fallout‘ files:

With GM now in bankruptcy protection, it’s getting the boot from the prestigious Dow Jones Industrial Average. In GM’s place, the DOW  is set to add Cisco (NASDAQ:CSCO) to the index.

Cisco could be added to the DOW as soon a June 8th (according to the Wall Street Journal). It is no surprise at this point that GM is in bankruptcy protection and similarly no surprise that a bankrupt company (though once one of the world’s largest) is getting kicked off the DOW.

The addition of Cisco should also not really be seen as a big surprise. Cisco with 65,000 plus employees and multiple tech divisions spanning consumer, enterprise and governement networking and collaboration gear is a stalwart of the US economy. It is, and has been for some time a good leading indicator for buyer sentiment in technology.

Cisco CEO John Chambers was among the first tech leaders to point out that the current economic slowdown was global and would affect technology vendors like Cisco. The buying patterns that Cisco sees from government, enterprise and consumer customers gives it a broad cross section of the economy and makes it a decent benchmark for buyer sentiment in my view.

Cisco is also a company with some $30 billion or so of cash on hand, and despite the challenging economy, seems to be staying the course of sustainability for its business.

The addition of Cisco to the DOW also marks an interesting milestone for tech. Cisco is the first “pure” technology vendor to be added to the DOW since Micrsofot (NASDAQ:MSFT) and Intel (NASDAQ:INTC) in 1999.

Though Cisco today is already among the most heavily traded stock on the Nasdaq, I would expect that with its inclusion on the DOW it might receive just a bit more interest from an even broader base of analysts and investors.

The addition of Cisco to the DOW, ultimately will not likely make any real difference to Cisco’s technology initivatives. It does however give them even more prominence as a key element of one of the world’s leading financial indicators.

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