If there is justice in this universe, they will add INTC:
Dow Industrials Now Have Vacancy
By PATRICIA LAMIELL
AP Business Writer
NEW YORK (AP) -- The acquisition of Union Carbide Corp. by Dow Chemical Co. will create a vacancy in one of the world's most exclusive clubs -- the 30 stocks that make up the Dow Jones industrial average.
Companies can't buy their way in, and there's no fancy clubhouse with leather chairs and fine dining. But membership can be very valuable.
Inclusion in Wall Street's best-known indicator establishes a company as a leader in its own industry and in the economy at large. And investment funds tied to the Dow index performance are bound by their charter to buy shares of the components.
A listing in the Dow industrials can spark demand for the shares, making it easier to buy and sell.
Investors will therefore try to guess which company The Wall Street Journal, the Dow Jones & Co. unit that publishes the index, will choose.
An obvious candidate would be Dow Chemical, which is not related to Dow Jones & Co. Replacing Union Carbide with Dow Chemical would maintain a presence for the chemical industry in the Dow index, which attempts to approximate the mix of industries in the economy at large.
There is precedent for replacing an acquired Dow component with the merged company, as was done when Travelers Group bought Citicorp. The combined company, Citigroup (NYSE:C - news), took Travelers place in the Dow.
But the Dow Jones industrial average has come under fire over the years for failing to accurately reflect the transition in the U.S. economy from industrial to service to technology. And so some market analysts were asking Wednesday whether the Journal might use this as an opportunity to add an up-and-coming technology company, for example.
''If I were doing it, I would want to reflect less the manufacturing, industrial element, and more some of the newer companies, the more technologically oriented companies,'' said William Freund, director of the Pace University Center for the Study of Equity Markets. ''Pulling a name out of the air, I would suggest a Lucent technologies, which is a big, well-established company.''
Market historian Yale Hirsch, who also favors the larger technology companies, suggested Microsoft (Nasdaq:MSFT - news), Intel (Nasdaq:INTC - news) or Cisco. Although all of the Dow industrial components have been names that trade on the New York Stock Exchange, there is nothing to prevent the addition of a stock that trades in the Nasdaq Stock Market.
John Prestbo, markets editor at the Wall Street Journal, suggested that all of the average's component stocks components could come under scrutiny as the keepers of the Dow consider a replacement for Union Carbide.
''A potential change caused by an external event is always an occasion to review the Dow,'' Prestbo said in an interview reported on Dow Jones Newswires. ''Adding a big technology company would be a possibility.''
A change in the Dow isn't expected overnight.
The acquisition of Union Carbide still faces a shareholders' vote and government review in the United States and Europe. It is not expected to be completed until next year.
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