AAPL Among Contenders for Replacing Citi, GM on Dow

Google, Apple, Goldman Sachs, Visa, and Cisco are among the names being considered for replacing GM and Citigroup on the Dow Jones Industrial Average of 30 so-called "blue chip" companies. GM and Citi have both fallen below $2 per share in recent weeks, a price that threatens their somewhat arbitrary designation as blue chip stocks.

The DJIA, or Dow as it is often shortened to, is made up largely of old school industrial, energy, and finance corporations. Exxon Mobile, Alcoa, Wal-mart, and Proctor & Gamble are the types of companies that have traditionally been included, with a few tech incursions like Intel, Microsoft, and HP.

If Google were selected, it would be one of the youngest companies ever chosen for inclusion. Google was founded in 1996 and has a market cap of US$76.4 billion, well off its highs of more than double that figure last year. Apple, in comparison, currently has a market cap of $82.5 billion, while Visa checks in at $23.1 billion, HP at $68.9 billion, and Cisco is sitting at $87.7 billion.

The process of selecting components in the DJIA is, effectively, a subjective process conducted by the editors of the Wall Street Journal, which is owned by Dow Jones, which is itself owned by News Corp. As an index of stocks that are intended to help gauge the relative strength of the stock market, companies have been selected in the past to be representative of a broad range of business concerns.

"While there are no rules for component selection," the company explains in its About site, "a stock typically is added only if it has an excellent reputation, demonstrates sustained growth, is of interest to a large number of investors and accurately represents the sector(s) covered by the average."

Apple has been tossed around as a contender for inclusion recently by Reuters, though the news firm didn't quote any specific sources from within the Wall Street Journal. The article in question also emphasizes Google, Cisco,and Goldman Sachs, with Visa and Apple being offered as company also being considered.

*In the interest of full disclosure, the author holds a small share in AAPL stock that was not an influence in the creation of this article.