Cisco Joins Dow Jones Blue Chips

Cisco Systems, a profitable and steady-riding IT infrastructure provider for nearly 20 years, gained a world of prestige in the global business community on June 1 when it was named to join Dow Jones Industrial Average lineup of 30 publicly traded companies.

Cisco will replace long-embattled General Motors on the list beginning June 8; GM opted for Chapter 11 bankruptcy protection on June 1. At the same time, the Travelers Companies insurance conglomerate will replace struggling banker Citigroup on the list.

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"A bankruptcy filing immediately disqualifies a stock, regardless of a company's history or its role as a cultural icon," Robert Thomson, managing editor of The Wall Street Journal and editor-in-chief for all of Dow Jones, wrote in the Journal.

Cisco will join fellow IT infrastructure companies IBM, Intel and Hewlett-Packard and telecommunications companies AT&T and Verizon Communications in the Dow Jones group.

Although being named to the elite group doesn't automatically translate to more dollars in Cisco's bank accounts—although Cisco's stock price did improve by 6 percent to about $19.60 on June 1—it does provide the data networking giant with a virtual shot in the arm in terms of company morale and respect from the business community in general.

Nonmaterial benefits such as those are "priceless," as MasterCard might say.

Cisco, like most other enterprises, has had to navigate uncharacteristically rough roads in this recessionary economy. The world's biggest supplier of IT networking hardware and software has endured sales-performance slippage during the last six months, with its income falling 22 percent during the fiscal quarter that ended April 25. So the Dow Jones encouragement is a salve of sorts during a tough time.

"Cisco is honored to be included in the Dow Jones Industrial Average," Terry Alberstein, Cisco's senior director of corporate public relations, wrote in an e-mail. "We believe our inclusion in the Dow demonstrates not only Cisco's role as a broad technology indicator but how remarkably the Internet and networking have transformed the way businesses and consumers connect, communicate and collaborate."