Ciscos Rise Reflects Big Economic Picture
The announcement not only is a trophy for Cisco and an embarrassment for GM,
but also makes a statement about U.S. business in general: It is yet another indicator of
the slow-moving, decades-old changeover from a primarily physical-production
economy to one that relies on invention, design, intellectual property, and
advertising, marketing and sales.
Zeus Kerravala of The Yankee Group told eWEEK that "it's a feather in Cisco's cap, a sign of the times. GM is really the old guard, and our country is built on innovation, not manufacturing."
Charles King, principal analyst at Pund-IT, told eWEEK that the June 1 announcement says a couple of important things about the IT-fueled U.S. economy.
"I remember at the outset of the dot-com boom, when some of the IT companies [IBM, Hewlett-Packard, Intel] had gained such stature and pushed their way on, and it was seen to be a 'changing of the guard' at that point," King said. "This time, I think what we're seeing is [a] fundamental shift away from traditional manufacturing and more toward companies that are leveraging technology for the sake of information. While this isn't a new thing, it does say great things about Cisco's health and longevity as an organization."
Cisco is a company that rose to prominence along with many others during the dot-com boom, King said. "But they've got staying power, and this should be seen as a feather in the cap of [CEO] John Chambers and his company," King said.
Changes in the Dow Jones list are rare. GM was added twice, first for about a year and a half in 1915 and then permanently in 1925. Only General Electric has been on the list longer; GE has been in the index since it began with 12 stocks in 1896.
The most recent change to the list was in September 2008, when Kraft Foods replaced AIG (American International Group).