It was a pretty good run for awhile -- 16 years of Hewlett-Packard stock being part of the greatest run-up in Wall Street securities history. But this week the Dow Jones organization announced the biggest shake-up in the average in a decade, removing Hewlett-Packard's shares. The stock lost half of its value, then regained nearly all of it, in a turbulent 18 months that ushered it out of the best-known average.
The change takes effect with the close of trading on Sept. 20, and was "prompted by the low stock price of the companies slated for removal, and the Index Committee's desire to diversify the sector and industry group representation of the index," according to S&P Dow Jones Indices LLC, the company that oversees the Dow. Alcoa Aluminum and Bank of America are also being removed.
HP's shares are not trading much lower than in 1997 when it joined the average. In that year, HP traded at $25.75 a share, just $3 higher than today's price. It became only the second computing company to join the 1997 Dow; Johnson & Johnson, Travelers Group and WalMart were added to the index that year as well. All but HP remain part of the index of international business. The Dow average was about 6700 when HP was added. Today it's above 15,000.
The HP of 1997 had no significant Internet presence, playing catch-up to Sun. Hewlett-Packard also was scurrying to adopt Windows as an enterprise solution, having gambled heavy on Unix through the 1990s instead. That year's Hewlett-Packard also sold HP 3000 Series 9x9 servers, a solution that was just gaining its first open source software programs as well as dropping the Classic CISC-based servers that ran MPE V. HP was a $43 billion company that year with a workforce of 121,000.
But many things have changed along with HP's overall futures and fortunes. In the summer of 1997, 3000 division manager Harry Sterling, in just his first full year on the job, announced that the HP 3000 would be gaining a 64-bit MPE, with designs aimed at using the newest HP chips.
"The growth of the HP 3000 is secure well into the 21st century," Sterling said. "Our engineers are working on a new generation of HP 3000s based on the 64-bit PA-8200 chip." HP said that a new 200MHz, 8200-based system would arrive in the lineup first as a midrange system.
More importantly, HP said it re-evaluated its 1996 decision to wait on delivering a 64-bit implementation of MPE/iX. The new MPE version will "fully exploit the power of the PA-8000 processors. After better understanding your needs, our completed investigations have convinced me that we need to move forward on this front," Sterling said.
HP stalled on its 64-bit MPE/iX program in the years that followed, delivering its final roadmap with a 3000 future on it during an HP World conference in Chicago again, four years later.
Visa International is replacing HP in the Dow Average, the Index Committee reports. Also joining the 30 companies in the average: Nike and Goldman Sachs. The index is designed to represent a broad spectrum of businesses and has included former companies such as ATT and GM. The biggest shift in its membership since the HP removal came in 2004, when "Too Big to Fail" AIG, Pfizer and Verizon replaced ATT, Kodak and International Paper. AIG was dropped in 2008.
Computing firms in the Dow are now represented by IBM, Microsoft and Intel. The latter two vendors joined the average just two years after HP arrived.