Donald Johnson

Candidates to Replace GM, Citigroup in the Dow

Well,

AAPL, NUE, USB and MON didn't make it. It was fun to speculate about which companies would be picked. Thanks for all the comments.

Why Google Won't Replace GM in the Dow

Very good piece.

That all Dow companies pay dividends is interesting. That some of those dividends are nominal at best may mean this criteria will be dropped. The weighting problem also is important for the high-priced, volatile stocks.

CAT has been in the Dow for a long time. I can't see adding more retailers other than, perhaps, AutoNation (AN), an auto dealer, nor another soft drink company. KO already is in the Dow.

Candidates to Replace GM, Citigroup in the Dow

I've purchased more than 100 Macs for my business and myself since 1986. Apple is a consumer electronics company, and all consumer electronics, including PCs, have relatively short life cycles and are faddish, in my opinion. Apple's been especially good at anticipating and creating fads in very competitive markets.

At the moment, it's market share is growing in a troubled economy. I think it should be in the DOW because its revenues and profits depend on everyone from teens to presidential candidates, corporations and old folks like me.

As for GOOG, it's selling for 22 times cash flow, it's PE is a relatively high 30 given that its sales are growing only 6% a year, and it depends on advertising revenue. It's PEG is a relatively cheapt 1.07, according to data on YAHOO. The company doesn't provide guidance to investors, and its governance structure is rigged to deny voting rights to shareholders, which, I happen to think is wrong. At some point it will go the way of MSFT.


On May 30 05:20 AM Timeline Strategy Consulting wrote:

> Apple's products 'faddish'? My definition of 'faddish' would be GM,
> cranking out endless undesirable combinations of models that require
> heavy discounts and incentives to sell, all to meet the cost accountant's
> model of 100% factory capacity utilization.
>
> Remember that Apple pioneered desktop computing and operating systems.
> It was the logical successor to the Silicon Valley garage ideal in
> the vein of Hewlett and Packard.
>
> Apple had hard hard times, but unlike GM, revitalized itself by adapting
> its business model to reflect the changing way that customers consume
> media. In doing so, it created a second act that rivals any in business.
> And, this second act also has allowed Apple to return to its first
> act, which is computing and software for the masses.
>
> And now it has completely revolutionized mobile computing.
>
> Maybe you should ask your grandkids.