Hewlett-Packard (HPQ) is being removed from the Dow Jones Industrial Average, a sign of waning confidence in the company's turnaround efforts amid an historic slump in the personal-computer industry.
The exit, announced Tuesday as part of the biggest reshuffling of the index since April 2004, delivers another blow to Chief Executive Officer Meg Whitman's quest to revive growth at the storied PC maker. Bank of America and Alcoa were also dropped. Replacing them will be Visa, Nike and Goldman Sachs Group.
Hewlett-Packard's shares have declined for three straight years as consumers have abandoned PCs in favor of smartphones and tablets. Whitman last month scrapped her forecast for a return to revenue growth in 2014 as lackluster demand for hardware and services and aggressive price cuts amplify the impact of the downturn for computers. The departure from the Dow reflects those challenges, according to Shannon Cross, an analyst at Cross Research.
"It's certainly not something you want to happen on your watch," Cross said in an interview Tuesday. "The Dow is more about symbolism and prestige than anything else."
Hewlett-Packard fell less than 1 percent to $22.27 at the close in New York. It's the third lowest-priced stock in the Dow index.
"HP remains confident that we are making progress in our turnaround," Michael Thacker, a spokesman for the Palo Alto-based company, said in an email. "We have delivered financial performance in line with or better than our expectations throughout this fiscal year, and remain focused on delivering shareholder value."
PC shipments fell in the second quarter for a fifth straight period, sliding 11 percent, market researcher Gartner Inc. said in July. Consumers are increasingly opting for tablets instead of traditional desktops and notebooks, and businesses are holding onto old machines for longer.
For the fiscal third quarter, which ended in July, Hewlett- Packard's sales fell 8 percent to $27.2 billion, missing analysts' average estimate of $27.3 billion, according to data compiled by Bloomberg. Sales in the business group that includes PCs fell 11 percent to $7.7 billion.
Goldman Sachs Group Inc., Visa Inc. and Nike Inc. will be added to the index. Bank of America Corp. and Alcoa Inc. are being removed along with Hewlett-Packard.
Once Hewlett-Packard is gone, four technology companies will remain in the Dow: Cisco Systems (CSCO), Microsoft, Intel (INTC) and IBM.