Honeywell Dumps New York Stock Exchange for Nasdaq. Here’s Why.
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Honeywell has formed a software unit run by a former Microsoft executive.
David Williams/Bloomberg
Century old industrial giant
Honeywell International
is leaving the New York Stock Exchange, flipping its listing to
Nasdaq.
The surprise move is all about perception, but it does have stock implications for investors to weigh.
The news might be a blow to NYSE, owned by
Intercontinental Exchange
(ticker: ICE).
Honeywell International
(HON) just celebrated 100 years of trading on the big board.
It’s a coup for Nasdaq (NDAQ), though. And the switch is happening because Honeywell wants to be seen as a tech company.
“Honeywell is the world’s premier software-industrial company, shaping the future of technology and sustainability,” said CEO
Darius Adamczyk
in a statement. “Nasdaq’s long tradition of listing category-defining technology companies aligns well with Honeywell’s cutting-edge technology and sustainability portfolio.”
Honeywell, under Adamczyk’s leadership, formed a software unit called Honeywell Connected Enterprise, run by former
Microsoft
(MSFT) executive Que Dallara. The company is starting to gather and use all the data coming from the myriad industrial assets its products help to control. That data can then be used to optimize and improve industrial operations around the globe.
Eventually, Honeywell wants to become to the industrial industry what
SAP
(SAP. Germany) has become for employees filing expense reports or
Salesforce.com
(CRM) has become for employees mining for new sales leads.
It’s a smart strategy. Software companies, with high profit margins and recurring subscription revenues, are more valuable than industrial firms. Honeywell is one of the most valuable industrial firms in the world with a market capitalization of about $156 billion. Salesforce has a market capitalization of about $216 billion—and isn’t the largest software provider. Microsoft’s market cap is approaching $2 trillion.
Of course, Honeywell just calling itself a software company doesn’t make it so. Honeywell will have to generate high-profit margins sales by monetizing the data from its industrial asset base.
It’s a symbolic move. And the change isn’t impacting the stock all that much Friday. Honeywell shares were down about 0.3% in early trading. The S&P 500 and
Dow Jones Industrial Average
were both down about 0.5%.
The switch will also make Honeywell eligible for inclusion in the
Nasdaq-100 Index,
which could impact the stock. Any fund managers managing money indexed to that benchmark will now be buying Honeywell shares. Still, the overall impact on the stock price will be small. Honeywell, of course, is already in large, popular indexes such as the
S&P 500.
Write to Al Root at allen.root@dowjones.com
