NEW YORK – General Electric Co. is creating an independent company for its software business as the struggling manufacturer rethinks what had been a key pillar of its growth strategy in recent years.
GE will retain ownership of the new operation, which will have about $1.2 billion of existing software revenue, according to a statement Thursday. GE Digital’s leader, Bill Ruh, will step down “to pursue other other opportunities” as part of the reshuffling.
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The company hasn’t revealed the name of the new venture, but said that more details would be provided in the first quarter of 2019. It also said that following Ruh’s departure it would work to find a new leader for the company, which will operate independently, signaling that GE Digital may have been folded into the new venture entirely.
In a release Thursday, the company said that the venture will “proposed new organization aims to bring together GE Digital’s industry-leading [industrial internet of things] solutions including the Predix platform, Asset Performance Management, Historian, Automation (HMI/SCADA), Manufacturing Execution Systems, Operations Performance Management, and the GE Power Digital and Grid Software Solutions businesses.”
The shift is not expected to impact the GE Digital Providence office.
The company also agreed to sell a majority stake in ServiceMax, a software provider it bought two years ago for $915 million, to technology investment firm Silver Lake. Terms of the latest deal weren’t disclosed.
The moves mark a major shift in GE’s digital strategy as new CEO Larry Culp tries to narrow the focus and pull the company out of one of the biggest crises in its 126-year history. Under former boss Jeffrey Immelt, GE had invested heavily to build a software business to complement its industrial machinery, even adopting the moniker “digital industrial company” to describe GE.
The shares jumped 9.4 percent to $7.34 before regular trading in New York as JPMorgan Chase & Co. upgraded GE to neutral. GE fell 62 percent this year through Wednesday, following a 45 percent decline in 2017.
Richard Clough is a reporter for Bloomberg News. PBN contributed to this article.
