Lawrence Culp, CEO of General Electric Co.
Lawrence Culp, CEO of General Electric Co.
Lawrence Culp, CEO of General Electric Co.
Lawrence Culp, CEO of General Electric Co.
Lawrence Culp, CEO of General Electric Co.

GE Forms New Software Company in Overhaul of Digital Strategy

Dec. 13, 2018
The company also agreed to sell a majority stake in ServiceMax, a software provider it bought two years ago for $915 million.

General Electric Co. (IW 500/6) 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.

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% to $7.34 before regular trading in New York as JPMorgan Chase & Co. upgraded GE to neutral. GE fell 62% this year through Wednesday, following a 45% decline in 2017.

By Richard Clough

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