Pivotal Software, the platform as a service company that went public in April, has seen General Electric unload its stake in the company, netting the conglomerate $173 million along the way.
In a Securities and Exchange Commission Filing on November 8, 2018, Pivotal Software disclosed GE sold 63% of its 15.5 million stake in the company, leaving it with just 5.6 million shares. The stake sale reduced GE’s position in the software company to 7% from 20.8%. The move shouldn’t come as too much surprise given Pivotal’s stock jumped since going public in April. The shares are up nearly 6%, but at one point climb to as high as $28.91 a share. Mixed quarterly earnings results and a declining stock market drove the price lower.
The stake sale is on the heels of GE Digital’s former chief commercial officer Khozema Shipchandler resigning from the Pivotal board this past September, according to CRN. "There is a lot going on at GE and they are prioritizing their investments to align with their future plans," the spokesperson told CRN of the stake sale. "As for our relationship with GE going forward, we do not provide customer specific updates."
GE’s move to unload much of its stake in Pivotal Software, which dates back to a $105 million investment made in 2013, comes as the conglomerate is changing its focus after missteps under former Chief Executive Jeff Immelt. Five years ago Immelt envisioned a global company that was a major player in industrial software. Pivotal was the conduit to this goal and viewed as a big profitability booster. In addition to investing in Pivotal, it tapped the SaaS company as its Internet of Things platform. The IoT market was at its infancy and GE expected to be a major player in it, enabling all sorts of consumer and commercial devices to connect to the Internet. That was expected to drive profit for the entire conglomerate.
“It’s no secret that the cloud and Big Data are driving dramatic business transformation enabling an Industrial Internet. At the heart of it is that machines can be intelligent, connected and that we can use software to analyze the information coming out of them,” said Bill Ruh, Vice President, and Corporate Officer, GE Global Software Center back in 2013. “Pivotal is creating a platform that brings the best of the Internet - rapid application development, data analytics, and cloud architecture - to enterprises. This is aligned with many of the things we are doing at GE to help accelerate our delivery of innovation and to bring a productivity revolution that will have a positive impact on all of us.” In an effort to diversify away from the financial and media markets, it developed Predix, a SaaS platform that helped utilities and airlines amass data and analyze it so that equipment could be better managed. In 2015, GE made it a stand-alone business unit.
But things are a lot different five years later with GE in restructuring mode, selling off units and cutting costs to improve its finances. One area that is expected to take a big hit is its GE Digital unit. In June the Wall Street Journal reported GE was seeking a buyer for some of its digital unit and has hired an investment bank to handle an auction for the businesses. The asset sale proceeds won’t make GE rich but it does underscore the reversal of fortunes for the company in recent years. Under its new leader, GE’s current CEO, John Flannery, it is scaling back its plans for the digital unit.