GE Sells Most Of Its Stake In Pivotal Software


General Electric has sold most of its stake in Pivotal Software, the Platform-as-a-Service developer that helped the conglomerate build its industrial Internet of Things platform.

The Boston-based company sold 63 percent of its 15.5 million shares of common stock in Pivotal on Tuesday, according to an SEC filing by Pivotal on Thursday. The sale netted GE $173 million and left the company with only 5.6 million shares. That substantially reduced the company's stake in Pivotal from 20.8 percent to 7 percent, according to a separate filing.

A Pivotal spokesperson said GE remains a customer but declined to elaborate on their relationship any further.

"There is a lot going on at GE and they are prioritizing their investments to align with their future plans," the spokesperson said. "As for our relationship with GE going forward, we do not provide customer specific updates."

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A GE spokesperson declined to elaborate on the sale.

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The sale comes after Khozema Shipchandler, GE Digital's former chief commercial officer, resigned from his position as a Pivotal board member in September, a month before he left GE.

Pivotal, a Platform-as-a-Service developer that spun out of EMC and VMware, went public in April with an initial public offering that gave the San Francisco-based company a $3.9 billion valuation. The company's largest stakeholder is Dell. Other major stakeholders include Microsoft and Ford.

GE's stake in Pivotal stems from a $105 million investment the industrial company made in 2013 as part of former GE CEO Jeff Immelt's ambitions to transform the company into a major industrial software player. At the time, Immelt said the investment could drive billions of dollars in profitability for GE. The company used Pivotal Cloud Foundry to build Predix, the industrial Internet of Things platform that would become the flagship offering of the GE Digital division Immelt established in 2015 to aid his mission.

The conglomerate has changed substantially in the five years since investing in Pivotal. GE is now undergoing a significant restructuring and consolidation effort to fix the company's financial problems that includes the spin-off of its healthcare and railroad locomotive divisions. More recently, the company announced plans to sell two IoT-related businesses, connected lighting division Current and automation division Intelligent Platforms.

Immelt has been out of the picture since 2017, when he was replaced by John Flannery, who scaled back GE Digital's efforts while the division pivoted its focus from the Predix IoT platform to applications built in Predix. Roughly a month after GE's break-up plan was announced in June, a report stated that the company was looking to sell key parts of GE Digital without saying which assets may be up for auction.

Now under Larry Culp, GE's new CEO who replaced Flannery in October, GE Digital's future remains in question. Shortly after Culp was appointed CEO, the company indefinitely postponed its eighth annual Minds and Machines conference for customers and partners weeks before it was set to happen. And in an interview with CRN last week, a vice president and a spokesperson were unable to say whether Culp is committed to the company's digital division.

At the same time, GE Digital is still releasing new products and services and another executive said last week that the division's product roadmap "remains completely intact" as "investments continue to grow." A GE Digital spokesperson said separately that the division is looking for an "investment partner."

Barry Lynch, CEO of Factora, a Trois-Rivières, Quebec-based GE Digital partner, told CRN earlier this week that he wouldn't be surprised if GE Digital ended up splitting itself across GE's aviation, power and renewable energy businesses while selling off any remaining assets to a third party.

"If it isn't really aligned with the core businesses that they're looking to grow," Lynch said, some parts of the business may need "a different company that continues growth and investment of those products."