General Electric Co. (GE) plans to put certain assets of its digital unit, GE Digital, up for sale. It is not clear what all operations are to be sold or how much the proceeds would be – and the yields are not expected to be significant. The company is said to have hired an investment bank to auction off the assets of the unit which generated over $500 million in revenue last year but is still losing money despite taking in billions in investments.
GE Digital, which was a key project of former CEO Jeff Immelt, became a standalone unit three years ago and went on to acquire several smaller companies to strengthen its offerings. As part of a diversification effort, GE Digital developed the Predix software platform to help in data analytics and better equipment management. Parent company GE also hoped this effort would boost its stock price.
GE Digital intends to continue serving customers in the power and aviation businesses
However, the digital unit has been seeing slow sales, and in the most recent quarter, it saw a drop in new orders. The unit faces tough competition from major technology companies like IBM that provide similar services to the industrial sector. GE invested billions of dollars and created its own operating system, software and other digital tools to help its own businesses before it started selling these applications to outside customers.
Due to difficulties in running this huge business efficiently, CEO John Flannery reduced the scale of operations by catering to a smaller customer base and by eliminating jobs. GE Digital intends to continue serving customers in some of its businesses such as power and aviation.
GE Digital is the latest business that GE is offloading as part of its restructuring efforts. The company had announced the spin-off of its healthcare division GE Healthcare, the planned divestiture of its stake in Baker Hughes and the sale of its transportation unit on previous occasions. GE wants to narrow its focus to aviation, power and renewable energy. Although GE continues to get slimmer, its stock price is still struggling to see a lift.