GE hires bankers to mull sale of digital assets: WSJ

(Reuters) - General Electric Co GE.N has hired an investment bank to organize an auction for its digital assets, the Wall Street Journal reported on Monday citing people familiar with the matter.

FILE PHOTO: The General Electric logo is pictured on working helmets during a visit at the General Electric offshore wind turbine plant in Montoir-de-Bretagne, near Saint-Nazaire, western France, November 21, 2016. REUTERS/Stephane Mahe/File Photo

GE’s multibillion-dollar digital business, which includes its Predix software system and applications, has been struggling with technical issues and weakening sales.

GE has been seeking partners to invest in GE Digital as it narrowed the target markets for the division and abandoned plans to build a cloud platform, instead partnering with Inc AMZN.O and Microsoft Corp MSFT.O clouds.

Faced with cash constraints and falling profits at its large power business, GE chose to reduce investment in the digital unit and focus on partnerships.

The Wall Street Journal report did not reveal the exact assets for sale or the potential deal value.GE declined to comment.

Former GE Chief Executive Jeff Immelt invested more than $4 billion in GE Digital and placed it at the strategic center of what he called GE’s new role as a “digital industrial company.”

But technical issues and competition from less costly systems slowed the unit’s growth, forcing GE to shift strategy.

The unit, which became a standalone business in 2015, has not reported profit and loss as other GE units do. It posted revenue of $4 billion last year, a 12 percent increase from 2016, GE said.

But growth has slowed. Revenue growth was flat in the latest quarter, compared with a year ago, and new orders fell 23 percent, GE said earlier this month.

GE also has been laying off programmers at the GE Digital’s San Ramon, California, headquarters.

The potential sale of digital assets comes amid a broader GE restructuring. The Boston-based conglomerate said in June that it plans to spin off its healthcare business and divest its stake in oil-services firm Baker Hughes BHGE.N, effectively breaking up the 126-year-old company.

The slimmed-down company under Chief Executive John Flannery will focus on jet engines, power plants and renewable energy, which GE hopes will reward battered shareholders who have seen the stock lose more than half its value over the past 20 years.

GE shares were up 0.7 percent at $13.14 in afternoon trading on Monday.

Reporting by Alwyn Scott in New York and Karan Nagarkatti in Bengaluru; Editing by Arun Koyyur and Lisa Shumaker