When General Electric Co bought oilfield services giant Baker Hughes last July, it created a global industry colossus with $22 billion in annual revenue.To get more company news, you can visit shine news official website. GE promised to digitalize oilfields worldwide, marrying its expertise in big data, analytical software and subsea equipment with Baker Hughes’ experience in drilling services, chemicals and tools.
Less than a year later, GE is bailing out of the deal, the firm announced Tuesday, planning to sell its 63 percent stake in the combined firm over time as part of a larger move to simplify its business and reduce debt. The retreat comes amid slipping market share, management missteps and culture clashes that have unsettled employees and frustrated suppliers and customers, according to data reviewed by Reuters and interviews with more than 30 employees, former employees, recruiters, analysts, suppliers and customers. GE managers initially took 11 of the combined firm’s top 15 posts and ushered in a by-the-book culture more like its aviation business than that of oil industry, where relationships are more prized and handshake deals are still common, said people who have had dealings with both. In a Tuesday note to employees seen by Reuters, Baker Hughes GE Chief Executive Lorenzo Simonelli complimented his “amazing team” and reassured them about the path ahead, but acknowledged “the last year has not always been easy for you, or our customers and partners. ” “I recognize that this moment is bittersweet for some, welcomed perhaps by others,” he wrote. Baker Hughes GE lost market share in 12 of 19 services and equipment sectors between 2016 and 2017, according to a Reuters analysis of data from prominent oilfield services consultancy Spears & Associates. In one area where Baker Hughes has been a pioneer, drill bits, its share fell to 17 percent from 20 percent between 2016 and 2017. In a statement to Reuters, Baker Hughes GE attributed the market share losses to “challenging market dynamics” and said most of the losses occurred before the merger closed in summer of last year. Since the merger, suppliers have chafed under strict cost-cutting demands, and some customers shifted to competitors after abrupt service-fee increases and contract changes, according to suppliers, customers and former Baker Hughes executives. The choppy transition also has driven out veteran Baker Hughes managers in key departments and rattled staff. Baker Hughes GE oilfield services and equipment revenues declined by $700 million. Rivals Schlumberger and Halliburton posted higher revenues on a resurgence in the North American hydraulic fracturing market, said Chirag Rathi, a consulting director at market researcher Frost & Sullivan. Baker Hughes sold a majority of its hydraulic fracturing business in 2016.
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June 2018
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