Quickie: PTC announces CEO change; Rockwell sells its stake in PTC
Earnings season rolls along, and I will eventually get to capsules covering PLMish results (mixed so far, nothing horrible), but there are two PTC items to cover outside of earnings.
The first is that PTC has announced that current CEO Jim Heppelmann will step down in February 2024 to be replaced by Neil Barua, who joined PTC with the acquisition of ServiceMax. Mr. Heppelmann will remain with PTC as chairman of its board of directors.
Was this a surprise? Oh yes (to me, at least, and the people who’ve gotten in touch to ask if I had any clue this would happen). We met Mr. Barua at LiveWorks in May when he gave an impassioned presentation about ServiceMax and how it fits into PTC’s overall vision, but there was nothing to indicate that he would be anything more than the head of that part of PTC’s business.
During the earnings call last week, Mr. Heppelmann said that “life is calling me to a new chapter” but didn’t elaborate on what that might be. He did say that PTC’s board had engaged Korn Ferry, an executive recruiting firm, to advise on a new CEO and that Mr. Barua emerged as its leading candidate.
Why does this matter? Because PTC is in the process of yet another reinvention: moving Creo to the cloud and the business to SaaS. That first, Creo +, is a big big deal and needs continued focus. During the investor call last week, Mr. Barua did say that [his] “top priority is continued execution” — critical, especially right now.
The second significant PTC news item came last night: Rockwell Automation is selling 5.8 million of the shares it still holds in PTC. Today, we learned that the price per share is $141.75 per share, meaning that Rockwell will see over $822 million in this sale — NONE of which will go to PTC since this is a sale between Rockwell and the (unidentified) buyer. You may recall that Rockwell initially bought 10.6 million shares for $1 billion, so it made money as it sold down its stake.
Why does this matter? Rockwell had already announced that it wanted to diversify its holdings and find new places to park its cash and had been selling in dribs and drabs, so this isn’t all that surprising. Too, as we’ve seen with other public companies that own shares in yet other public companies (see Siemens and Bentley, as one example), the owner has to keep making accounting adjustments because of the volatility in the shares they own. This adds risk to their own financial statements, which is never desirable.
So is this a big deal? Investors this morning sent PTC’s shares down 2.5% in pre-market trading to $143/share. FWIW, PTC has around 120 million shares outstanding, so this sale amounts to a less than 5% change. Of course, if the buyer already owns a significant stake, these new shares could give them influence at the board level. TBD.
But the business relationship between Rockwell and PTC seems to be on track. The companies announced at LiveWorx 2023 that they were extending their joint efforts to sell IoT and augmented reality solutions to manufacturing companies. Rockwell Automation still resells PTC’s ThingWorx IoT software, including the new-ish Digital Performance Management (DPM) manufacturing solution and Vuforia AR.
TL;DR. Changes afoot at PTC. New CEO coming. Ownership changing. But as far as we know right now, “continued execution” remains a priority.
