Without a Net: VerticalNet Sells Its NECX Unit

VerticalNet (VERT Quote), a struggling B2B company, said Tuesday it's selling its NECX unit, which contributed 53% of its third-quarter revenue.

The unit is an electronics component brokerage the company acquired last year. The vast bulk of the unit's business is conducted off-line, which has raised questions about whether VerticalNet is a true business-to-business e-commerce company.

VerticalNet is selling the business to Converge, an online marketplace for buying and selling technology products backed by several companies including Advanced Micro Devices (AMD Quote) and Hewlett-Packard (HWP Quote). As part of the deal, VerticalNet will gain a 19.9% stake in Converge and a seat on its board. In addition, Converge will use VerticalNet technology under a three-year software licensing and professional services contract valued at $107.5 million, the companies said.

"Our equity ownership in Converge enables VerticalNet and its shareholders to continue to benefit from our leadership position in the electronics component marketplace," Joe Galli, VerticalNet's CEO, said in a statement. "In addition, our agreement to provide Converge with our direct material procurement technology securely positions VerticalNet Solutions as the emerging leader in this high-growth sector and accelerates our go-to-market initiatives. This will sharpen our focus on VerticalNet Solutions and on VerticalNet Markets, our strategic business unit that operates 58 industry-specific marketplaces. Focusing on these two complementary businesses will enable VerticalNet to continue our rapid growth trajectory while driving us toward profitability." ...