VerticalNet (VERT) , 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
, an online marketplace for buying and selling technology products backed by several companies including
Advanced Micro Devices
. 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."
The decision to sell NECX is just the latest bit of turmoil at VerticalNet.
As far back as this past
past summer, investors began to wonder whether the company was a pretender in B2B, something that has continued to haunt it. In July, Galli
joined the company as CEO, leaving
, which also has been surrounded by plenty of its own
Then in September there was
speculation the company was going to buy
, another struggling B2B company. The speculation hurt VerticalNet's stock. The company had to
come out and say it wasn't interested in Ventro. Also in September, Galli made his first big move,
reorganizing the company in a bid to emphasize its B2B operations, which includes operating online communities for industry professionals.
And just last month, VerticalNet
agreed to buy online credit company
for about $133 million in VerticalNet stock. VerticalNet's plan plans to use SierraCities to allow companies that use its network of Web sites to check the credit quality of prospective customers.
All the while, however, VerticalNet's stock has plunged, closing Tuesday at $5.38 a share, well off its 52-week high of $148.38.