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B2B firm shuns its dot-com past

SciQuest, which has been phasing out its online exchange, acquires a biotech company in the latest move by a Web marketplace seeking shelter from the dot-com demise.

Online exchange SciQuest has acquired a biotechnology software maker in what is the latest move by a Web marketplace to seek shelter from the dot-com demise by morphing into a software company.

SciQuest announced the acquisition of Textco on Thursday.

Research Triangle Park, N.C.-based SciQuest is one of several publicly traded dot-coms that promised to revolutionize the way businesses buy and sell goods with each other. But after realizing that bringing suppliers and purchasing mangers to the e-commerce table was not an easy task, many online exchanges have headed to the software industry to stay afloat.

After reporting a net loss of $84.3 million on revenue of $51.7 million in 2000, SciQuest began phasing out its online exchange for lab products and supplies, and cut its staff in half.

To reach its goal of breaking even by the end of this year, the company has turned its focus to selling software that helps life-science researchers find and acquire compounds and equipment used in drug discovery. Textco, which booked $500,000 in revenue during the last 12 months, develops software for analyzing and tracking genetic research.

Ventro, which used to compete with SciQuest as an online exchange, acquired software company NexPrise last year after abandoning plans to provide software and hosting services to online exchanges. NexPrise, now the name of the combined company, sells software that helps manufacturers negotiate supplier contracts and develop engineering designs online.

Verticalnet Software, owner of more than 50 online business portals, has adopted a similar strategy. The company recently said it plans to sell off its portals unit to focus on its software business, which it expanded in December with the acquisition of Atlas Commerce. Atlas develops software that lets companies hold auctions and order supplies online.

All three companies have their work cut out for them. Besides the fact that their stock prices are all hovering around $1, companies have cut their spending on business applications and other information-technology initiatives as a result of the recession.

"They don't have a choice but to find another justification for being," said Joshua Greenbaum, an analyst at Enterprise Applications Consulting, "but it's going to be pretty tricky."