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Safeguard to focus on Net infrastructure

Internet incubator Safeguard Scientifics Inc. (NYSE: SFE), which had been a big investor in business-to-business companies, said Monday it will focus on the Internet infrastructure market.

Safeguard, which owns a significant chunk of Internet Capital Group (Nasdaq: ICGE), said its on to new things. The company has invested in 25 Internet infrastructure companies - a dozen were acquired in the first quarter.

The move, reported this morning in The Wall Street Journal, was initially seen as the end of the B2B stock craze. After all, Safeguard was behind many recent B2B IPOs, including the debut of eMerge Interactive (Nasdaq: EMRG), an online cattle auctioneer.

Safeguard, however, went on damage control as ICG shares fell 7 percent in morning trading. "Safeguard is still extremely supportive of the B2B e-commerce sector through its large network of partner companies, especially Internet Capital Group," the company said.

According to a Safeguard spokesman, the company "sees Internet infrastructure and B2B as perfect compliments to one another."

The company also said Internet infrastructure is "a huge and virtually untapped market." Safeguard will invest in communications, software and eServices companies.

As for ICG, a spokeswoman said the company's B2B strategy won't change. "The land grab is not over yet," she said.

Safeguard recently raised more than $375 million in a secondary offering. Last week, underwriters for that offering -- CS First Boston, DB Alex.Brown, Lehman and Merrill Lynch -- started coverage with bullish ratings.