VA Software has folded its software division and changed its name to Sourceforge. The former Linux vendor will focus its business entirely on the web.

VA owns the SourceForge.net site, which hosts open-source projects, and the Slashdot news aggregation site, which is popular with technology enthusiasts.

The company said the moves are in response to the dynamics of “Web 2.0”, in which traditional software is beginning to give way to advertising-funded web services.

VA Software last month quietly sold its enterprise software business to CollabNet, a company that offers development software for geographically distributed teams, in consideration for an equity ownership in that company. The newly branded Sourceforge will make its revenue from advertising sales and product sales from its geek merchandise e-commerce site, ThinkGeek.

Other properties that are part of Sourceforge include another open-source project site, Freshmeat, and enterprise Linux resource site Linux.com.

VA Software began its life as VA Research in 1993 and later and more notoriously as VA Linux Systems, one of the early distributors of Linux whose stock jumped to $299 on the day of its December 1999 IPO. But its Linux business soon flagged and the company had more success in software development and acquiring the web properties that still operate today.

SourceForge.net in particular is a successful site for the company, and one of company's most recognisable brands. It hosts more than 100,000 open-source projects and has more than 1 million registered users.

Sourceforge also reported is third quarter fiscal 2007 financial results yesterday. Revenue was $10.3 million for its third quarter of fiscal 2007, a 30 percent increase from the $7.9 million the company reported for the same period last year.

The company reported net income of $6.5 million mostly from the sale of its software business. After years of not turning a profit, VA Software recorded its first quarter of profitability in its second fiscal quarter of 2006, which ended 31 January, 2007.