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3Com Nabs Ethernet Card Outfit

In search of even more speedy network connectivity, 3Com Corp. Wednesday lifted Alteon WebSystems' gigabit Ethernet network interface card business for $110 million in cash.

The transaction, which is structured as an asset sale, is subject to customary regulatory approval and is scheduled to close in December 2000.

Alteon WebSystems is owned by Canadian networking giant Nortel Networks Corp. Having first shipped gigabit Ethernet products in Feb. 1997, the purchase of Alteon means 3Com has picked a purveyor of the field. Alteon has shipped more than 120,000 Gigabit Ethernet NICs worldwide.

3Com, which last Wednesday put the finishing touches on a virtual private network that will be rolled out by digital subscriber line providers, hopes to amp its leadership into the next generation of high-performance wired and wireless solutions with the play.

Why could this deal be so important? According to research groups such as Cahners-Instat Group, the gigabit Ethernet segment is exploding, with growth rates of more than 300 percent per year and an estimated 50 million network connections shipping in 2004.

Analysts said the growth is fueled by increased demand for high-bandwidth connections for enterprise resource planning, e-commerce and streaming media applications over copper wiring infrastructure.

Tom Werner, vice president and general manager of 3Com's Business Connectivity Group, swore by gigabit Ethernet power in a company statement Wednesday.

"Just as new PC applications are written to exploit advances in computing performance, networked applications will also be developed to leverage the bandwidth expansion made possible by gigabit Ethernet technology," Werner said. "A decade from now nearly every PC will ship with Gigabit connectivity and 3Com intends to be the established leader."

3Com's deal Wednesday accompanies a move the firm made November 6, when it launched a suite of commercial networking products, including six models of stackable 10/100/1000 Mbps switches.

The companies said no personnel will transfer from Alteon or Nortel Networks to 3Com in connection with this transaction.