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.