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3Com back on the rumor-go-round

Rumor that the network equipment maker might sell its business to Lucent Technologies or spin off its Palm Computing unit resurface, boosting the company's stock.

The 3Com buyout rumors are back again.

3Com's stock shot up 13 percent yesterday after a financial Web site posted a rumor that the network equipment maker might sell its business to Lucent Technologies or spin off its Palm Computing unit, which makes the popular Palm handheld devices.

3Com's shares rose 2.56 to 27.31 before closing at 27.06 yesterday. The stock treaded water today, finally closing unchanged at 27.06.

The rumors have surrounded the struggling networking firm for more than a year, resurfacing every few months.

Speculation has been fueled by a bevy of mergers during the past year between telephone equipment makers and networking firms, as they race to build technology that merges voice and data on a single network. In the past year, for example, Nortel purchased networking firm Bay Networks, and Lucent bought networking firm Ascend Communications.

Analysts have speculated that the remaining unattached telephone equipment makers--such as Alcatel, Ericsson, Nokia, and Siemens--covet 3Com's data networking equipment, because they want to build new telecom technology. Although Lucent recently acquired data equipment maker Ascend, industry observers speculate that the company might want 3Com's corporate and enterprise technology.

Lucent representatives could not immediately be reached for comment. 3Com representatives declined comment on merger speculation. 3Com is scheduled to release quarterly earnings September 21.

Standalone networking companies, such as Newbridge Networks and Cabletron, also have been mentioned as acquisition candidates for the telecom equipment makers.

Siemens chief executive Heinrich von Pierer in May tried to end the 3Com speculation by saying he doesn't want to buy the company.

In an interview with CNET this spring, 3Com chief executive Eric Benhamou addressed the frequent rumors by saying: "I'm not going to feed the frenzy of rumors. Every Friday, there is a new one. If I had started to comment on the first one, then I would spend my time doing that, and I couldn't run the company in the meantime."

In separate news, OpenSky, a joint venture between 3Com and Aether Technologies, said it will offer wireless Internet service to Palm III and Palm V users by the first quarter of next year.

3Com, which will soon roll out nationwide wireless service for its Palm VII device, is still evaluating whether to offer its own wireless service for its lower-end Palm devices.