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3Com takes $100 million stake in USWeb/CKS

The networking company says it will work with the Web services firm to jointly develop and sell wireless applications.

3Com today said it is making a $100 million investment in Web services firm USWeb/CKS and that the two companies will jointly develop and sell wireless applications.

Building on 3Com's new "e-networks" strategy, the networking company said it will work with San Francisco-based USWeb/CKS to build wireless applications for mobile devices, such as 3Com's popular PalmPilots, along with converged voice, video and data products for their customers.

For example, the companies foresee offering voice over the Internet, video streaming on e-commerce Web sites and sites that offer education over the Internet, said USWeb/CKS executive vice president Bob Wise.

3Com president Bruce Claflin said the deal goes hand-in-hand with the struggling company's goal of selling its networking equipment to businesses that need to connect customers, partners and workers to the Web.

"This is the first tangible example of our 'e-networks' strategy," said Claflin, who says the company wants to move beyond just selling networking equipment, but offer the software and services that go along with it. 3Com recently purchased LANSource Technologies, maker of technology for faxing over the Internet.

"We have three simple premises: converged applications; a highly available and secure [network]; and a variety of wireless and wired technologies," he said.

Under the agreement, the companies said 3Com will fund development work by USWeb/CKS. In addition, 3Com said it may purchase up to $40 million in USWeb/CKS stock and also will have the right to purchase additional shares, depending on regulatory approval.

The two companies said employees from USWeb/CKS and 3Com consulting services will implement the new applications.

3Com and USWeb/CKS said they plan to develop and debut new products in USWeb/CKS's "Centers of Excellence" and 3Com's lab at its Santa Clara, Calif., headquarters. They expect the products will be available by mid-year.

Ben Tanen, analyst at Giga Information Group, said the investment makes sense for 3Com and could benefit USWeb/CKS.

"I think because the wireless thing is unproven, [3Com] has got to get some example applications out there, and it makes a lot of sense to get someone on your team," he said. "If it pans out, USWeb is well positioned to say: 'We're the first ones to do that kind of stuff.' "

In other news, Cisco Systems today said it will buy for $25.5 million Worldwide Data Systems, a consulting firm that focuses on the convergence of voice and data on a single Internet-based network.