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Intel makes Net play with Proxicom stake

Giant chipmaker Intel invests about $5 million in the Internet consulting firm.

Internet consulting firm Proxicom today announced that Intel has invested about $5 million in the company.

Intel, which has recently been making a big play for services, said the approximately $5 million investment works out to about 100,000 shares of Proxicom.

The investment follows a partnership agreement announced last month between Proxicom and Intel Online Services, the chip giant's new Internet services hosting business. In the agreement, Proxicom and Intel are working together to develop and market integrated hosting services for the Web.

Intel purchased the equity stake in Proxicom through Proxicom's secondary offering of 3.6 million shares, which was priced on October 7 at 52.38 per share and was completed yesterday, the company said.

In recent weeks, more companies have been setting up hosting strategies that involve services.

In September, USWeb/CKS, an application service provider and Internet consultancy, received a $67.5 million investment from Microsoft over the next 12 months to fund the development and marketing of new application services and technologies. As reported, Microsoft said it will pay $14.9 million for warrants to purchase 1 million USWeb shares for a fixed price of $27.59 at any time over the next five years.

With Intel Online, the company is striving to tap into the Web hosting trend by getting into the business of running a data center. Intel's latest $150 million data center is the first of more than 12 centers planned worldwide, including an operation in Virginia slated to open in the first quarter of 2000 and centers in London and Tokyo by mid-year. Intel said it will sell its services directly to large customers, but will also partner with Web consulting firms, such as, iXL, Proxicom, and Razorfish, to resell services or simply refer customers to Intel.

Reston, Virginia-based Proxicom, which went public in April, competes in the lucrative Net services market against rivals Scient, Viant, Zefer, and others.