3Com Buys Alteon's Gigabit Ethernet NIC Business

3Com Corporation has purchased Alteon Websystems Gigabit Ethernet NIC (network interface card) business for $US110 million in cash, 3Com announced Wednesday.

Alteon Websystems is a subsidiary of Nortel Networks. Its NICs were developed to be used with the existing copper network wiring system present in most businesses, making fiber optic cables unnecessary, said 3Com spokesman Brian Johnson.

The Gigabit Ethernet adapter business is growing 300 percent a year, according to market research from Cahners-Instat Group that was cited by 3Com in a press release, driven by growing enterprise resource planning, e-commerce, and streaming media (such as video) applications.

The deal, scheduled to close in December, is structured as an asset sale and still requires regulatory approval. Besides purchasing the NIC business from Alteon -- which was itself acquired by Nortel last month -- 3Com will license some Gigabit Ethernet technology and intellectual property from Alteon. According to 3Com, no personnel will transfer from Nortel or Alteon as part of this transaction. In its fiscal third quarter ending March 2, 2001, 3Com will record a one-time charge of US$20 million to $25 million for in-process R&D, related to this deal, 3Com said in a statement.

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