3Com, USWeb/CKS Ally on Mobile Apps

3Com and USWeb/CKS have entered into an agreement that will involve 3Com investing up to $US100 million toward the development of mobile, corporate electronic-commerce applications. The deal also calls for 3Com to purchase a $40 million stake in USWeb/CKS, a provider of Internet consulting services.

USWeb/CKS, which just this week announced a planned merger with competitor Whittman-Hart, and 3Com plan to deliver their first co-developed applications in the second half of next year.

The goal of the alliance is to develop products for corporations and service providers that want to build e-commerce applications that can be accessed from anywhere, according to Bruce Claflin, 3Com president and chief operations officer. The PalmOS operating system from Palm -- the handheld-device maker that is set to spin off from 3Com in an initial public offering -- will play a role in the applications that are being developed, Claflin said.

In addition to mobile applications, the duo will work on distance-learning applications and technology involving the convergence of voice, video and data delivered over the Internet, said Robert Shaw, chief executive officer of USWeb/CKS, who also spoke on the conference call.

"We plan to be the first to market with a series of video, voice and data solutions," Claflin said.

Although the negotiations began before the USWeb/CKS hook-up with Whittman-Hart, 3Com is "delighted with the merger," Claflin said, in part because Whittman-Hart brings more focus to the mid-tier customers, where 3Com is strong.

In addition to the funding 3Com is providing for the development work, 3Com has negotiated the purchase of up to $40 million of USWeb/CKS stock, although it is subject to certain conditions not outlined in the release today. Additionally, 3Com has the right to acquire warrants to purchase more shares in the company. This will also be subject to certain conditions. Some of the funding will also go towards establishing technology development labs.

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