Industry sources said Red Hat, which distributes and supports a version of the Linux operating system, is expected to announce that Intel, Netscape Communications Corp. and two venture capital firms are buying stakes in it.

The anticipated investments will be a major boost for Linux, an operating system originally developed in Finland that has been mostly given away as so-called "shareware."

Linux is a version of the UNIX operating system created by Linus Torvalds when he was a student at the University of Helsinki in Finland and now used mostly by engineers and programmers.

Intel, Netscape, and Red Hat all declined to comment on recent reports on Internet-based news sites Ziff Davis Inc.'s ZDNN and CNET Inc.'s news.com, about the expected investments.

But one industry source confirmed thatthe companies were indeed close to making an announcement, although the terms and the amount of the investments could not be learned.

Netscape co-founder Marc Andreessen, Intel's vice president of sales and marketing Sean Maloney, Torvalds and Red Hat chief executive Robert Young will all participate in a panel discussion on Tuesday at a trade show for Internet service providers that will address Linux and the business model of open source code.

Linux was first released in 1991 and has always been free over the Internet. It is a version of the UNIX operating system that runs on Intel-based personal computers and servers. Servers manage the flow of data in computer networks.

Linux now has over 8 million users and is used within the Internet community, by Internet service providers and for intranet site hosting.

But because the software is free and it not owned by one company, many major corporations are hesitant to use Linux, even though some claim it is more robust and less prone to crashing thanMicrosoft Corp.'s Windows NT.

"With the right support, Linux could crack the commercial market," said Jon Oltsik, senior analyst at Forrester Research. "The right support means visible vendors there to answer calls when things are not running right, rather than a federated group of software programmers."

Red Hat, based in Research Triangle Park, N.C., charges $50 for its version, Red Hat Linux, and provides customer support. It is also the best-known distributor of Linux at retail.

In recent months, Linux and other shareware programmes have gained recognition by major computer makers, which are moving to commercialise the software.

In June, International Business Machines Corp. said it would distribute and support Apache, another "freeware" programme with a far-flung programmer group.

The commercialisation of so-called freeware is likely to be seen as controversial by some of the programmers who work to improve the products.

Thousands of programmers make changes to Linux, who then submit theirchanges to Torvalds, who then adds the worthwhile changes to the source code and then leaves the software to be tested again by the community.

"It's a cycle. It's quite different from anything out there," said Michael Masterson, technical director of Taos Mountain Inc., a UNIX services and support company in Santa Clara, Calif. "Some of the hard-core community will say it's a negative thing and it will hurt the artistic process."

Some in the industry may speculate that Intel's investment in a company making another operating system could mean another chink in the so-called "Wintel" duopoly that dominates the industry, but analysts and executives said that Intel is just placing its bets on all promising technologies.

"Will Windows NT even feel the bump? I don't think so," said Martin Marshall, an industry analyst at Zona Research in Redwood City, Calif. "I don't think it's an anti-Microsoft play on the part of Intel. Of course Intel would like to show it is not solely dependent on Microsoft."