Microsoft

(MSFT) - Get Report

and

Andersen Consulting

announced a $1 billion joint venture on Monday as part of an expanded alliance that will offer services to companies that run on Microsoft software.

Microsoft will pay $385 million in cash to support the joint venture, to be called

Avanade

. It will also offer development support. Andersen will put in $600 million in resources, which includes the creation of a new unit for 3,000 employees to design and build business applications based on Microsoft technology.

The two companies will also jointly market, develop businesses and deliver services to Fortune 500 companies, new market entrants and Internet start-ups.

"By combining our technology strengths with Andersen Consulting's recognized business and industry expertise, we can ensure that the most demanding enterprise customers receive all the benefits possible from Windows 2000 and Microsoft's entire enterprise platform," said Steve Ballmer, president and chief executive of Microsoft, in a statement.

Avanade, to be headquartered in the Seattle area, will work with Andersen, Microsoft and key computer makers, or original equipment manufacturers. Andersen estimates that the company will offer $15 billion in services by 2002.

Avanade also plans to open offices in San Francisco, Dallas, New York, Paris, London, Sydney, Sao Paulo and Singapore in the next 18 months. It will also likely go public at a future date.

Chicago-based Andersen Consulting is a subsidiary of

Andersen Worldwide

, the largest of the Big Five accounting firms in the U.S.

Shares of Microsoft, based in Redmond, Wash., closed Friday trading at 101, up 1, or 1%. In pre-market trading, they were down 1 1/8, or 1%, to 99 7/8, according to

Instinet

.