Aether Systems aims to put data into your hand

Owings Mills firm sees market in feeding palm-sized devices

Initial public offerings

August 25, 1999|By Mark Guidera | Mark Guidera,SUN STAFF

Aether Systems Inc. is angling for what analysts predict will be one of the big growth sectors in the telecommunications markets during the next three years: Transmitting a wide range of data, from real-time stock and mutual fund quotes to airline schedules and e-mail on palm-size computers and other hand-held devices such as "smart phones."

The 3-year-old Owings Mills company, which filed to go public this week, hopes to raise $75 million in its initial public offering.

Aether develops sophisticated communications systems and data compression software to allow financial market and other data to be transmitted and received on mobile devices. It also plans to expand into operating customer support centers for wireless data clients.

Company executives declined to be interviewed for this article, noting Securities and Exchange Commission regulations barring them from discussing the offering or the company prior to a public offering.

But the company, which lost $4.4 million on $787,000 in revenue during the first six months of this year, said in a filing with the SEC that it plans to initially focus on the financial services sector.

That sector is rapidly embracing wireless technology to increase online trading convenience for customers.

For example, Discover Brokerage, Morgan Stanley Dean Witter & Co.'s online trading unit, spent less than six months working with Aether to design TradeRunner, a wireless trading and account information system launched two weeks ago.

A number of major investment houses, including Fidelity Investments, have either rolled out wireless trading and account information services or announced plans to do so. Analysts expect more than 90 percent of U.S. brokerages to offer some type of wireless trading and account information service by 2004.

Diana Hwang, a research manager for International Data Corp., a Cambridge, Mass.-based technology consulting firm, said U.S. corporations are increasingly investing money in new wireless technologies to support the clamor for information on the go.

Hand-held devices that can access wireless data, she said, are increasingly being seen as a "key business tools for connectivity."

Aether, which is backed with $20 million in venture capital, is moving quickly to take advantage of the growing popularity of hand-held devices.

Its most recent deal: providing software and network engineering for TradeRunner, the new wireless trading service offered by Discover Brokerage.

John MacIlwaine, senior vice president and chief technology officer for Discover Brokerage, said his company selected Aether because the Owings Mills concern had a track record with successfully developing a wireless financial news service, MarketClip, for Reuters Group PLC.

Also Discover wanted a vendor which could adapt the TradeRunner service to mobile devices and operating systems which emerge as front-runners with consumers.

"We didn't want to be locked into any specific device or operating system. The world is changing very quickly, and no one really knows yet which direction this technology will end up. Aether had the ability to adapt," said MacIlwaine.

Aether also said its working with online trading giant Charles Schwab & Co. to develop a mobile trading and account information service that Schwab hopes to roll out later this year.

Other projects Aether says it is working on include PitViper, a trade-recording and commodities quote system for the Chicago Board of Trade, and wireless account and trading access for brokers at Bear, Stearns & Co.

Aether holds a stake in Open Sky, a joint venture with 3Com Corp., the California-based maker of the Palm Pilot devices. The venture is developing a new generation of wireless data systems for securely downloading e-mail and other personalized or business data on mobile devices.

3Com and Aether also have a financial tie: After the offering, 3Com will own 26 percent of Aether, with an option to increase its stake to 33 percent.

With the wireless data market expected to boom over the next several years, especially in Europe, analysts said, companies such as Aether face plenty of competition.

Among the competitors already developing software, operating systems and other technologies for wireless data networks: privately held w-Trade Inc., a New York wireless trading venture, and Wireless Knowledge, a joint venture between Microsoft Corp. and Qualcomm Inc.

Aether, co-founded by David Oros, 39, former president of Westinghouse Electric's wireless data group, didn't say in its filing when it expects to go public.

But, according to the offering, the company plans to use a portion of the $75 million it hopes to raise in the initial public offering to complete a planned $12.5 million acquisition of Mobeo Inc. The Bethesda-based company offers foreign exchange and other financial niche information through wireless paging networks.

That acquisition must close before Oct. 3, Aether said in its SEC filing, or it will have to pay Mobeo a $200,000 penalty.

Oros has managed to assembled a Who's Who of the Baltimore financial and legal community on the Aether's board.

Appointees include George P. Stamas, a limited partner in the Orioles who is heading up Wilmer Cutler & Pickering's Baltimore office; Frank A. Bonsal Jr., a founding partner of Baltimore-based New Enterprise Assoc., the venture capital outfit; and J. Carter Beese Jr., the former head of BT Alex. Brown's global banking unit.

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