Zooming Aether stock pauses for a breather

Share price falls .75 after rising nearly $60 in four days

February 08, 2000|By Mark Ribbing | Mark Ribbing,SUN STAFF

Aether Systems Inc.'s stock finally paused to catch its breath yesterday after four torrid trading days last week lifted the company's share value by 48.6 percent.

Shares in the Owings Mills wireless data company dropped by 75 cents yesterday to close at $182, having risen from $123 from last Tuesday through Friday.

This boomlet was just the latest flush of success in the brief but heady history of Aether's stock.

Aether -- which makes software that allows Palm Pilots and other hand-held computers to receive up-to-the-second customized stock information -- went public Oct. 21 at an initial share price of $16.

By the end of the day, the stock's value had more than tripled.

After an initial tumble, Aether's shares shot into high orbit and, at least for now, are staying there.

The recent $20-plus daily increases have been due in no small part to the favorable notices the company has begun to receive from the financial press and stock analysts.

Barron's anointed Aether as one of the new wireless companies to watch, while two influential investment houses -- Deutsche Banc Alex. Brown and Friedman Billings Ramsey & Co. Inc. -- initiated coverage of Aether last week with "buy" ratings.

Bo Fifer, who covers Aether for Deutsche Banc in New York, said a key reason for Aether's rising stock price is the company's ability to land contracts with large online trading companies such as Charles Schwab & Co. Inc.

Aether is in a position to sell wireless communications service to companies in a wide variety of industries, Fifer said.

"I think there's an enormous opportunity to help traditional companies extend their business into the wireless medium," Fifer said.

Mark Zohar, a wireless analyst with Forrester Research Inc. in Cambridge, Mass., said Aether -- which has seen its losses mount as quickly as its sales -- will have to develop new customers in order to remain successful.

"The revenue base for them is still extremely small," Zohar said. "While their initial focus has been on the financial market, they're starting to realize they need to branch into other markets."

Even the successes of potential competitors have buoyed Aether shares.

Fifer and Zohar said the stock benefited from the highly successful Jan. 28 initial public offering of 724 Solutions Inc., a Toronto company with products that closely resemble Aether's.

Zohar said 724's IPO, which saw a near tripling of share value, gave investors another reason to buy Aether shares.

"It just validated Aether's business model," he said.

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