Aether acquires another rival

Wireless company buys NetSearch, weeks after IFX buy

April 21, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

Aether Systems Inc., the fast-growing wireless technology and data company, said yesterday that it has bought another wireless service company as it continues to move quickly into new markets by acquiring or investing in competing and complementary companies.

The purchase of NetSearch LLC of Scottsdale, Ariz., for $25 million in cash and potentially another $65 million during the next 13 months is Aether's second since it raised $1.6 billion last month through a stock and debt offering.

Two weeks ago, the Owings Mills-based company acquired IFX Group PLC, a large provider of mobile financial data services in Europe, for $85 million.

NetSearch, an early stage company founded in 1998, has developed a wireless service that alerts car dealership salesmen and other retailers by a pager device that a potential customer has requested information over the Internet.

The 25-employee company claims that its service, which it has just begun marketing, helps clients increase Internet commerce sales by bridging gaps between Web site consumers and bricks-and-mortar retailers and service industry companies.

NetSearch's service, said Aether, has found favor in the automotive industry. Clients include Lexus, Toyota and Lincoln-Mercury. NetSearch also is targeting customers in the real estate and insurance industries, said Aether.

David Reymann, Aether's chief financial officer, said that while NetSearch is young and has modest revenue -- less than $500,000 this fiscal year -- it appears to have strong growth potential.

jv0 "They've made a lot of headway in a short time," said Reymann. The acquisition, he said, gives Aether another opportunity to gain wireless customers in a traditional vertical sales market niche, in this case the automobile market.

"Quite often what happens with Internet shoppers is they send an e-mail expressing an interest in a car, and a salesman may not get back to them until the end of the day. The emotional tie by then might be broken," said Reymann. "NetSearch's service closes that gap."

NetSearch customers pay a monthly fee for the pager service and mobile pager devices for employees. Reymann said Aether believes that the revenue stream from those leases could be substantial, as NetSearch expands its customer base. He declined to list specific estimates.

Michael Braun, a NetSearch spokesman, declined to comment on the deal.

Under the agreement with Aether, NetSearch must meet specific sales targets during the next 13 months to get the entire $65 million in potential payments.

"We think that will be very motivational in getting them to meet the customer and sales targets," said Reymann.

Shares in Aether, which have dropped more than 50 percent since hitting an all-time high of $345 March 10, slid again yesterday.

They dropped $12.3125 a share, or about 10 percent, to $111.1875.

This week, the company announced that all company officers and shareholders involved in the March stock and debt offering had agreed to extend the lock-up period on when they could sell their shares, from April 17 to Oct. 17.

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