Aether partnership with EDS is called `incrementally positive'

January 17, 2003|By Andrew Ratner | Andrew Ratner,SUN STAFF

Aether Systems Inc. announced yesterday a strategic partnership with Electronic Data Systems Corp., one of the nation's largest corporate technology providers, that executives hope will validate the Owings Mills-based company's wireless data communications services.

Terms of the agreement were not disclosed, but EDS will manage internal information services and customer relations for an undisclosed fee for Aether. It will also employ Aether's wireless services among the technology solutions it offers other clients.

"What this brings to Aether is probably a very effective distribution channel, while Aether brings to EDS some wireless and mobile know-how," said Paul Coster, a J.P. Morgan Chase & Co. analyst in New York who follows Aether. "It's incrementally positive."

Gregg Smith, president of Aether's Enterprise Mobility Solutions group, said the alliance helps Aether expand its sales reach beyond North America and broadens EDS offerings in the market against the likes of International Business Machines Corp. and Accenture Ltd.

"We're seeing significantly more activity than we saw last year," Smith said. "When you work with a partner like EDS, which runs IT for 9,000 corporations around the world, and mobility is one of the hot topics, it gives us a huge advantage."

Aether has struggled to reach profitability even while laying off 800 employees in the past two years. But the company hopes the EDS deal will help it expand in the wireless enterprise sector, which is estimated at $7.6 billion. EDS recently replaced its chief financial officer after a major earnings warning caused its stock price to plummet.

Aether shares fell 8 cents to $3.26 on the Nasdaq stock market yesterday, while EDS lost 2 cents to $19.99 on the New York Stock Exchange.

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