Wireless middleware and software provider Aether Systems Inc. filed an initial public offering prospectus with the U.S. Securities and Exchange Commission last week with the intention of selling 6.9 million shares at $15 a share by next year.
The offering will consist of 6 million shares to the public, with another 900,000 available as an option to underwriters to cover any over allotments.
The company’s ticker symbol will be AETH.
The move to go public was preceded just weeks before by the company changing its name, formerly called Aether Technologies Inc. The new name better reflects the product it offers, company officials said, which is customized, end-to-end wireless systems integrating business applications with wireless technologies.
In particular, Aether provides the necessary link between enterprise systems and wireless networks. The company has played key roles in several such wireless solutions in the last year, primarily through its wireless integration software-the Aether Intelligent Messaging software platform, known as AIM.
As a system integration system, the AIM platform is the middleware that links an enterprise network with wireless networks. The platform includes all the software, gateway protocols, messaging routers and application end server development. Also included in the platform is the AIM.net service bureau, providing various types of Internet-based content and information.
The AIM platform initially was targeted at the financial services space. Services using it include the Reuters MarketClip financial price quote, alert and information service; and TradeRunner, an online trading application that allows Discover Brokerage customers to place buy and sell orders wirelessly. The company is developing a similar solution for Charles Schwab.
To bolster AIM.net content, Aether bought mobeo Inc., a provider of foreign exchange information over wireless networks with more than 3,000 subscribers. It also joined L.M. Ericsson’s Wireless Internet Solutions unit to co-market and develop wireless data solutions for the online financial industry.
While the financial services center remains its primary focus, Aether hopes to branch out to other areas, first by licensing the AIM platform to other industries. The intent, the company said, is to help drive the growth of enterprise wireless data access to markets beyond the financial services space.
Additionally, the company teamed with 3Com Corp. to form OpenSky, designed to extend corporate intranet and Internet-based information to wirelessly enabled devices based on the Palm Computing platform, Windows CE operating system or Wireless Application Protocol technology. To achieve this, OpenSky will use Palm’s Web clipping technology with the AIM middleware. Aether owns 26 percent of the company. Aether’s relationship with 3Com began with work on the Palm VII wireless organizer.
Response to the company’s activities to date have been positive.
“Aether is one of the leaders in this space for many reasons,” said Bob Egan, research director at the Gartner Group. “Much of it has do to with being very flexible. Another is their investment and participation in OpenSky.”
Central to its strength, he said, is the company’s experience integrating enterprise and wireless networks. The AIM.net service bureau is an added bonus.
“AIM.net certainly can help small- to mid-sized companies,” he said. “It will remain very important for at least the next three to five years. Companies doing this without that kind of service bureau are going to struggle.”
According to George Davis, Aether chief operating officer, all AIM platform customers have chosen to outsource their information services needs through AIM.net. “They don’t want to tie up bandwidth doing that stuff,” he said.
Going forward, Egan said Aether would benefit from increased partnerships with companies like IBM Corp., Sun Microsystems Inc. or Oracle Corp.
“They need to establish a portfolio of partners that can round out and strengthen their overall solutions,” he said.
While the company cannot directly comment on future business practices as a result of the enforced quiet period preceding its IPO, Aether revealed some strategic plans in its prospectus with the SEC.
Of the $103.5 million it hopes to raise, Aether said $14.8 million will be used to pay off debt, including the $11.7 million used to buy mobeo Inc. under a senior secured interim credit facility. Another $2.5 million will be used to exercise its warrants to increase its ownership in OpenSky to 33 percent and $2 million to expand its network operations center during the next year. The remainder will be reserved for general corporate purposes, including engineering and research and development.
“Our strategy … (is to) develop the market for existing and new products in the financial service sector, expand into new industries and international markets, pursue mass-market opportunities-including wireless Internet access, e-mail and Internet and other electronic transactions … (and) pursue selective acquisitions to expand our capabilities.”
For the first six months of this year, Aether reported a net loss of $4.3 million on revenues of $787,000, compared with a net loss of $4.7 million on revenues of $1.5 million at the end of 1998.
