- The Washington Times - Tuesday, August 15, 2000

Aether Systems Inc.'s buying spree continues.
The Owings Mills, Md., company that makes software for wireless devices yesterday bought Cerulean Technology Inc. for $150 million in cash and stock, its sixth acquisition in less than a year.
Cerulean, based in Marlborough, Mass., makes software used by police to let them communicate through wireless devices. The purchase gets Aether Systems into the government market for wireless devices.
It also helps the fast-growing company extend its reach as it tries to become a key player in the growing wireless data services market.
"We're going to pick out our key segments and dominate in them. We can't grow Aether fast enough," Aether Systems President and Vice Chairman George Davis said.
Cerulean is expected to expand its own market of public-sector customers using hand-held devices with Web access to fire departments, health and human services workers, and public works employees. Cerulean has 45,000 customers now, the company told analysts at a meeting yesterday.
In addition to moving into the government and health care fields, Aether Systems already is providing financial market information over hand-held devices, and marketing wireless data services for transportation and shipping companies.
Analysts said yesterday they liked the acquisition.
"It's part of their strategy to really take advantage of the market and look at the best way to move into new markets," said Riyad Said, senior analyst at Arlington-based investment firm Friedman, Billings, Ramsey & Co. Inc.
Nearly 500 million people worldwide have wireless access now, through either wireless phones or hand-held computers. By 2005 that's expected to grow to 1.5 billion. About half of those devices will be able to let users log onto the Web, and Aether Systems is trying to keep pace with that growing demand for mobile Web access through its acquisitions, according to Mr. Said.
Aether's biggest acquisition came last February when it bought Vienna-based Riverbed Technologies Inc., which makes software that allows the transfer of data from desktops to wireless devices. Aether Systems bought Riverbed for 5.4 million shares of its stock, and the deal was valued then at $802.5 million.
Aether Systems also has purchased Bethesda-based Mobeo Inc. for $12 million in cash, Richmond-based LocusOne Communications Inc. for $40 million in cash, Scottsdale, Ariz.-based NetSearch LLC for $25 million in cash, and European company IFX Group for $85 million in cash.
Thomas Watts, analyst with Merrill Lynch Global Securities, said he expects Aether Systems to make two more acquisitions within the next 90 days.
"We have lots of things on the burner," Mr. Davis said.
That could add up to $100 million in revenue to Aether's bottom line, Mr. Watts said.
Aether Systems reported an $89.9 million net loss for the second quarter on revenue of $10.7 million.
Mr. Said doesn't expect the company to report net income until about 2005.
Aether Systems raised $1.4 billion by selling debt and convertible securities in a secondary offering in March.
Aether Systems also said yesterday it will start a new venture capital fund that will invest in companies developing wireless products, and invest $15 million in ParkStone Medical Information Systems, whose software lets doctors access patient records via hand-held devices.
Aether Systems has already invested $40 million in wireless companies in the last three months, including $20 million in Novatel Wireless Inc., which makes wireless modems.
Aether Capital, the new venture fund, will manage the investments. Aether Systems will contribute $125 million to the new fund.
Acquisitions have helped bolster its work force to 600 persons. The company had a mere 70 workers when it made its initial public offering last October.
Aether Systems closed yesterday at $142.50, down $6.94 on the Nasdaq stock market.

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