- The Washington Times - Friday, October 20, 2000

A wholly owned subsidiary of Michael Saylor's MicroStrategy Inc. plans to announce today it will receive a $52.75 million investment led by Aether Systems Inc.
The investment joins two of the region's most visible technology companies Aether because of its buying frenzy and MicroStrategy because of the high-profile Mr. Saylor and his company's financial problems earlier this year.
Aether Capital, the investment arm of Owings Mills, Md.-based Aether Systems, will invest $25 million in Strategy.com and own an estimated 7 percent of the MicroStrategy subsidiary. The remainder of the $52.75 million will come from Baltimore-based venture capital firm Nevis Capital Management Inc. and from individual investors.
"It's a win for MicroStrategy because it's an endorsement of our wireless-technology platform and a win for Aether because they enhance their offering," Mr. Saylor said.
Aether and Strategy.com both deliver news and information to subscribers. But they have different specialties.
Vienna, Va.-based MicroStrategy makes data warehousing software to help companies make sense of data, like telling them which products sell best in which markets. Strategy.com is a free service that delivers news, weather and financial information.
Aether's specialty is getting data like corporate information from company databases to mobile workers, especially those in the transportation, government and health care fields. Aether also markets financial information over handheld devices.
While Aether delivers information over wireless devices like cell phones and personal digital assistants, Strategy.com sends data mostly via e-mail to personal computers.
"It has been fairly obvious that by combining what they do well and what we do well, that a fantastic offering would result," said Wayne Jackson, managing director of Aether Capital, which was started in August and has $1.2 billion under management.
MicroStrategy had been looking for investors to sink money into Strategy.com, which MicroStrategy started in June 1999. MicroStrategy and Aether talked about an alliance for 18 months.
The new investors will be given a 15 percent share of Strategy.com in return for their nearly $53 million investment, Mr. Saylor said. That indicates MicroStrategy has valued its subsidiary at $350 million.
"MicroStrategy has been looking for a way to beef up Strategy.com. It's taken longer than they hoped and the amount they got is less than they wanted. But obviously Aether sees some advantage in working with Strategy.com," said Steve Abrahamson, senior analyst at Prudential Securities.
Strategy.com will benefit from the alliance because the potential audience of subscribers will be broadened beyond those using personal computers once Aether begins sending data to wireless devices.
Aether will benefit because MicroStrategy will bundle Aether's wireless services into its own software. That will let users of the MicroStrategy software access information over wireless devices.
Mr. Jackson said Aether will see new revenue from the deal as early as the first quarter of next year.
Also as part of the alliance, Aether Chairman and Chief Executive Dave Oros will join the Strategy.com board of directors.
Mr. Saylor said he expects Strategy.com to make its initial public offering within the next 12 months.
Aether Capital already has invested nearly $15 million in Strategy.com, the companies said.
MicroStrategy said in August it would cut 234 jobs in an effort to save $25 million.
In March it said it would revise revenue and profit statements for the last two years because it included future earnings in current earnings reports. Shares fell 62 percent on news it would restate revenue and the company's value fell nearly $11 billion. In the past year, MicroStrategy's stock has fallen from a high of $333 per share to $16.56. It closed yesterday at $25.44, up $3.56 on Nasdaq.
Aether has been engaged in a buying frenzy.
Aether's biggest acquisition came when it bought Vienna-based Riverbed Technologies Inc., which makes software that allows the transfer of data from desktops to wireless devices. The deal in February was valued then at $802.5 million. In August Aether bought Cerulean Technology Inc., in Marlborough, Mass., for $150 million in cash and stock.
Last month, Aether bought the transportation unit of Reston-based Motient Corp. for $45 million, its seventh acquisition this year.

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