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Aether Systems: Wireless Data King by Chris Connor Irrational Exuberance Over a Wireless SuperstarAether Systems {AETH} is a perfect example of a stock with a substantial amount of potential that got way ahead of itself. In March of 2000, demand was so high for the stock that it hit $345 per share (a market cap of over $13 billion) with little in the way of revenues. The irrational exuberance stemmed from interest in the wireless Internet. AETH figured to play a prominent role because of its massive war chest ($729.9 million in cash), complete range of wireless solutions (software, hardware, wireless Internet connectivity, application design and hosting), compatibility with whichever next generation wireless platform becomes adopted as the de facto standard, and a customer list that included Merrill Lynch {MER}, Charles Schwab {SCH}, Office Depot {ODP}, Staples {SPLS}, and J.P. Morgan Chase {JPM}. In addition to its impressive customer list, AETH caught the attention of investors because of the ability to provide customers with the option either outsourcing their entire wireless network or building one in-house. Times Have ChangedOnce considered to be one of the top pure wireless plays when the industry was red hot on Wall Street, AETH now sells at a considerable discount to its cash level and book value. In fact, the company still boasts one of the largest war chests in the entire wireless industry. Although the AETH will need the bulk of its cash position to stay afloat in the uncertain wireless industry, it's financial strength allows it to assume the role of a vulture that can pick through the bones of wireless data companies that will not be able to survive. If wireless data ever realizes its immense promise, look for Aether to lead the pack. |
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