This is an excerpt from the Internet Stock report on 10/14...it concerns AETH.....
Wireless Investments: Anytime, Anywhere
I couldn't resist. I purchased the Palm VII.
Several days ago, I attended a boring local commission board meeting and
there were no cell phones allowed. But they didn't forbid my Palm.
During the meeting, I was able to communicate via email, as well as
check stock quotes and news.
Now I can't live without this wireless device.
Yes, wireless is the future. And it is happening very quickly.
This week, for example, there were a variety of major wireless
announcements. Perhaps the biggest was from Oracle Corp. (ORCL), which
announced a partnership with Phone.com (PHCM) , so as to create a new
product called Oracle Portal-to-Go. Basically, the new product will
allow for enterprise and business-to-business applications.
The growth of wireless communications is astounding. By the end of 1998,
there were 187 million digital wireless subscribers. By 2002, there are
expected to be 590 million. This makes sense, as the US workforce has
become increasing mobile. According to IDC, the mobile workforce is
expected to grow from 35.7 million in 1999 to 47.1 million by 2003.
Yet, despite the growth, the economics of the telecom industry are
brutal. Costs of acquiring new subscribers are high; there has been a
reduction in average revenues per subscriber; and there is a high-rate
of customer churn. A way to deal with this is by offering valued-added
services.
In many cases, the best way to provide these extra services is by
outsourcing. Reasons include: speed to market, lower costs and
expertise.
A striking example of this is Phone.com, which is one of this year's
hottest IPOs and has a market cap of $6.8 billion.
The company helped create the standard for Net telephony -- known as
Wireless Markup Language (WML). The standard is compliant with
Extensible markup Language (XML), which allows for describing and
exchanging data in an open environment.
The mission of Phone.com is simple: enable the delivery of Net-based
services to mass-market wireless telephones. That is, suddenly you can
get email, news, stock quotes, weather, travel information and sports
from your cell phone.
However, there are not many pure-play wireless companies. But this will
change very quickly, with some upcoming IPOs, which include:
1. BSquare: This company develops software and provides services for the
Windows CE operating system. The company, in fact, has been doing this
before Windows CE was released in September 1996. With its leadership,
BSquare will be able to take advantage of the strong growth in Windows
CE. According to Venture Development, the number of devices using
Windows CE will increase from less than one million in 1999 to 14
million by 2003. The lead underwriter is CS First Boston and the
proposed ticker symbol is BSQR.
2. Wireless Facilities: This company provides outsourced services for
the planning, design and deployment of wireless networks. Customers
include AT&T, Lucent and Siemens. In all, the company developed over
3,000 cell sites in the US last year. The lead underwriter is CS First
Boston and the proposed ticker symbol is WFII.
3. Aether Systems: This company develops software that allows for
wireless data services, focused primarily on the financial industry. The
company has agreements with Reuters, Schwab and Discover Brokerage. But
the company will leverage on this base, by expanding into other business
lines. For example, the company has a 26 percent interest in OpenSky,
which is backed by 3Com so as to provide wireless services for consumers
and business mass markets. The lead underwriter is Merrill Lynch and the
proposed ticker symbol is AETH.
4. Handspring: This is a privately-held company, but will likely go
public soon. It was created by the founders of the Palm Pilot: Donna
Dubinsky and Jeff Hawkins. Their new wireless device is called Visor and
so far, has been selling at break-neck speed.
Actually, one company that looks particularly attractive is Puma
Technology (PUMA). The company recently announced a free, Net-based
synchronization service, which can be helpful to transfer data to
wireless devices. Such a service is essential given the widespread
proliferation of wireless devices and the need to maintain data
consistency.
Although, I expect much consolidation in the industry, especially from
Phone.com, which can use its high-flying stock as currency. This already
happened with Apion, which is similar to Phone.com but is based in
Belfast, Northern Ireland. The price tag was $239 million.
A company like Puma could be next on Phone.com's list. |
