TeleCommunication Systems Inc. announced it bought the enterprise mobility division of Aether Systems Inc. for $19 million, a move TCS said will boost its data offerings and further serves to highlight the difficulties in the wireless enterprise market.
The deal is a relative steal for TCS, as Aether’s enterprise mobility division generated $40 million in revenues in the last nine months.
TCS said it now expects to generate total annual revenues of $150 million to $170 million thanks in part to the deal. Under the agreement, TCS will acquire all of Aether’s Enterprise Mobility Solutions division, including 1,200 enterprise customers, 60,000 wireless data users and 112 employees. TCS also gains Aether’s Fusion software platform and enterprise applications from wireless e-mail to vehicle logistics. TCS, which offers carrier software and infrastructure products as well as various governmental services, said it will apply its wireless messaging and location-based technology and its wireless carrier relationships to solidify and expand Aether’s enterprise solutions.
“It has always been TCS’ vision to bridge the carrier-enterprise divide through integrated wireless data offerings,” said Maurice Tose, the company’s chairman, president and chief executive officer. “Together, we will be the only company to offer wireless data and location-based solutions incorporating platform technologies for carriers, enterprise and government. Wireless carriers that already rely on TCS for messaging and location products may now work with us to generate revenue from enterprise-focused solutions as we migrate enterprises to the carriers’ high-speed data networks. And we now expand the range of wireless data solutions that we provide to our government customers.”
TCS’ stock was up almost 8 percent following the deal to about $4.73 per share. Aether’s stock was down slightly to $4.69 per share.
The deal is significant for both companies. TCS now fully enters the wireless enterprise space and is using the same strategy-acquisitions-that a variety of other major players have also employed. Nokia Corp., for example, acquired wireless enterprise company Eizel Technologies before it launched its new enterprise division. It is indeed a buyer’s market for wireless enterprise technology; a recent study found that the vast majority of businesses would purchase wireless products only from established players instead of wireless pure-play companies.
For Aether, the deal marks an end to its lofty Fusion platform plans. The company introduced its Fusion platform in 2001 with hopes that it would help Aether transform into a software licensing company. However, as the economy lags and interest in wireless enterprise solutions remains flat, Aether has increasingly relied on sales of its government and transportation products for support.
Although Aether derives the majority of its revenues from its enterprise division, sales in the business have been declining during the past year. Indeed, Aether’s enterprise division lost $1.1 million in revenues over the course of the year, from about $13.8 million last year to about $12.8 million, according to its most recent Securities and Exchange Commission filing. Aether’s government division, on the other hand, increased revenues by $500,000 over the same period, to about $5.3 million in the recent quarter. Aether’s third division, its transportation segment, saw declining revenues over the same period.
“The Aether Enterprise Mobility Solutions division has grown to be a leader in the wireless data market,” said Dave Oros, Aether’s chairman and CEO. “Combining the division with the strengths of TCS will enable EMS to enhance its leadership position. In addition, we are very pleased to have found a Maryland-based home for the division and the employees who have worked very hard to grow that portion of our business.”
