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IPO Update: Aether Systems rockets up 203 percent

Aether Systems (Nasdaq: AETH) closed up 32 7/16, or 203 percent, to 48 7/16 Thursday in its initial public offering. After pricing at $16 a share, the stock surged as high as $55 a share in early trading.

The company, which provides data services to wireless handheld electronic devices, priced above its initial $13-15 range.

Merrill Lynch was the lead underwriter for the offering, Robertson Stephens and Donaldson Lufkin are co-managers.

The company had net loss of $4.3 million on a meager $787 000 in revenue for the six months ended June 30, compared to loss of $2.1 million on revenue of $561,000 for the same period in 1998.

Aether acquired Mobeo last December for $11.7 million in cash and options; the integration of the provider of wireless foreign exchange information services, which had revenue was $8.6 million for the year ended December 31, 1998, (more than five times Aether's) has yet to be completed.

The company's success also relies on its ability to buy sufficient capacity on the networks of wireless carriers such as AT&T Wireless Services or Bell Atlantic Mobile, since all of their services are delivered using airtime purchased from third parties.

The only customer for Aether's main business it Discover Brokerage. Aether delivers the Reuters MarketClip service for financial market price quotes, alerts and information and TradeRunner, to the online customers of Discover Brokerage, and is just in the development stage for similar services for other financial institutions, including Charles Schwab.

Competitors for the company could include wireless network carriers such as AT&T Wireless Services and Bell Atlantic Mobile, software developers such as Microsoft Corp. (Nasdaq: MSFT) and (NYSE: PHCM) and systems integrators such as IBM.