Aether Systems announces cost cutting

Aether Systems introduced a $78 million cost-cutting program to offset predicted “flat to modest” revenue growth for the remainder of 2001.

According to the upstart wireless data company, the “macroeconomic slowdown has made it difficult for potential [corporate] customers to make technology investment decisions in the short term.”

Aether plans to prune costs by reducing marketing, capital, and operating expenses, as well as eliminating “redundant” jobs and restructuring Sila Communications, a European joint venture that is 60% owned by Aether and 40% by Reuters. According to an Aether spokesman, some of the job cuts have already taken place. About $35 million of the $78 million in savings will come from the workforce reduction, the spokesman said. He declined to specify how many employees would be affected.

According to a statement by Dave Oros, chairman and CEO of Aether, the company is still “comfortable” with its target of reaching EBITDA-positive status by the third quarter of 2002. At that time, Aether expects to have $550 million in cash and cash equivalents on its books. At the end of the first quarter, the company’s balance sheet included $729.4 million in cash and cash equivalents.

In May, Aether reiterated previous guidance of $37 million in revenue for the second quarter and $160 million for the full year. For 2000, the company reported revenue of $58.2 million and a net loss of $132.3 million. The bulk of Aether’s revenue comes from software products and services.