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Aether Cuts 25% of Workforce

Wireless data software developer Aether Systems, Inc. is cutting 25 percent of its workforce, approximately 225 employees, to reduce operating costs. The Owings Mills, Md.-based company also said it will consolidate facilities and further streamline Sila Communications, its European venture.

Aether will take a restructuring charge of approximately $11 million in the first quarter relating to these actions.

Based on Aether's cost-cutting initiatives, management expects operating expenses to continue to decrease throughout the year. In the first quarter, operating expenses are expected to be in the low $40 million range. In Q2, Aether expects operating expenses in the mid-$30 million range. Operating expenses are expected to continue to decrease in the second half of the year, with a goal of reaching the mid-to-upper $20 million range in Q4. Aether's cash position as of the end of Q4 2001 was $530 million.

The company said it will now focus its resources on core and near-term revenue opportunities, areas where the company has either developed a leadership position or has recognized a clear market opportunity, while reducing development efforts on initiatives with a longer path to revenue.

"Our collective energies will be focused on customer-driven solutions to drive profitable revenue," said Chairman and Chief Executive Officer Dave Oros. "We remain committed to our path to profitability and will not yield from this goal. At the same time, it is never easy to let go of dedicated and talented employees and we regret that the economic environment along with slower than anticipated adoption of some wireless data solutions has forced us to make these difficult decisions."

Oros said the recent completion of the Aether Fusion core platform will allow Aether to dedicate its development and support resources to "key strategic initiatives," including enterprise solutions, transportation and logistics, mobile government and small business solutions.

"New product offerings will be driven by customer requirements and return on investment. Specifically, this year we will deliver productized field service applications to empower remote workforces, building upon our experiences delivering solutions for leaders including Office Depot and Sun Microsystems," Oros said. "Aether Fusion, our core software platform, recently completed acceptance testing and it, along with our world-class network operations centers, will continue to be the cornerstone of all new product offerings."