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Wireless Solution Illustrates Success of Unorthodox Strategies

Second, Aether still had a lot of cash on its books left over from its stock sales.

Reymann said that FBR co-chief executive Emanuel J. Friedman and Philip J. Facchina, FBR's chief technology investment banker, came up with the idea of selling all of Aether's operating businesses and investing the firms' resulting cash balance in a portfolio of mortgage-backed securities.

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FBR's asset management group, which manages a $12 billion portfolio of mortgage-backed securities for its own account, would manage Aether's business for a fee.

Aether would cease to be a technology company.

Aether officials accepted the FBR plan. Last week it agreed to sell the last of its three major operating divisions for $10 million.

FBR earned brokerage fees for helping find buyers for Aether's businesses. It was also paid a $250,000 fee by Aether for implementing its mortgage-backed securities strategy. In addition, Friedman will be paid a fee based on the size of the mortgage-backed securities in Aether's portfolio, plus an incentive fee if the portfolio performs well.

Aether's stock price closed Friday at $2.81, down more than 16 percent from its early May stock price. Aether's new plan was formally announced on June 8.

Reymann said FBR won't manage Aether's portfolio of securities indefinitely, but until the company can hire a staff with experience in the market, FBR will, in effect, be running Aether Systems.

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