Shareholders approved Aether Systems Inc.'s sale of one of its two remaining operating divisions yesterday, a deal that will take the Owings Mills company out of the wireless business and nearly complete its transformation into a mortgage investment fund.

Aether, which raised more than $1 billion in public stock sales in 1999 and 2000, has never made money in its wireless ventures.

Chief Financial Officer David C. Reymann said yesterday that the company made the shift to running a portfolio of mortgage-backed securities because whatever value Aether had left was in its financial assets. "This strategy is for our shareholders' benefit," he said.

Aether is selling its transportation division, which sells wireless data systems to help customers track distribution networks, such as delivery trucks or fleets of automobiles, for $25 million to a private equity investor. A sale of its government division, which sells wireless data networks to police departments and other state or local government agencies, is expected to close soon for $10 million.

Only 11 people gathered in a small meeting room at a Baltimore hotel where the latest step in the transformation was ratified in a meeting that adjourned after eight minutes.

Aether founder and chief executive David S. Oros, a mathematician who once wrote software for military radar systems, explained the arcane finances driving Aether's new strategy. Instead of the wireless technology that always was his company's focus, he described the relative merits of investing in adjustable-rate mortgage-backed securities and the benefits of having "net-operating-loss carryforwards."

In an interview after the meeting, Oros said he would remain chief executive for the time being. He said the company will pare down from 287 employees at the beginning of this year to five or fewer, including him and Reymann. Oros was paid $200,000 last year.

"This has been a difficult process, believe me," said Oros, who is Aether's biggest shareholder, with about a 10 percent stake. "It's a very big change. There were a lot of naysayers at the beginning, but the calls we're getting now, people are beginning to see the strategy."

Once the sales are final, Aether will be a cash-rich shell, holding no real estate and having no debt. Its stock rose 7 cents yesterday to close at $3.12. At that price, Aether's market value is about $136 million, roughly equal to what its cash level should be after the asset sales and debt repayments.

As part of a strategy first considered by Aether's board last year and implemented this spring and summer with the help of Arlington investment bank Friedman, Billings, Ramsey Group Inc., Aether decided to sell its money-losing operations piecemeal and invest in mortgage-backed securities.

Aether will make money on the difference between what it pays to borrow money and the interest that its portfolio of mortgage-backed securities yields, the so-called spread. Aether also could make money by reselling the securities.

The company also can take advantage of tax benefits. Because it has more than $700 million in net losses on its books, it can earn that much before it pays corporate income tax.

The new strategy is not risk-free. Sharp changes in interest rates hammer mortgage securities investors.

Oros said the company will start out slowly and conservatively in building its portfolio to establish a track record with stockholders.

"It's important for us to show the market we are serious about this," he said.