Business Week Cover Story re:Diana Partnership news
YURIE SYSTEMS:
HIGH-TECH HOT ROD
Jeong H. Kim has always been in a hurry. The 36-year-old Korean
immigrant took just three years to complete college. He later finished
his PhD in reliability engineering in just half the typical four years. And
he did it while working full-time as an engineer.
So it's no surprise that Yurie Systems Inc., the Lanham (Md.) company
Kim founded five years ago, is moving just as fast. Topping BUSINESS
WEEK's 1997 Hot Growth list, Yurie--named after one of Kim's two
daughters--has seen revenues grow an average of 385% annually over
the past three years, to $21.6 million in 1996. Earnings have been even
stronger, rising 410% annually to hit $3.2 million last year.
CREATIVITY. The secret behind the spurt: The company makes
equipment that transmits voice, video, and data over phone lines as well
as satellite and wireless networks. ''I would never be content to sit on
the sidelines,'' says Kim. ''I wanted to create technology.''
So far, that creativity has been a hit with Uncle Sam. Last year, 96% of
Yurie's sales went to the U.S. government or government contractors. In
part, that's because Kim, who served as a nuclear submarine officer in
the U.S. Navy, knew what the military needed. And Yurie's
products--known as asynchronous transfer mode (ATM) access
equipment--have proven particularly useful at speeding military
communications systems in such places as Bosnia. Yurie also got a big
hand: Most were sold through AT&T, which has extensive government
sales. To gain quick entree, Kim signed an exclusive deal with AT&T in
1995 to market Yurie's products to the government.
But Kim figures Yurie doesn't need a middleman to sell commercial
buyers, so he has begun pitching his products to telecommunications
carriers for use in their networks and those of corporate customers. In
1997's first quarter, commercial sales hit $3.5 million, up from
$800,000 in the previous quarter.
Still, it's likely to be a tough fight. Yurie is facing off against such stars
as 3Com Corp. and Cisco Systems Inc. ''They are going to have to fight
the battle of gaining recognition,'' warns Thomas L. Nolle, president of
telecom consultants CIMI Corp. ''The next year to 18 months will be
critical.''
Such hurdles don't frighten Kim, who came to the U.S. with his family in
1975. In his first year at Johns Hopkins University, he met Kwok L. Li
and soon became a part-owner of Li's computer-system startup. Kim
left in 1982 for the Navy but remained an investor until the company
dissolved in 1985. The relationship continued: Li led the team that
invented Yurie's proprietary technology and is now Yurie's president.
Kim started Yurie in 1992 while working full-time for an AlliedSignal
Inc. subsidiary. Since he had missed the computer revolution, he
decided to focus on communications. With no formal training in the
area, Kim taught himself the technology. He financed Yurie almost
completely by himself, going as far as $400,000 in the hole by
borrowing against his house and on credit cards.
Not anymore. With Yurie stock hovering around its February initial
public offering price of $12, Kim's 56% stake is worth some $168
million. And he has wooed an all-star board that includes former CIA
chief R. James Woolsey, ex-Secretary of Defense William J. Perry, and
Kenneth D. Brody, onetime head of the Export-Import Bank. Despite
his success, Kim is a pragmatist who does not rule out a sale of Yurie.
''The force of consolidation is very strong in this industry,'' he notes.
But for now, Kim is gunning for the big boys.
By Amy Barrett in Lanham, Md. |
