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.
Updated June 15, 1997 by bwwebmaster
Copyright 1997, Bloomberg L.P.