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International Sales Account for Most of Firm's Business

May 20, 1993|DEAN TAKAHASHI | TIMES STAFF WRITER

COSTA MESA — Fifteen months ago, Satellite Technology Management Inc. was riding high.

The company, which uses satellite transmission links to create corporate communications networks, raised about $13 million in an initial public offering in February, 1992.

It had also landed its largest customer, the Philippine Long Distance Telephone Co., which ordered a $6-million telephone network in January, 1992.

The contract was to build a satellite communications hub to establish communications for the country's thousands of island communities. The company has installed 20 such networks in nine countries.

The proceeds from the offering were to be spent on marketing and on research and development activities overseas.

Such international sales now have put the company under the spotlight--the subject of an investigation by the Commerce Department for allegedly violating export regulations by shipping goods to Iran. On Wednesday the company revised its first-quarter earnings and revenue because of the uncertain result of this sale of computers and satellite equipment.

Despite the setback, company officials say business still looks bright.

Satellite Technology, which has no long-term debt and about $17 million in cash, has expanded to provide video conference services as well, said Steve Strohman, senior vice president.

The company also does well competing against large satellite technology companies such as AT&T, NEC Corp., Scientific Atlanta, GTE SpaceNet and Hughes Network Systems.

Satellite Technology leases transmission time on orbiting communications satellites and manufactures equipment that uses the satellites to send messages or make phone calls from one remote location to another.

The networks are especially useful for developing countries that do not have telephone cables already installed.

"The more remote the locations, the better the economics work in favor of satellite communications," Strohman said.

Satellite Technology was founded in 1982 by Emil Youssefzadeh, a former Hughes Aircraft Co. engineer who decided to start the company after the announced breakup of AT&T.

At the time, satellite communications were billed as a low-cost alternative to unpredictable long-distance telephone bills. But the company incurred losses from 1982 to 1988. In 1992, sales grew 54% to $19.1 million and net income grew 29% to $3.6 million.

The Costa Mesa company has about 90 employees, up from about 70 a year ago. About 90% of the revenue comes from overseas accounts, which are serviced by a network of independent distributors.

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