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DSL Gives Start-Up Chief High-Speed Line to Riches


Add John Clarey, 34, to the list of newly minted Internet millionaires.

Four years ago, he launched TeleCore Inc. from a tiny office near John Wayne Airport, positioning it as a technical staffing firm and installer of fiber optics equipment.

In the fall of 1998, he took his company into the market for digital subscriber lines, or DSLs, which provide high-speed Internet service through traditional phone lines.

Little did he know then how hot DSL would be. Last month, Clarey sold TeleCore for $172.5 million in cash and stock to a Florida broadband communications company, personally walking away with a cool $16.8 million in cash. And that's not all, he also got more than 8% of the acquiring firm's shares.

"I'm so excited I don't know what to do with myself," said Clarey, who has resigned as TeleCore's chairman and chief executive. "My family's taken care of forever."

On June 1, Viasource Communications Inc., which provides long-term maintenance and service for cable television, cable modems and satellite television, snapped up TeleCore, based in Newport Beach, to gain access to the DSL market.

Viasource, based in Fort Lauderdale, made an offer "too good to refuse," Clarey said, or he would probably have tried to take the company public this year.

TeleCore's 500 employees, including 150 in Orange County, are expected keep their jobs.

"We felt like they were the leading company in the DSL market," said Craig Russey, Viasource's chief executive.

Clarey is no stranger to building a successful company from scratch. He started an Internet service provider, Spider.Net, in 1994, selling the firm a year later for nearly $1 million. In 1996, he launched TeleCore.

Initially, TeleCore focused on technical staffing services and installing fiber optics transmission equipment, businesses that Clarey figured would be in heavy demand from the growing number of long-distance and local phone carriers.

But the firm didn't blossom until Clarey decided late in 1998 to focus on the DSL market to tap investors' enthusiasm for upstarts in that industry.

Clarey's instincts were on target. Nationwide, telecommunications companies are racing to piece together high-speed data links across the country. Over the next three years, for example, SBC Communications, the owner of Pacific Bell, plans to spend $6 billion to improve the reach and speed of its DSL.

TeleCore's big break came last year when it secured $6.5 million in funding from investors, allowing it to open six regional offices and add 400 workers. Palomar Ventures, which has offices in Irvine and Santa Monica, gave TeleCore nearly $2.5 million.

The company's revenue soared to $9.5 million last year from $800,000 the year before. Despite the surge, TeleCore lost $100,000, largely because of expansion costs.

Having completed his latest successful venture, Clarey plans to spend time with his wife and two young children--for a while. He is taking his family to Australia for three weeks to see the summer Olympics in Sydney.

After that, it's back to work for the self-described workaholic. Clarey said he hopes to launch another high-tech company soon in Orange County. Fearful of tipping off potential competitors, he will say only that the new business, which he initially will finance himself, will manufacture telecommunications equipment.

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