Satellite Technology: Beaming Abroad To Stop The Static At Home

Five years ago, Emil Youssefzadeh's company was close to bankruptcy. Satellite Technology Management Inc. was founded in 1982 to provide companies with private satellite networks to move data between headquarters and branches in remote areas. But before long, big competitors such as GTE Corp. and Hughes Aircraft Co. were chasing the same market. By 1987, Youssefzadeh's privately held company was in trouble. Close to defaulting on $4 million in debt, he even made out a check for 5,000 to retain a bankruptcy attorney.But before he handed the check over, Youssefzadeh had an inspiration. Just because STM was getting hammered in the U.S. didn't mean it couldn't find business abroad. Foreign companies were looking for similar communications services. And the competition wasn't as fierce. Creditors of the Costa Mesa (Calif.) company also bought the idea and agreed to defer debt payments.

FORGING TIES. Now they feel lucky that they did. These days, 90% of STM's business comes from overseas customers. In Italy, for example, its satellite dishes and software technology link BancaD'Italia headquarters with its branches. And in Mexico, STM enables Organizacion Editorial Mexicana to exchange data with its 68 newspapers. Even better, STM is making money. The company turned profitable in 1989. Last year, net profits rose 29%, to $3.6 million, as revenues soared 54%, to $19 million.

Those results didn't come easily. Youssefzadeh, now 40, an Iranian-born electrical engineer who used to work at Hughes' satellite group, labored hard to establish alliances with overseas distributors willing to market STM's products. The company now has 17 such partners in 21 foreign countries that sell and service STM's wares.

STM's technology was also a big selling point with foreign clients. The company offered the ability to transmit private voice conversations along with the streams of data. That's not important in the U.S., which has a well-established telephone infrastructure and fierce competition among long-distance carriers. "But when we started going overseas, it became obvious that voice capability was a prerequisite," Youssefzadeh says.

Indeed, some customers buy STM's satellite software and earth stations just to extend their phone systems to remote areas. STM recently installed an $8 million system so Philippines Long Distance Telephone Co. could link outlying islands. Among STM's competitors, only Hughes Network Systems Inc. can handle phone calls as well as data.

With the U.S. market's explosive growth slowing, the competitors that almost forced STM out of business a few years ago are starting to look overseas, too. But with an established market share and satisfied customers, STM feels better prepared for the onslaught. So Youssefzadeh doesn't worry as much about the big boys these days.

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