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GOLDSEA 100
No. 9: Steve Kim
Xylan Corporation
y wife points out things that I overlook about myself and others," says Steve Kim. "She is my most valuable asset." Judging by Kim's remarkable progress from stocking shelves in an auto warehouse to starting and building switchmaker Xylan Corporation into one of the most closely-watched companies on the hi-tech scene, Jung must be a remarkable pointer.
The meager savings from that warehouse job, Kim invested in a ticket to fly over and marry his fiance. Jung promptly produced a son and a daughter, helping Kim see the need to increase his income. A nightschool electrical engineering degree from Cal State Northridge landed him a job at Burroughs, then Litton Data Systems. His third job at a small fiber-optics modem company inspired Kim to strike out and start his own garage-based company to make networking products. When he sold it seven years later, Fibermux netted him a cool $54 million. The minute his two-year contract with the buyer expired in 1993, Kim started Xylan to make power-packed, versatile next-generation switches to handle hi-speed data routing for local-area-networks. The switches were the size and shape of pizza boxes, earning them the name pizza switches.
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Seems the investing world was famished for a hot pizza switch. Xylan's 1996 IPO was the most successful since Netscape's. The opening price of $26 on 4.2 million offered shares quickly jumped to a high of $75. Among those who snapped up shares was Alcatel, France's leading telecommunications company which today owns 6% of Xylan and looks to be considering a buyout. That could produce a nice payday for Kim. As of February1999 Xylan's market cap had soared to $1.2 billion, pricing his majority stake at around two-thirds of a billion, maybe a billion counting a takeover premium.
Xylan isn't at all like the web wonders that have huge market valuations with no prospects for earning profits. In 1998 Xylan's sales grew to $350 million in a field that includes healthy giants like 3Com, Cisco and Bay Networks. More impressively, in the face of that kind of competition Xylan actually enjoyed a hefty $40 million in profits -- and faces prospects for more fast growth in 1999. Investors are betting that Kim's souped up switches are exactly the thing for the coming boom in hi-bandwidth cable and fiber-optics networks -- the sling that can kill the Goliaths glaring down at Xylan.
Steve Kim was born in Seoul in 1952. He immigrated in 1976 after serving his mandatory two-year stint in the Corean military and spending four years studying electrical engineering. He and Jung married in 1977. Son Albert is an athlete in his third year at the University of Michigan. Kim is a hard-worker who relies heavily on his own creativity to provide many of the key engineering advances that keep his switches on the cutting edge and his 1,000-comployee company growing. He typically awakens at 5:30 and does his creative thinking before getting out of bed. He considers creativity to be his main strength.
"I never yell and scream," he says. "Instead, I look for ways to overcome the adversity through alternatives." He's also a stickler for staying on schedule. That means his workdays typically don't end before 8 p.m. and his weekly golf game must wait until the weekend.
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| Seems the investing world was famished for a hot pizza switch. |