Yurie modifies deal with AT&T Equipment provider seeks increased sales in new arrangement

November 05, 1997|By Mark Ribbing | Mark Ribbing,SUN STAFF

Yurie Systems Inc., a Landover-based provider of communications network equipment, has modified its operating agreement with AT&T Corp., with the communications giant giving up its exclusive rights to sell Yurie products in the lucrative government market.

In return, AT&T freed itself from minimum purchase commitments with Yurie that were worth $26.5 million and stretched into 1998.

While both sides had something to gain from the new terms, it was Yurie that pushed for the deal.

"We were the ones who had the most to gain with the restructuring," said Joe Miller, Yurie's vice president of marketing. "For us, it was a no-brainer to give up the minimum commitments with AT&T."

Yurie's confidence stems from its leading position in a hot area of communications technology. The company sells equipment for asynchronous transfer mode, or ATM, networks. ATM networks are particularly efficient conduits for different kinds of information.

"The reason why people have been so excited about ATM is that it has the ability to take lots of different kinds of files and transfer them rapidly," said Dr. David Sachs, assistant dean of Pace University's School of Computer Science and Information Systems in White Plains, N.Y. "Today, we've got video, we've got voice, we've got data. Each one of them has its own set of characteristics, and ATM chops them up so a switch can handle them efficiently."

Yurie patented a method for allowing ATM networks to function even along slow or poor-quality lines. This innovation has made Yurie products popular with military and other government users who must send or receive data in difficult field conditions.

Yurie is betting that its new arrangement with AT&T, which was announced late Monday, will invite new companies, such as Lucent Technologies Inc., to sell Yurie equipment to government clients, and that the increased sales will outweigh the loss of the minimum purchase commitments.

The original agreement between Yurie and AT&T was struck in May 1995, shortly before AT&T spun off its equipment division, which was reborn as Lucent Technologies. According to Yurie's Joe Miller, this spin-off was a factor leading up to Monday's restructuring. Now, Miller said, clients can ask for Yurie products from companies that, unlike AT&T, focus on providing equipment.

Shares in Yurie closed at $30.50 yesterday, down 56.25 cents on the Nasdaq stock exchange.

Pub Date: 11/05/97

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