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Hekimian Lifts Its Regional High-Tech Presence; London-Based Spirent To Buy Rockville Firm

By Sara Gebhardt
Washington Post Staff Writer
Monday, November 20, 2000; Page E01

Hekimian Laboratories Inc. of Rockville wasn't exactly a household word among Washington technology types. It's perhaps best known among the electrical engineering set, readers of Telephony magazine or Communications News.

"I'd heard of them, but I can't tell you a lot about them," said Phil Herget of venture capital firm Columbia Capital. "A lot of these testing facilities keep a low profile and you don't hear much about them. They just go out, build a nice business and go about their business. And I get the sense that's what Hekimian set out to do."

But $1.6 billion is the kind of number that turns a lot of heads.

That's the amount in cash and stock British telecommunications firm Spirent PLC will pay for the little-known telecom technology shop.

Founded in 1968 in Norris Hekimian's Rockville living room, the company develops and manufactures products that monitor the networks of its clients--major carriers such as SBC Communications Inc., Sprint Corp., Verizon Communications and WorldCom Inc.--and help them run properly. These clients join Spirent's existing customers, including Alcatel, Cisco Systems Inc., Lucent Technologies Inc. and Nortel Networks Corp. Acquisition of Hekimian is subject to approval by Spirent shareholders on Dec. 8.

"We're little-known in the public market, but very well known within the industry we serve," said Hekimian's president and chief executive, Des Wilson. "Frankly, we kind of like it that way--not having to deal with the public marketplace."

Until its acquisition by Spirent, Hekimian was privately held--under both its original founders and Axel Johnson Inc., the North American branch of the $6 billion Swedish conglomerate Axel Johnson SA, the company that bought Hekimian in 1983. However, the company is no longer privately held; Spirent's shares are traded on the London Stock Exchange, and the company is considering listing on the Nasdaq Stock Market to increase its profile with American investors.

Norris Hekimian started the company as a telecommunications consulting practice, and two years later, in 1970, the company had three full-time electrical engineers and two part-time secretaries on staff. One of the first three employees, Walter Mack, has witnessed the company's growth to 575 employees, 150 of whom started this year. He has also watched its telecommunications testing devices evolve from "phase jitter meters"--an early device for testing telecommunications systems on site--to centralized, remote testing software in the 1980s and then to even more advanced remote testing and monitoring systems for managing networks in the 1990s.

Mack remembers that the first big sale of a Hekimian jitter meter was to NASA. In the early '70s, Mack did everything from engineering work to sweeping floors. "Our [NASA] contract got us to $100,000," he said. "Before that, our payroll was somewhat intermittent. I remember when that paycheck came in, and we said 'Hallelujah, I think we've made it!' "

Last year marked the first time Hekimian's revenues exceeded $100 million. In the first eight months of this year, Hekimian had pretax profit of $36.3 million, on revenue of $129.4 million, and Wilson expects total revenue to grow 80 percent this year, to an estimated $180 million.

Bill Duncan, vice president of marketing, said that with the acquisition, Hekimian expects to add employees. Since it's a largely North American company, with offices in California and Colorado, Hekimian was ready to move into the global market. "A big piece of moving with Spirent is to more aggressively grow internationally," Duncan said. "To take our solutions to Europe and Asia and become more of a global player."

Hekimian may not be well known in certain technology circles, but a number of companies besides Spirent were interested in buying it. Hekimian selected Spirent because of its "technology and culture," Wilson said.

Also, Hekimian is well enough known in the telecommunication testing industry to land the lucrative deal with Spirent.

"[Spirent] is trying to roll out a lot of complex services. They're rolling these out in an environment where there's not a lot of people who understand it, and they need systems like ours to do that," Wilson said. "Since we have a history and credibility with those large service providers, it was natural for them to turn to us."

© 2000 The Washington Post Company