Bloomberg. Iridium Shares Plunge (via I* yahoo thread)
July 15, 1999
By BLOOMBERG NEWS
ASHINGTON -- Shares of Iridium World Communications Ltd., whose parent company runs the first
global satellite-telephone network, fell 18 percent Wednesday after Motorola Inc. said it would not invest
more money in the system unless other investors and lenders did the same.
Shares of Iridium World, the publicly traded arm of Iridium L.L.C., fell $1.4375, to $6.75, on trading of
4.7 million shares, almost three times the three-month daily average. The shares have fallen 89 percent over
the last year.
Motorola, the maker of cellular phones, is the biggest investor in Iridium L.L.C., with an 18 percent stake.
Motorola said on Tuesday that it took a second-quarter charge of $126 million to write down the value of
Iridium's bonds, which have fallen about 80 percent this year as the company struggled to attract
customers.
"Motorola is not going to bail out Iridium," said William Kidd, an analyst at C.E. Unterberg Towbin. "Some
may have bought Iridium thinking the stock was going to be rescued. Based on Motorola's announcement,
I don't think those plans are in the works."
Motorola, based in Schaumburg, Ill., was one of Iridium's founders in 1987 and built the 66 satellites that
make up the telephone network. Motorola has guaranteed at least $1.67 billion in Iridium financing.
Iridium L.L.C. is 86 percent-owned by 19 investors, which also include the Lockheed Martin Corporation,
the Raytheon Company, the Sprint Corporation and American International Group Inc. Iridium World
Communications, based in Washington, owns the remaining 14 percent.
Iridium has been unable to attract enough subscribers to pay its bills because of the high cost of its phones
and high per-minute charges. |
