Motorola calls on partners to help bail out Iridium
Tuesday July 13, 7:11 pm Eastern Time
Motorola calls on partners to help bail out Iridium
SCHAUMBURG, Ill., July 13 (Reuters) - Motorola Inc. (NYSE:MOT - news) on Tuesday called on its partners to help bail out Iridium World Communications Ltd. (Nasdaq:IRID - news), the financially troubled global satellite phone company that Motorola has bankrolled.
Motorola, the wireless communications and semiconductor maker, owns 18 percent of Iridium and has guaranteed a portion of that company's debt. Iridium has struggled to sign up subscribers and has not been able to pay its debts.
In a statement accompanying its second quarter earnings, Motorola said it ''will not provide any further support beyond existing contractual commitments unless there is substantial participation in the Iridium LLC restructuring from all parties with significant financial interest.''
Those parties include Lockheed Martin Corp. (NYSE:LMT - news) and Raytheon Co. (NYSE:RTNa - news).
Motorola said it continued to defer recognition of profits under its operations and maintenance contract with Iridium, and recorded a $126 million second-quarter charge to write down the value of Iridium bonds that it owns. Motorola said it may take additional charges in the third quarter.
''The impact on Motorola of an Iridium LLC restructuring may become clearer in the third quarter, and may necessitate an additional special charge at that time,'' Motorola said.
''The previously announced sales of several businesses and assets are expected to generate significant gains and significant cash inflows in the third quarter, enabling Motorola to maintain a strong financial position, even with the negative impact of charges that may need to be absorbed by Motorola in the financial restructuring of Iridium LLC,'' Motorola said.
Motorola reported higher-than-expected second quarter operating earnings of $273 million, or 44 cents a share, ahead of last year's $6 million, or one cent a share. Both figures exclude one-time items.
Shares of Motorola fell $1.50 to $95.00 in after-hours trading on Instinet.
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