SUMMARY OF IRIDIUM CONFERENCE CALL:
Opening commentary by Chairman Ed Staiano basically said that this is the year IRIDIUM transitions from a development-stage company to a revenue-generator. Customers on the Iridium system have been giving the service high ratings, including a pilot who used the system while flying the successor to the U2 spy plane at 70,000 feet.
Call completions are now at 94%, with less than 5% drops, a figure in accord with my experience. Quality continues to improve, with new software being loaded now, and will continue to do so as enhancing software is loaded going forward. The system, said Staiano, is performing "beyond expectations".
Kyocera continues to hamper the full scale rollout of service, with the Kyocera multi-mode phone still experiencing drop rates in excess of IRIDIUM's required standard. Staiano indicated this is a short-term problem and will be fixed within weeks. Once available, there are a number of vertical market customers who will adopt the system, as they prefer the Kyocera phone's multi-mode capability for global travel usage. Volume shipments of the Kyocera phone are expected by the end of the first quarter.
Industrial users evaluating the system for use include corporations and governments around the world. Some names include: Shell Oil, Aramco, Petro-Canada, American Electric Power, Monsanto, Lockheed, and NATO. (I have also been told that Boeing is interested...) Orders from the U.S. government could total 1000's of phones, said Staiano. A contract with a major corporation is expected within the next 30 days, according to Mr. Staiano.
A number of governments have contacted IRIDIUM to set up use of the system as a national security failsafe relating to the Y2K problem, since IRIDIUM unit-to-IRIDIUM unit calls would not be subject to any "glitches" caused by a Y2K "meltdown" scenario.
A U.S. government test of the IRIDIUM system from November 21 to December 21 elicited the comment that the IRIDIUM system "introduces a significant service" and that the government was "highly satisfied" with its performance; this was before recent upgrades were made. The Air Force Battlelab assessment, reported elsewhere, was also mentioned by Staiano, as well as favorable commentary from the Australian military. Additionally, Staiano said phones shipped to Honduras for the hurricane relief effort were heavily used, and that the Honduran Finance Minister took one on a trip to Germany and used it to renegotiate Honduras' National Debt; he described the call as "crystal clear".
Cash flow breakeven is expected this year. A design contract for the 2nd generation of IRIDIUM satellites could be signed as early as Q2 this year.
There were a few comments on aircraft phones, but nothing really new here. My overall sense is that IRIDIUM is going to deliver the goods in the next 60 days, both in actual phone shipments/deliveries and in announcing major orders for the service from well-known companies. An analyst I spoke with projected 500,000 subscribers this year (another analyst said 600,000), with 1.5 million by next year. If so, IRIDIUM will make money, and so will the shareholders. But the company MUST deliver by the end of Q1, or Wall Street will not be forgiving, in my opinion...
I believe they will deliver. |
