Thank you, Lu Xun, for your comments. The last week has been a bit of a "test", I think, for Iridium shareholders, including myself - research reports that favor G* over I*, articles in the press that characterize Iridium as "falling from the sky", a volatile market and an Iridium share price that gnaws away at important $31 support. It would seem that all is about to unravel...or is it?
Let's look a little closer at Marc Crossman's "market performer" report on Iridium - perhaps there's something in it that offers a better view of the future than we've seen lately. For one thing, Crossman projects EBITDA per share in 2000 of $4.29, and for 2001 the number goes to $9.53. Now, his target price for the stock in 2000 is a paltry $47; can we say that, since 2001 EBITDA is more than double the 2000 figure, that a stock price of $100 is reasonable? Yes, we can! And this is all predicated on his stingy view of subscriber levels, which reach only 250,000 at year-end 1999; not a bad return for investors even assuming Crossman's bleak scenario plays out as he says. And if Iridium's own projections are correct...?
The action of Iridium today in market was, again, interesting. Lots of negative press, less-than-enthusiastic research reports and a difficult stock market - yet the price held. That's not to say it won't break support tomorrow, or the next day, but I find it interesting that it hasn't broken in the face of all that's been put in its way. One would also expect significant put option activity if a disaster were about to befall the company, but there has been almost non-existent put action on Iridium this week.
And then I think about the phone sitting here on my desk. It works - very well for me - and it works anywhere in the world. If Iridium were to announce a few big contracts (and they have 600 companies they're targeting), that would be a large number of subscribers using that phone, and then I think psychology would make a U-turn. |
