Leon: I was just about to continue the somewhat diverting conversation on this board with a story of the day a climbing partner of mine and I did a route called "Desperado Chute-out", an 800 foot vertical ascent on Machete Ridge at the Pinnacles National Monument, but your post rightly brings me back to the matter at hand. I was planning to revisit some information about Iridium today anyway, so your exhortation gets the ball rolling.
Ed Staiano said in the recent conference call that the marketing campaign is about to resume in earnest, because production of handsets is now at a level that it can feed the purported demand. The campaign was halted at the end of 1998 because those who expressed a desire for a phone could not get one. Kyocera, however, is really screwing up the entire business, for they cannot get their phones' antenna to lock on to the satellites without drawing excessive power. You'd think if Motorola could do it (and believe me, they have), the wizards at Kyocera could at least copy the innards of the Motorola phone.
What is the real demand picture? This is something that has troubled me from the start. When the initial ad campaign began in the fall, the marketing people claimed to have received over 100,000 inquiries, or something close to that, yet they lost a large number of leads because the system used to track the calls to the 800-number somehow "malfunctioned". I was told that "heads were rolling" over that mix-up, but I worry that they never really had a good idea of what they were doing in the first place. Motorola is shipping 1000 phones per day, according to the company, which means that at the end of Q1 there should be something like 100,000 phones in circulation (counting the 30,000 they claimed to have shipped prior to year end). The thing is, there were only 3000 subscribers at year end, and something like 6000 a couple of weeks ago. They need at least 50,000 at quarter's end from what I've been told, to meet the requirements of their lenders. If they somehow manage to report just over 50,000, I'd be a little suspicious; frankly, a number closer to 75,000 will be needed to interest Wall Street, and even then they'd have to work like hell to hit their 500,000 year end 1999 target. I have been told by company people that they ARE working like hell...so we'll see.
What does it cost to carry the phone around? Monthly access charge is $69.95. I have heard various estimates of monthly use and dollar amounts, but it depends on whose doing the estimating. Perhaps someone has a firm number; I can only tell you that my first month of use came to about $450, but that will drop to something more like $150 or less. I really bought the phone as a tool to keep me informed about the health of my investment, from a technical standpoint at least; I need a spy inside the company to keep me abreast of financial/subscriber developments.
The next 60 days will make or break Iridium. When the quarterly numbers are released in April, we will know whether the company will still be around by year end. Iridium, it is said, is to big (money-wise) to fail, so I suspect there will be a lot of creative marketing done during February and March. If the stock should break $31 support, it would signify to me that Wall Street is losing faith... I have been told to expect the announcement of a significant customer contract this month (like a Shell or ?), which may save us from that loss of faith. |
