Greenberg. Iridiots Come Out in Force After Iridium Stumbles
By Herb Greenberg
Senior Columnist
5/17/99 6:30 AM ET
One of those Fridays. Too much to do and too little time to
do it all. Just a few small points, and then you can go read
GeeBee Smith (a thin version of Freud, don't you think?).
So, last week's Iridium (IRID:Nasdaq) columns turned out
to be timely -- luck, I tell ya, luck -- after the company said
it had hired Donaldson Lufkin & Jenrette to help
restructure its debt. My fave quote, spotted by this
column's eyes and ears, Mark Martinez, on Bloomberg via
America Online from ING Baring Furman Selz analyst
Robert Kaimowitz: "Our model suggests it's heading for
bankruptcy, and we've thought that for several months. We
just can't do the math where there is any positive equity
value.''
Especially when it's valued at $1.5 billion without the debt!
So, here the company goes and blows itself up and some
Iridiot, with the initials J.F. writes: "Do you enjoy destroying
people's hard-earned wealth? Iridium constitutes a large
percentage of my retirement nest egg. I bought my position
at $65 per share because I believe the company has a
bright future. Yet, THANKS TO YOU, I have lost most of my
retirement security. Day after day, all you do is pound
Iridium. Your hatred of the stock is not only irrational, but
mean-spirited and sadistic. Thanks for destroying my life."
From another Iridiot (B.P.): "What is your problem with
Iridium? If you want to talk about Iridium in a financial
forum, that's fine. However, your snide remarks are very
unprofessional." Thanks, I do try hard!
And from the short-seller who was kind enough to share his
Iridium thoughts with this column in the first place (the
moral of today's story): "The differential in the price between
the different coupons of IRID junk has collapsed, with all of
them trading at around 20 cents on the dollar. How should
that be interpreted? Prior to today's news, the difference in
price was due to the difference in the size of the coupon
payments and one's estimate of the probability of receiving
payments.
"So, if you think you're going to get the next coupon, you'll
pay more for a 14% bond than an 11 1/4% bond. However,
if IRID doesn't pay any more coupons, the bonds are worth
an equal claim in bankruptcy. The fact that they now trade
at the same level indicates the debt market's expectation
that there will be no further coupon payments. The next
payments are in July. Failure to pay would be an event of
default."
He adds, "I'm amazed that the stock is where it is. [It
closed Friday at 10 7/16, down 28%.] At that price, there's
still more than $1.5 bil of total equity. Unbelievable."
Finally, reader Paul Molling writes: "Iridium: Even their
name is wrong: 77 satellites were meant to orbit the earth.
The atom with the number 77 is Iridium. But 11 satellites
went up in smoke, so there are, in fact, only 66 satellites
out there. The atom with the number 66: Dysprosium. Gives
you dyspnea, doesn't it?" Oh, yes it does, Paul, yes it
does! (Dyspnea; can't help but like that!)
Welcome back, Dan
When you're in this biz, any Tom, Dick or WavePhore
(WAVO:Nasdaq) can make groundless allegations that can
come close to ruining your career. In the case of Dan
Dorfman, groundless allegations did worse than ruin his
career; they left him partially paralyzed by a major stroke,
which is why he never got the chance to return to TV and
get on with his life and career, let alone clear his name.
Two years later, Dan is back, this time churning out his
daily column (starting today) on Jagnotes.com. (Saw him
the other night: He's as prickly as ever!) Best of luck, Dan.
Great to have you back.
Herb Greenberg writes daily for TheStreet.com. In keeping
with TSC's editorial policy, he doesn't own or short individual
stocks, though he owns stock in TheStreet.com. He also
doesn't invest in hedge funds or other private investment
partnerships. He welcomes your feedback at
herb@thestreet.com. Greenberg also writes a monthly
column for Fortune.
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