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Strategies & Market Trends : Mr. Pink's Picks: selected event-driven value investments
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To: Marconi who wrote (9292)6/1/1999 8:10:00 AM
From: Daniel Chisholm  Read Replies (1) of 18998
 
Hello Mr. Marconi,

Iridium satellites have a planned life of 5 years and then they need replacement.

Can you provide a reference for this? Because if it is true, then I think IRID is an absolutely no-brainer go-to-zero short.

I'd be surprised if their planned lifetime was so short (instead of 10-12 years), since it's so darn expensive to launch satellites. However I'm not saying that you're wrong -- I just hope for Iridium's sake that you are!

I'm an aerospace type, and I've long been fascinated by the Iridium project from a technical point of view, while at the same time being highly skeptical of its commercial feasibility. Given what I know about where the project stands now:
* still very few customers
* some service coverage problems (James Cramer's experience)
* heavy, high coupon debt, trading at steep discount to par
* high rates for calls, still too high, and falling
* still no model of high sales (it's still a specialty tool)

...it seems to me that they are fatally behind the power curve on just about every front, and that it is inevitable that it will all end very badly. Heck, IMHO you could probably even make money shorting their bonds at their present steep discount to par -- what does that say about their stock?

- Daniel

edit: I recently shorted IRID, but was bought in! This is the first time I've ever been bought in!
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