Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Microcap & Penny Stocks : Globalstar Telecommunications Limited GSAT -- Ignore unavailable to you. Want to Upgrade?

To: Maurice Winn who wrote (26749)	2/26/2008 7:35:24 PM
From: pcstel	Read Replies (1) \| Respond to of 29987

Calls Placed Using the Iridium Satellite Network are Three and One-Half Times More Likely to go Through iridium.mediaroom.com 8 New Birds up in the air and the service is still way below minimums. PCSTEL

To: Maurice Winn who wrote (26749)	10/2/2008 8:52:39 AM
From: Geoff Goodfellow	1 Recommendation Read Replies (1) \| Respond to of 29987

online.barrons.com MONDAY, SEPTEMBER 29, 2008 TECHNOLOGY TRADER Iridium's Act II: This Time, With Its Feet on the Ground By ERIC J. SAVITZ \| MORE ARTICLES BY AUTHOR Iridium's second act. IN 1999, THE SATELLITE PROVIDER IRIDIUM completed one of the all-time spectacular flameouts, filing for Chapter 11 bankruptcy protection after having eaten up billions in debt and equity capital creating a highly ambitious satellite-based communications system. In late 2000, a group of private investors bought what was left of the company, which mostly was its constellation of 66 satellites and related ground stations, for a paltry $25 million. The new management then quietly went about the business of attempting to remake the company. By February of this year, more than seven years into its turnaround, CEO Matt Desch told me in an interview published on my Tech Trader Daily blog that the company had begun the process of seeking a new round of equity investors, with an initial public offering as soon as early 2009. But the company, as it turns out, has chosen another path: Iridium last week agreed to merge into a SPAC, or special-purpose acquisition company, called GHL Acquisition (ticker: GHQ), which was taken public by the investment firm Greenhill & Co. early this year. (Greenhill owns 17.5% of the SPAC.) Like other SPACs, GHL began life as a blind pool, with no operating business; the IPO came at $10 a share. The net effect of the deal will be to turn GHL into Iridium -- and to return Iridium to the public market. Iridium says the deal gives the company an enterprise value of $591 million, or nearly 24 times what the investors paid when they bought the company out of bankruptcy in 2001. CEO Desch thinks Iridium will eventually be worth a lot more than that. He notes that the company has more than 305,000 subscribers to its satellite-communications service; it has been growing rapidly -- at a first-half pace of 31% at the top line, 55% in "operational Ebitda" (earnings before interest, taxes, depreciation and amortization) and 87% in net income. Desch adds that while the company is both fast-growing and profitable, it isn't increasing its cash flow quite fast enough to build all the capital it needs to finance replacing its entire satellite constellation by 2016, a project he calls Next. The project, he says, will cost $2.7 billion. Desch looks for the GHL deal to bring $150 million to $200 million of cash into the business, with $323 million more from the eventual exercise of the SPAC's outstanding warrants. That cash, combined with operating cash flow from the existing business, should finance most of the cost to replace its satellites, Desch thinks. He reports that the company had revenue in the first half of $156 million. Simply double that, and it's running at more than $310 million annually, which is a pretty conservative number, given that Desch says the company has been growing on average almost 30% a year over the past six years. He sees the market for satellite communications services growing about 15% a year over the next five years, and he expects to continue to build market share. I WAS CRITICAL OF IRIDIUM the first time around; but Desch is a level-headed guy who seems to have eradicated the grandiosity of the original Iridium, which had somewhat irrationally thought that consumers might actually want to buy satellite phones as an alternative to cell phones, despite sat phones' bulkiness and the high cost of making calls on the network. I've also been a skeptic on SPACs, which are simply a gussied-up version of the old-fashioned blind pool. And I'm also no fan of reverse mergers of this ilk, since they allow companies to go public without the scrutiny provided in an IPO process. All that said, Iridium will be a company to keep tabs on; if Desch is right about the potential for the satellite market over the long haul, Iridium could be worth a lot more than the valuation implied in the GHL transaction. I wouldn't jump into the deal right away; I would wait for the acquisition to close, and then give it some time to settle down. But with the IPO market effectively closed to tech stocks, the new Iridium could be the most interesting tech company to go public in many months.