Iridium On CNNfn>
CEO Iridium, CNNfn
FDCH CEO Wire/Associated Press
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STEVE YOUNG, CNNfn ANCHOR,
DIGITAL JAM: Iridium (Company: [ Iridium
World Communications Limited ] ; Ticker:
IRIDF; URL: N/A) says it's hooked up 3,000
customers to its worldwide satellite phone
system, but the system's debut was delayed five
weeks, and that, plus a shortage of phones, hurt the bottom line. Iridium is
(19:49:10) reporting just $186,000 in revenue and a net loss of $440 million
this quarter.
Joining us now to access its first two months in operation as a system is
Iridium's CEO, Ed Staiano. Welcome to (19:49:20) DIGITAL JAM.
EDWARD STAIANO, CEO, IRIDIUM: Thank you, Steve.
YOUNG: It's still very much a niche product. It's a status product. It's the
toy for the boys and women, too, are executives. How long before there are
enough phones out there and a lot of (19:49:30) customers more than you
have now on the system?
STAIANO: Well, [ Motorola ] (Company: Motorola Incorporated; Ticker:
MOT; URL: mot.com has now shipped about 40,000 satellite
phones. The cellular cassettes are now shipping in volume. The pagers are
shipping in volume. We have a incredibly (19:49:40) active program out
there with very large industrial users. We've had very long tests now run by
U.S. government agencies and by many of the oil companies: Shell , Phillips
Petroleum (Company: [ Phillips Petroleum Company ] : Ticker: P; URL:
phillips66.com, [ Exxon ] (Company: Exxon Corporation;
Ticker: XON; URL: exxon.com et cetera, and the (19:49:50)
results we're getting back are outstanding. So, we're very excited about the
potential now for accelerating the sales of the product.
YOUNG: What are your targets for customers say, in the next (19:50:00)
six months, year?
STAIANO: OK. Our first target is what we call, the industrial markets.
These are people in the oil and gas industry, the mining industry, they are
maritime, shipping. There are 500,000 ships that are over 35 feet in
(19:50:10) length and only 1 percent of them or less have phones on them.
It's aircraft. It's mineral extraction industries. These are people who often are
working in remote areas where there aren't any (19:50:20) communications
whatsoever, and heretofore their only option was to carry a 14-pound
briefcase and try and find an equatorial satellite.
YOUNG: How many of them do you want to be (19:50:30) customers by
the end of the year?
STAIANO: Well, we're looking for something, our goal is to get a million
customers by the end of the year. We need some 5- or 600,000 to
(19:50:40) get the cash flow break even on a run-rate.
YOUNG: That's quite a trajectory.
STAIANO: We believe we'll get there. We have many large customers.
One of the nice things about the industrial users are that (19:50:50) they tend
to buy multiple phones. So these oil companies are customers for hundreds,
if not thousands of phones.
YOUNG: You're tweaking the system. I had one of your phones for three
or four (19:51:00) days, took it to Colorado as well as New York. Some
places where I thought it wouldn't work, it worked fine. Some other places
where I thought it wouldn't work, it did. You're improving the system aren't
you, technically, as you (19:51:10) operate?
STAIANO: The system is getting better day by day. I don't know when you
used it, was it back in December, or.?
YOUNG: Yes, yes.
STAIANO: Since then, we've added two or three new software releases.
The quality of the system (19:51:20) now is outstanding. We're up to 94
percent call establishment with less than 5 percent dropped calls, and we
see that continuing to improve. In fact, we now believe the system is going to
(19:51:30) perform much better than we thought it would.
YOUNG: I want to turn to a subject that I think telecommunications industry
would like to go away, and it sort of has (19:51:40) in a way, but not really.
Several years ago with cell phones there was the issue of brain cancer. It
really was unresolved because no science has ever proved since that
(19:51:50) time that it was an issue or it isn't. These satellites are 480 miles
out. The company says, Motorola says, that it meets all the government
specifications about radiation that you might absorb in (19:52:00) your head.
STAIANO: Yes.
YOUNG: But nobody seems to want to tell us how much power is that
comes out of the phones. Can you clear that up?
STAIANO: Oh yes, I can clear it up exactly. By the way, the (19:52:10)
active element for the antenna is above the head, so the radiation.
YOUNG: That's a long antenna.
STAIANO: . is above the head. The power level maximum of the telephone
is 7 1/2 watts. But it's only for a (19:52:20) very short period, 90
milliseconds. So when you look at the average power that's released by that
phone, it's actually much less than the cellular phone.
YOUNG: Is that one of the reasons the (19:52:30) antenna is so big, to
increase the safety factor?
STAIANO: No, really not. It's really that height so that you can see
satellites, independent of whether they're to the left or to the (19:52:40) right
of where your head is. So we want to get that active antenna element up
above the head so it's easily able to see satellites. And the reason for
(19:52:50) that is, the power level for a satellite phone is about 1/500 of that
of a cellular phone. So it, because of the distance between the satellite and
the handset, the power (19:53:00) level is much lower.
YOUNG: Sounds like you rest pretty comfortable with that health issue.
STAIANO: I rest very comfortable with it.
YOUNG: OK. Ed, thanks very much for joining us and talking about the
financials (19:53:10) and the future of the industry.
STAIANO: Thank you, Steve.
YOUNG: Ed Staiano, the chairman and CEO of Iridium.
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