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.

Technology Stocks : IRID - Iridium World Communications IPO Announced! -- Ignore unavailable to you. Want to Upgrade?

To: Joe Brown who wrote (1374)	2/24/1999 9:10:00 AM
From: Goodboy	Read Replies (1) \| Respond to of 2693

The cellular companies have a proven model of the usage by their subscribers and thus can subsidize the handset price knowing their payback period. Satellite TV companies such as Echostar have now reached the point where they can give away their equipment for free as long as the new sub commits to a certain amount of programming for one year. The difference here is financial flexability by the cellular/SatTV companies along with the unknown usage pattern of these Iridium phones. It is likely that the government or corporations will buy lots of phones, but only put them in use under certain circumstances or for limited usage. No corporation will be canceling their cost effective cellular or paging contracts for Iridium. With debt convenants not met, bank debt, bond debt and a nice chunk of money now owed to Motorola, eating the cost of the phone does not seem to be smart. From Motorola's standpoint, they would give up their profit margin on the phones if Iridium did not eat the cost (subsidize) to discount the phone to the consumer. Kyocera has even less of an incentive to do this. The more you look at this thing the more you see how a restructuring makes sense ( and the conflicting positions of the financial and strategic partners). With a restructuring, they would have the flexibility to do more with pricing and Motorola would have a larger ownership stake in the end. It will be interesting.

To: Joe Brown who wrote (1374)	2/24/1999 9:28:00 AM
From: Goodboy	Read Replies (2) \| Respond to of 2693

It was interesting to see that the competition here is not just Globalstar. When one considers the market to be maritime and oil companies, there are plenty of office type situations aboard ships and in the oil fields. As was probably discussed on this board in the past, Inmarsat offers a product that can easily be used in an office setting and may even be preferable to the Iridium offering where a hand held is not needed and the pricing will be better. When I look at the competition the will emerge commerically this year, look at the plans of those who had market share prior to Iridium (Imarsat) and see the coming systems such as Elipso, it is hard not to see that they all have superior business plans and much lower costs. This is a cost sensitive business, regardless of what Irdium thinks or planned for. What should be more worrisome is that their system performance will degrade as the year goes on likely causing a number of new customers to hold off to test the Globalstar system or a least not commit to long term deals. I just don't get what all these bullish analysts see. First to market in this business with Iridium technology is a massive liability, not an advantage. Chow.