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To: Yogi - Paul who wrote (1477)	3/1/1999 10:30:00 AM
From: LK2	Read Replies (1) \| Respond to of 2025

Repeat of Iridium missing growth targets in today's WSJ. For Personal Use Only >>>>>>>>>>>>>>>>>>>>>>>>>>> March 1, 1999 Tech Center Iridium Says It Expects to Miss Targets For Subscribers, Revenue in 1st Quarter By QUENTIN HARDY Staff Reporter of THE WALL STREET JOURNAL Iridium LLC expects to miss its first-quarter targets for subscribers and revenue, possibly putting it in technical default of agreements with lenders that helped finance its $5 billion telephone-satellite system. Washington-based Iridium has an agreement with its bankers to meet a target of 52,000 subscribers, including 27,000 users for the high-revenue satellite-communications portion of its network, by the end of March. Iridium also has revenue targets of $4 million in cash and $30 million in accrued revenue, such as pending payments from users. The company launched its global service Nov. 1. Iridium has about $800 million in secured loans to a group of banks. In addition, Motorola Inc., Schaumburg, Ill., which built Iridium's network of 66 low-earth-orbit satellites and created a separate company for the network, has guaranteed a $750 million bank loan. Motorola also has granted Iridium $400 million in vendor financing and owns $157 million of Iridium's high-yield debt. Any change in the loan structure could lower the market value of Iridium's junk bonds, a total of about $2 billion repayable in five years. At present, according to people familiar with company operations, Iridium has fewer than 20,000 subscribers. Two weeks ago, its officials told analysts that it is unlikely to see a rapid enough increase to meet the targets agreed upon with its lenders. Edward Staiano, Iridium's chairman, repeated that forecast in an article in the Financial Times on Friday. Iridium doesn't give out its subscriber numbers until after each quarter. A company spokeswoman said no one could comment on its situation. A Motorola official said it was too early to comment on whether Motorola would guarantee any further lending arrangements by Iridium. Iridium has been hobbled by slow production and distribution of phones by Motorola and Kyocera Corp., Kyoto, Japan, and a poor sales effort by the service providers that have contracted to sell Iridium's service to retail customers. In particular, according to people familiar with Iridium's business, few of Iridium's regional operators, or gateways, have been aggressively marketing the service. There have been problems securing and training sales staff, distributing products and operating an efficient billing system. While troubling, Iridium's predicament is hardly unprecedented. Nextel Communications Inc., McLean, Va., which operates a nationwide mobile-phone service, endured several years of poor system performance, and several times missed performance targets on its loans. Iridium and its gateways spent more than $180 million last year on advertising and marketing world-wide, targeting wealthy international travelers. People who follow the company say the banks aren't likely to press Iridium too hard, for now. "They will ask for a waiver fee and bump up the interest rate a bit on the loans," said Tom Watts, an analyst with Merrill Lynch & Co. "It's not a big deal. The big deal is whether there is a market there." Class A shares of Iridium World Communications Ltd., a stock that tracks Iridium LLC, fell $1.50, or more than 5%, to $25.8125 on Nasdaq Stock Market trading Friday. URL for this Article: interactive.wsj.com Hyperlinks in this Article: (1) interactive.wsj.com (2) interactive.wsj.com (3) interactive.wsj.com Copyright © 1999 Dow Jones & Company, Inc. <<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<<