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To: Maurice Winn who wrote (4110)	4/23/1999 10:10:00 PM
From: ML	Read Replies (1) \| Respond to of 29987

After they {Iridium} have gone bust, Motorola can buy the assets for $3,141,592, ...They will then have a multibillion dollar asset at near zero cost. ...then start selling the minutes at 15c per minute and that will enable them to sell millions of Sure sounds like Moto is in a good position relative to the Iridium investor, but there's a problem with your logic. The asset may have zero cost at the point in time where whoever takes it over, but it takes money to maintain the satellite constellation. Suppose you have 66 satellites which each live for (one the average) 6.6 years. (I picked a number that makes the math easy. Pick whatever number you like.) That means that on the average, you have to replace 10 satellites per year. Now suppose that replacing an Iridium satellite costs $30M. Those satellite replacements then cost $300M/year. These are not the only costs of operating this system. Suppose there are $100M/year other costs (advertising, management, operations, etc). Now you're at $400M/year. You need your sales to exceed these fixed costs. Feel free to substitute what you expect to be the average lifetime of a satellite and the average cost per satellite for replacement, and your own estimate of other fixed costs. I'd be happy to hear other folks guesses for these numbers. I'm sure some folks have a more sophisticated financial model for the Iridium system than the horribly simplistic one I've related here. Motorola will also sell 1.5bn minutes at 15c or maybe 20c per minute to make it easier to calculate, and will get $300m income per year on their $3m asset. That's good! 1.5B minutes at 20c is $300M/year sales, which comes out less than the fixed costs I described above. Besides the fixed costs, of course you have revenue sharing with the local providers, local access fees, and long distance charges from your gateways (of which Iridium has few, spaced far apart) to the call's land destination. I'm having trouble trying to calculate how you could ever afford to operate the Iridium system with a per minute price as low as you have described. ...even if someone gives you the system for free. What you need to make money is a system with much greater capacity. The Iridium design not optimized for high capacity. In fact, it seems that they wasted capacity many ways, for example by putting much more power in the RF signal to each phone than is needed, and choosing orbits which spend a lot of their time over unpopulated area, etc.

To: Maurice Winn who wrote (4110)	4/24/1999 12:02:00 AM
From: METMAN	Read Replies (1) \| Respond to of 29987

Maurice...you think you know pigonomics, don't you? Well, you must'a visited the Midwest in the good ol' USA in the past 12 months....too many hog producers being too efficient for too little demand...Asia currency crisis, etc. For $65 or less, you could get a 200 pound porker and make your own bacon...a lot of farmers won't be back this year in the hog business...so just like GSTRF if they are not careful. You're right... GSTRF should give away the minutes at cheap cost to gain an audience, so GSTRF can stick around for a while...and I don't mean stickin callers in the bush, either. rant, rant, rant,.... Sounds like IRID is losing investor/management confidence rather fast..... -metman