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: djane who wrote (4615)	5/14/1999 11:20:00 PM
From: Andmoreagain	Read Replies (1) \| Respond to of 29987

djane: I can confirm that Iridium is cutting not only the per minute cost of using their system, but the monthly access fee as well. From a user standpoint, this is great news, since cost is definitely an impediment to "powering up" the phone. From an investment standpoint, Iridium is a moot point, as we all know... Here's a question likely to produce divergent replies: Given the $600 million financing need Globalstar has - to get to service initiation - and the added $600 million to get to cash flow breakeven, is Wall Street's preponderance of "buy" ratings for Globalstar somehow fee-motivated? I'd bet a couple bucks that it is... Take away the potential for syndicate business, and how many "buy" ratings would there be? Globalstar needs 1.3 million subscribers to generated positive EPS. Let's see how Iridium's lower prices increase their subscriber base, then let's see - if a substantial increase does not occur - how well Globalstar ramps up. Getting a remote Indian/Chinese/Brazilian village to adopt Globalstar might be easy if the local SP is willing to forego some profitability to subsidize the endeavor, but even assuming that...how much marketing expertise does a third world SP have? Enough to generate 1.3 million users? If shortfalls occur, they won't be made up by travelling business persons (as Iridium discovered). And if there are a million oil company personnel just itching to grab a satphone, I'll be amazed... OK...send the hate mail. I'm ready.

To: djane who wrote (4615)	5/15/1999 1:02:00 AM
From: djane	Read Replies (1) \| Respond to of 29987

WashPost. Iridium's Stock Dips 28 Percent Company Can't Meet Debt Terms By Mark Leibovich Washington Post Staff Writer Saturday, May 15, 1999; Page E01 Iridium LLC's stock price dropped 28 percent after the struggling pioneer of worldwide satellite-phone service said it does not expect to meet terms on $800 million in debt by a May 31 deadline. District-based Iridium also said it has enlisted the New York investment bank Donaldson, Lufkin & Jennrette Securities Corp. to help restructure its debts. Iridium's stock dropped $4.06 1/4 to an all-time low of $10.43 3/4; about a year ago, the company's shares were trading at $62.37 1/2. Prices for Iridium 14 percent bonds, which come due in 2005, dropped dramatically yesterday. Trading at prices of 23 cents on the dollar at day's end, they have lost nearly three-fourths of their face value since February. Iridium, which is 19 percent owned by Motorola Inc., was in arrears by almost $3 billion in debt at the end of March. At that time, the company secured a 60-day waiver period from its bankers to meet certain terms of its credit line, including achieving a target of 27,000 subscribers and total sales of $4 million by the end of this month. But in a brief statement yesterday, Iridium said it did not expect to meet the covenants of its waiver period. Beyond the statement, "Nobody here is commenting," company spokeswoman Michelle Lyle said. "They're all working on fixing our problems." Iridium's problems are not new. In the last two months, its chief executive, Edward Staiano, and its chief financial officer, Roy Grant, both resigned. Iridium shares have fallen steadily as the company has made largely futile attempts to find customers for its unwieldy-yet-state-of-the-art satellite phones. Iridium drew international headlines in 1990 with its plan to ring the earth with 77 telecommunications satellites; the number later was scaled back to 66. This network of satellites would let subscribers make or receive calls from anywhere in the world with hand-held phones. But analyst say the company has had trouble manufacturing and distributing the phones, and has also been slow to assemble and prepare an adequate sales force. Analysts once had projected that Iridium would have 100,000 subscribers by the beginning of this year. But at the end of March, Iridium had signed up 10,294 subscribers. "Right now, they've certainly hit a new low," said Riyad Said, a communications analyst for Friedman, Billings, Ramsey Group Inc. in Arlington. Said was referring specifically to yesterday's announcement about Iridium's debt covenants. He currently rates the company as a "hold." Still, Said said Iridium is not without long-term potential. If the company becomes financially and operationally sound, it can market its services to niche customers -- such as government agencies, news media companies and oil and gas firms -- that often send people to remote parts of the globe. These are "heavy-use" customers who tend to be relatively insensitive to the company's high prices. Iridium phones alone cost $3,000. Merrill Lynch & Co. analyst Tom Watts said that if Iridium can secure financing through 2000, "it could give them a new lease on life." By the end of the year, Watts said, Iridium is expected to announce a next-generation phone that will be considerably lighter and, presumably, less expensive. "Clearly the current pricing model is not viable right now," he said. © Copyright 1999 The Washington Post Company