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

To: Marty Rubin who wrote (1853)	5/27/1999 4:53:00 PM
From: Marty Rubin	Respond to of 2693

Motorola struggles with satellite ventures By Corey Grice Staff Writer, CNET News.com May 27, 1999, 12:30 p.m. PT URL: news.com Motorola's decision to pull resources from Teledesic to buoy its struggling Iridium phone service raises questions about the communications company's commitment to future satellite ventures. Motorola, the wireless communications and semiconductor company, has sunk billions of dollars into several space-age satellite technologies, but has so far seen little return on its investments. Motorola holds a 19-percent stake in Iridium, the world's first satellite mobile phone service. An ambitious $5 billion, 66-satellite project, Iridium has suffered from product delays and poor subscriber numbers, and has lost two top executives. Now, Motorola plans to pull engineers from Teledesic, another broadband satellite company, which is planning an "Internet-in-the-sky" in the next decade. Teledesic, which has financial backing from mobile phone magnate Craig McCaw and Microsoft chief executive Bill Gates in addition to Motorola, is planning to launch a constellation of more than 250 satellites for Net access and other data services. A Motorola spokesman said the company remains committed to its satellite projects, despite the troubles at Iridium and the decision to move workers from Teledesic. Analysts note that Motorola wisely wants to focus its attention on Iridium, which began offering service last year, rather than throwing resources at another satellite venture that--despite its huge profit potential--is years from completion. After all, Iridium offers service today while Teledesic is still in the planning stages. But not all the engineers Motorola had working on Teledesic have been transferred to Iridium. Many have been reallocated to other "new business opportunities," Motorola spokeswoman Karen Culver said. "This is a small internal realignment…It's not uncommon for Motorola to move people with specific skills around," Culver said. "It's being blown out of proportion. "We are committed to our contribution to the Iridium system and to Teledesic," she said. "Motorola remains committed to satellite technology." But analysts say that even Motorola has its limits. "I think there's only so much money you can spend," said Evie Haskell, a satellite industry analyst at Media Business, a communications consulting and research firm. "They've spent a lot on Iridium, and it's a good system in many ways, and they don't want to see it go down the drain." Other analysts said that Iridium's woes won't sour Motorola on other satellite ventures. "I don't think they're going to scrap Iridium. I don't think the system is a total flop, it just takes more than they thought at first," said Antonette Goroch, a senior analyst at The Carmel Group, a satellite industry consulting firm. Analysts said Motorola likely will learn from Iridium's early mistakes, and by moving engineers away from Teledesic, Motorola realizes that project is still years from completion. "That says that they need to focus on what's at hand now," Goroch said. Haskell said she believes Motorola will try and salvage what it can of the Iridium service before jumping into another new and unproven technology--that of broadband satellite data services. "Teledesic, while it is a fascinating project, is still many years away," she said. Motorola has backed away from satellite ventures before. The company abandoned its own planned broadband data service, which was to be called Celestri, in favor of Teledesic when it signed on last May. Meanwhile, Iridium executives today told Reuters the company intends to restructure its debt arrangements with creditors, including Motorola, rather than seek bankruptcy protections. Iridium has until May 31 to renegotiate its loan agreements with creditors. The company recently hired Donaldson Lufkin & Jenrette to help advise it on how best to reduce its financing costs. Reuters contributed to this report. (http://www.news.com/News/Item/Textonly/0,25,37143,00.html)