Iridium May Go Public Again

from the buying-stuff-up-for-pennies-on-the-dollar-is-good-business dept

It's really quite fascinating to watch infrastructure bubbles, where investors overspend on infrastructure, only to go bankrupt, and have that infrastructure picked up for pennies on the dollar out of bankruptcy and turned into a useful, profitable asset. We've seen it with all the dark fiber investment in the '90s, and perhaps we're now seeing it with satellite communications as well. Remember Iridium? The huge satellite phone operation spun out of Motorola that was valued at many billions of dollars? It was supposed to replace cellular phones with satellite phones that could work anywhere in the world. Of course, there were a few problems with that plan. First, it was insanely expensive to build out and launch the necessary satellites. Then, the satellite phones themselves were huge, ugly and bulky. Third, it cost a ridiculous amount to actually use the phones. Lastly, and probably most importantly, between the time it took for Motorola to come up with this plan and to actually have something to offer the market, cell towers were spread quite widely around the globe and cellular technology had improved greatly -- basically lessening the need (drastically) for Iridium in the first place.

That caused Iridium to go bankrupt, and for a while the entire project was almost abandoned completely with plans in place to destroy the satellites. At the very last minute, though, a group of investors picked up the entire thing for $25 million (yes, the entire system, which had cost the original company $3.4 billion to build). Not only that, but part of the $25 million buyout was a $72 million contract with the US government. The new Iridium was a lot more focused. Rather than going after the entire mobile phone market, it really narrowly focused on occupations where such phones would be necessary. However, even then, we've still been skeptical that the economics could work out. After all, it's still costly to manage those satellites (which have a limited lifespan and need to be replaced) and reports indicated that the new Iridium really had very few customers.

However, the company now claims it's in pretty good shape, with good revenue and EBITDA, and is even talking about trying to go public once again. I'm sure the roadshow pitch will be quite different than the original Iridium. And, considering the name is still synonymous with one of the biggest failures in business, it will be interesting to see how investors react. Still, it's yet another example of companies buying up expensive assets for pennies on the dollar after an investment bubble, and turning those assets into something useful. Sometimes it's good to be a scavenger, apparently.


Reader Comments (rss)

(Flattened / Threaded)

  1.  
    identicon
    Anonymous Coward, Feb 25th, 2008 @ 7:15pm

    If I could get a phone the size of my RAZR2, and the cost is the same as cell providers, I'd be in.

     

    reply to this | link to this | view in thread ]

  2.  
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    leo, Feb 25th, 2008 @ 8:10pm

    This Iridium phone i'll buy one if cheap. Start investing your dollars to Iridium. Ohh, I wonder if it provides radiation?

     

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  3.  
    identicon
    Alfred E. Neuamn, Feb 25th, 2008 @ 8:43pm

    Dysprosium

    Its not 77 satellites, it is now 66.
    Shouldn't they change the name to "Dysprosium" ?

     

    reply to this | link to this | view in thread ]

  4.  
    identicon
    G Man, Feb 25th, 2008 @ 10:17pm

    Rip Off

    They picked it up for pennies on the dollar because others who thought it was a good idea lost their investments that built that infrastructure. They didn't reach their subscription quota, and at the time they didn't even approach the Merchant Shipping for business. Now it's round two for ripping people off

     

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  5.  
    identicon
    Anonymous Coward, Feb 26th, 2008 @ 12:20am

    Be interesting to see how their PR department (eg marketing) manages to deal with using the same name. Like mike said, iridium is synonymous with failure right now. If they really have their crap together and are serious about going public, it's going to be neat watching them change the initial reaction associated with the name.

     

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  6.  
    identicon
    J.P.deLeon, Feb 26th, 2008 @ 5:32am

    Re: Dysprosium

    Its not 77 satellites, it is now 66.
    Shouldn't they change the name to "Dysprosium" ?


    Source, please.

     

    reply to this | link to this | view in thread ]

  7.  
    identicon
    Anonymous Coward, Feb 26th, 2008 @ 6:33am

    Re: Re: Dysprosium

     

    reply to this | link to this | view in thread ]

  8.  
    identicon
    Michele Pain, Feb 26th, 2008 @ 6:41am

    Fun Sightings

    Well, I've been using the satellites for years. There's a German site (http://www.heavens-above.com/) which predicts when the satellites will be visible in the evening sky. While you can't make a phone call you can watch them slowly streak across the sky. Predictable shooting stars. I've enjoyed this for quite a while and personally think it was worth the $3.4B.

     

    reply to this | link to this | view in thread ]

  9.  
    identicon
    Anonymous Coward, Feb 26th, 2008 @ 7:26am

    Re: Re: Dysprosium

    I believe that Iridium has 66 in use, and 2 spares deployed in orbit.

    Sad thing is satellites usually have a 20 year lifespan, but it looks like it's a propietary satellite so MTBF stats aren't to be found. On the dataside, 10Kbps/sec and 1500ms latency may push adoption of microwave links, UMTS, and terrestrial solutions.

    Because the internet is not hiding anymore, like those whitty AT&T commercials tell us... Yes I would like tea with that download.

     

    reply to this | link to this | view in thread ]

  10.  
    identicon
    Anonymous Coward, Feb 26th, 2008 @ 11:14am

    Re: Re: Re: Dysprosium

    FWIW:

    atomic number from the periodic table
    iridium 77
    dysprosium 66

     

    reply to this | link to this | view in thread ]


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