Iridium Sees Strongest Equipment Shipping Results In Company’s History

By | December 3, 2008 | Feature, Telecom

[Satellite News 12-03-08] Despite concern from some analysts over how the credit crunch would affect satellite industry customers, Iridium reported its best quarter for number of units shipped in the company’s history, Iridium CEO Matt Desch told Satellite News.
    "To date, we are not seeing a significant impact from the developing global financial crisis,” said Desch. “I think the fact that our service is primarily focused on industrial applications, it doesn’t have competitive alternatives that offer 100 percent global coverage, and a significant percentage of our business comes from U.S. and international governmental agencies, makes our business less impacted by recessions and other problems affecting the consumer markets.”
    Desch does believe Iridium will feel some impact of the economy as markets contract, but “we think we have a pretty diversified business model that should better position us to weather the global financial crisis," he said.
    Iridium posted solid growth in other areas as well, reported a 37 percent increase in subscribers from 2007 at 309,000 subscribers and a jump in net subscribers of 28 percent, according to the 2008 third quarter financial results released Dec. 3.  The company’s revenue also grew, improving 19 percent over the third quarter of 2007 at $88.2 million and up 26 percent year-to-date at $244.2 million. Iridium’s net income also is up modestly at an 8 percent edge over 2007.
    Iridium’s across-the-board subscriber growth is due to a wave of government business. "In the first quarter of 2008, we renewed our U.S. Department of Defense airtime services and gateway maintenance agreements with a slight price increase. We are very pleased that the [Department of Defense] continues to be one of our largest single customers,” Desch said, and he expects growth to extend into 2009.
    Iridium also has enough cash on hand to take its business model well into the future, due, in part, to a planned combination with GHL Acquisition Corp. announced in September — a move that could erase all of Iridium’s debt, Desch said. “Our transaction with [GHL Acquisition] is an important element in funding Iridium Next,” he said, referencing the company’s next-generation satellite constellation.
    The constellation’s development is on track, with Lockheed Martin and Thales Alenia Space ¬competing for the prime contract. “We continue to work separately with each of them during this competitive phase, and we expect to award the contract for development of Iridium Next during the second quarter of 2009,” Desch said. He also expects the constellation to hit its launch target date. “Right now, we are on plan to launch the first satellites for Iridium Next in 2014, with the full constellation replaced by 2016," he said.
    Iridium’s 2008 fourth quarter report will include financial data concerning the November release of the company’s 9555 Handset. Desch is optimistic about the handset’s potential. “We’re shipping it now and we’ve received a lot of positive feedback from our partners on the new phone and expect it to be a real winner," he said.
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