Iridium downsizes, stock stumbles

Iridium World Communications laid off 15% of its work force last week, including most of its marketing executives, possibly in an attempt to meet the financial target required as part of its $800 million credit facility.

The news pushed the company's stock down to a 52-week low of $5 per share, but shares retaliated 21% after a Motorola executive announced the company would change its focus to vertical markets.

The satellite phone company has until June 30 to revamp its business plan, which includes increasing its subscriber base. Motorola, which owns 18% of Iridium, is in talks with the company regarding its marketing plan.

"I am surprised they cut just 15% particularly considering the [approaching] deadline," said Larry Swasey, senior analyst with Allied Business Intelligence. "It is a good start, but they need to revamp and may need to be bare bones to make it work."

The company, which has a goal of increasing its subscriber base to 27,000, had only 10,300 subscribers at the end of March.

"They are still in the first innings of this and they will be going 10," said Swasey. "They have to have more cuts to get moving on this." Swasey foresees further cuts as the company nears the end-of-the-month deadline.