Iridium rising?

With a less-than-stellar first quarter, upper management turnover and a slew of stock downgrades in the last month, Iridium has no choice but to restructure its strategy. However, the Motorola prodigy is working under a May 31 deadline.

The company "is suffering as pioneers often do, but it will get it right," said Andrew Cole, senior manager at Renaissance Worldwide.

By May 31, the company, with an estimated $5 billion orbiting constellation of 66 satellites, is expected to have $4 million in revenues and 52,000 customers total, which was its original first quarter target. The company currently has 10,294 total customers.

Iridium notified its lenders that it's in the process of revising its revenue and customer estimates and intends to request a modification of the minimum level covenants in the secured bank facility once complete.

For the quarter ending March 31, the company reported a net loss of $505 million or $3.45 per Class 1 interest unit, above analysts' expectations.

Last week, Leo Mondale, senior vice president of strategic planning and business development for Iridium, laid down the company's tentative forward-looking plan but did not provide specifics.

"Based on the lessons of the first quarter, we are doing everything to recognize the imperative to generate sales and revenue," he said. "We are prepared to make significant changes to accentuate the transition from developing project to an operating business."

Recently, Iridium has been no stranger to change. Under pressure from the company, Vice Chairman and CEO Edward Staiano resigned on April 22, less than a week after the departure of Chief Financial Officer Roy Grant. The following day, the company's stock closed 6% lower at $16, close to itsx 52-week low.

"They will turn it around," said Cole. "It was the right decision for Staiano to go. It is good news because now the company will have a fresh perspective on the market."

Although global phone service was a revolutionary idea nearly a decade ago, competition and the changing face of terrestrial wireless technology have lessened the impact of a provider like Iridium.

"The expectations it built by itself has only bitten them in the back," said Larry Swasey a senior wireless analyst with Allied Business Intelligence. "Its marketing campaign promised what the company could not offer. All things age eventually, even beautiful business plans."

Part of the Iridium turnaround calls for tailoring its product and service offering to better fit the identified market demand.

"Iridium will take a more aggressive approach in the vertical and horizontal markets," Cole predicted.

April 28 According to The Wall Street Journal, reporters covering Kosovo say their $2,300 Iridium phones are providing undesirable service, with dial tones hard to get and in-building calling nearly impossible.

April 27 Friedman Billings downgrades stock from buy to hold

April 26 Iridium reports first quarter earnings, which fall short of expectations

April 23 Iridium stock drops more than 8% and closes down 6% at $16 after trading in the $40 range in January

April 23 Goldman Sachs downgrades Iridium stock from market outperform to market perform

April 23 CSFB downgrades stock from buy to hold

April 22 Vice Chairman and CEO Edward Staiano resigns

April 22 Investors who purchased Iridium stock between Sept. 9 and March 29 file a class action lawsuit against the company

April 16 Chief Financial Officer Roy T. Grant resigns