WASHINGTON – The fate of Iridium came to an end late Friday as quixotic efforts to keep the company afloat failed.
The Washington, D.C. satellite telecommunications company had hoped for an 11th hour rescue by a qualified investor, but "no bid was received which was a qualified bid,'' Iridium attorney William Perlstein told the U.S. Bankruptcy Court in Manhattan on Friday afternoon.
The plug will be pulled on the company‘s service by midnight tonight. Judge Arthur Gonzalez approved a liquidation budget of $8.3 million to cover expenses through April 30.
Motorola, which has lost nearly $1 billion in the operation and maintenance of the $5 billion, 10-year-old Iridium constellation, will begin yanking the Volkswagen-size satellites from orbit and send them on a fiery suicide dive through Earth's atmosphere.
"The industry overall is doing well with record growth throughout the industry. There are a lot of good success stories out there."
Calls to Motorola were not returned. The Schaumberg, Illinois-based company's shares closed down $1-11/16 at $149-5/16 on Friday on the New York Stock Exchange.
"It’s very unfortunate," said Leslie Taylor, a Washington, D.C. consultant for the satellite industry. "Iridium failed to match its system to its mission which caused too much pressure on the company to get customers quickly."
The company was hatched in 1998 with grandiose plans and plenty of cash from industry heavyweight Motorola.
But complaints about exorbitant prices – about $3,000 per phone and up to $6 a minute for calls – dogged the company. Consumers also found the brick-size phones awkward to use. Iridium responded by slashing prices last summer, but it was too late. Consumers were already lost to other new rivals, such as Loral Space & Communications’ Globalstar.
By August 1999, the company was rife with debt and filed for bankruptcy. What followed was a string of failed attempts by several suitors to save it from its demise. The biggest blow came few weeks ago when cellular communications pioneer Craig McCaw and his Eagle River investment group begged off a plan to buy the beleaguered company, sealing its fate.
Last summer was a tough time for the mobile satellite services sector. In addition to Iridium, ICO Global Communications found itself short of cash and ended up in bankruptcy court.
This meltdown has put pressure on the industry and looks to go down in history as one of the biggest high-tech fiascoes of the 20th century.
But some analysts are optimistic.
"The industry has a demonstrated success," said Roger Rusch, president of industry consultant firm TelAstra in Palos Verdes Estates, California. In a recent article he wrote of the mobile satellite services industry, Rusch points out that London-based Inmarsat has been delivering profitable services for 20 years. Also, Asia Cellular Satellite (ACeS) and the United Arab Emirates’ Thuraya Satellite Telecommunications "are economical and have sound business plans that can lead to profitable business."
"The industry overall is doing well with record growth throughout the industry," said Clayton Mowry, executive editor of the Satellite Industry Association. "There are a lot of good success stories out there."
In the spirit of success, Globalstar Telecommunications didn’t skip a beat.
Yesterday it announced that some of its distributors would give rebates of up to $495 toward a new Globalstar phone for Iridium users who trade in their handsets.
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