Iridium Communications: Stock Reaching Critical Mass
- Revenue growth is back, new products are expanding the addressable market and operating performance is improving.
- ‘NEXT’ constellation, Aireon, ‘Go!’ and new customers & partners to act as significant catalysts for the next leg of growth.
- Stock should benefit from improved earnings power of the business, as capital requirements peak and operating cash flows start to grow, while valuation multiple expands to catch up with peers.
- IRDM is undervalued and presents an opportunity for long-term investors.
- IRDM is protected by high barriers to entry and a customer in the U.S. government.
- IRDM is increasing its market to market services through current and future projects.
- IRDM faces risks such as having to raise $3 billion and tough competition.
Malaysian Airliner Disappearance Highlights The Need For Aireon's Satellite Air Traffic System
- Aireon will provide Total Global Surveillance Coverage & 15 second updates to Position, Trajectory, and Air Speed.
- Iridium Communications is a great value investment with potential upside from the success of Aireon.
- M2M Growth will continue and potentially accelerate as the need for information on moving objects is realized.
For Value Investors, Iridium Could Be 'Out Of This World'
Iridium Is An Underfollowed Value Stock With Strong Potential
These 2 Cheap Telecom Picks Could Be Top Performers In 2013
May. 20, 2014, 10:13 AM| Comment!
May. 12, 2014, 9:24 AM
- Macquarie has upgraded Iridium (IRDM) to Outperform, and lifted its PT by $1.50 to $8.50. The firm is pleased with the satellite network owner's recent stock offerings.
- Iridium rallied on Friday after pricing a $55M common stock offering, and a $125M convertible preferred stock offering. The offerings followed the sale of $50M in shares to mutual fund manager Baron.
May. 9, 2014, 9:25 AM
- Iridium (IRDM) is selling 7.38M shares of common stock at $6.10 (slightly below yesterday's $6.13 close), and 500K shares of 6.75% convertible preferred stock at $250. Underwriters have an overallotment option covering up to 1.1M shares of common stock.
- Iridium expects gross proceeds of $170M. Shares fell on Monday after Iridium announced the offerings, along with a $50M stock sale to fund manager Baron at a price of $6.50/share.
May. 5, 2014, 9:11 AM
May. 5, 2014, 8:27 AM
- Iridium (IRDM) is offering $45M worth of common stock and $125M worth of convertible preferred stock, and is directly selling $50M worth of common stock to mutual fund manager Baron at a price of $6.50.
- The convertible stock has an offering price of $250/share, and a liquidation preference at the same level.
- Iridium suggests it might use some of the proceeds to help finance its NEXT satellite constellation (expected to launch in 2015). The company had $255.2M in cash/investments at the end of March, and $1.1B in debt.
- Shares jumped last week following a strong Q1 report.
May. 1, 2014, 9:03 AM
- Iridium's (IRDM) commercial sub base grew by 8K Q/Q and 51K Y/Y to 621K, and its government sub base grew by 2K Q/Q and Y/Y to 53K.
- Commercial voice/data ARPU was $43, down $4 Q/Q but unchanged Y/Y. Commercial M2M ARPU was $16, unchanged Q/Q and Y/Y.
- Commercial service revenue rose 7% Y/Y to $57.4M, government revenue 6% to $16M, equipment revenue 16% to $20.2M, and engineering/support revenue 45% to $4.4M.
- Operational EBITDA rose 10% Y/Y (in-line with revenue growth) to $51.6M; OEBITDA margin was 53%. Iridium is reiterating its 2014 and long-term service revenue and OEBITDA forecasts (provided on Feb. 27).
- Q1 results, PR
Feb. 27, 2014, 2:41 PM
- Investors are pleased with Iridium's (IRDM +9.9%) guidance for an 8%-12% service revenue CAGR from 2014-2018, and its 60% 2018 OEBITDA margin target (2013 OEBITDA margin was 53%).
- Iridium is also guiding for 2%-4% service revenue growth in 2014; the consensus for total revenue growth, which also accounts for equipment and engineering/support revenue, is at 4.9%. OEBITDA is expected to grow to $205M-$215M from 2013's $201.1M.
- Q4 commercial service revenue (62% of total revenue) rose 18% Y/Y in Q4 with the help of a 15% increase in voice/data ARPU to $47. M2M ARPU was unchanged at $16.
- Billable commercial subs totaled 613K at the end of Q4, up 9K Q/Q and 53K Y/Y. Voice/data subs totaled 340K, and M2M subs 273K.
- Government service revenue +3% Y/Y, billable subs unchanged at 51K. Equipment revenue -28% (lower phone sales), engineering/support revenue +66%.
- The satellite network owner expects to pay "negligible" cash taxes until approximately 2020.
- Q4 results, PR, CC transcript
Dec. 23, 2013, 2:51 PM
- SA Pro author Buy the Dip, Sell the Rip notes Iridium (IRDM +3.5%) trades at a mere 60% of book value, something deemed unjustified given the company has been "solidly profitable" the last three years, and has major growth opportunities in the form of its Aireon traffic surveillance venture and NEXT satellite constellation (launching in 2015).
- Among other things, the author notes Iridium has landed a series of major contracts this year, stands to benefit from growing DoD reliance on commercial satellites, and thinks NEXT's technology benefits, limited competition, and (debt-based) financing structure will help Iridium deliver long-term growth and margin expansion.
- Shares rallied on Friday in response to news that Aireon, which has agreed to pay large hosting and data service fees to Iridium, is receiving $120M in fresh funding.
Dec. 20, 2013, 2:29 PM
- Iridium's (IRDM +6.4%) Aireon venture, provider of (according to Iridium) the world's first air traffic surveillance system to rely on satellites, is receiving $120M in investments from three air navigation service providers: Denmark's Navair, Italy's ENAV, and the Irish Aviation Authority. (PR)
- The investments have strings attached: They'll give the investors preferred interests, will be provided in tranches from 2014-2017, and require Aireon to redeem part of Iridium's stake in the company, likely in 2018. Following the redemption, Iridium will have only a 24.5% stake in Aireon. NAV Canada will own 51%.
- But Iridium may be less interested in its equity stake than its ability to profit from sales to Aireon. In tandem with the investments, Aireon has promised to pay Iridium in hosting fees for placing receiver payloads on Iridium NEXT satellites, and nearly $300M in data service fees through 2030.
- Aireon declares its solution, which allows air traffic surveillance to be extended to oceans and remote areas, will deliver "increased efficiencies and fuel savings" for airlines.
Nov. 27, 2013, 5:39 PM
Nov. 15, 2013, 5:42 PM
Nov. 1, 2013, 9:45 AM
- Alcatel-Lucent (ALU +3.5%) has been upgraded to Hold by SocGen a day after posting a Q3 beat fueled by margin expansion.
- Lumos Networks (LMOS +4.9%) has been upgraded to Buy by D.A. Davidson a day after delivering its Q3 results.
- Omnicell (OMCL -4.2%) has been cut to Hold by Craig-Hallum after providing mixed Q3 results.
- Sony (SNE -1.8%) has been cut to Hold by Jefferies in the wake of Thursday's disappointing FQ2 results (I, II).
- Iridium (IRDM -9.5%) has been cut to Outperform from Strong Buy by Raymond James a day after reporting a Q3 earnings miss and revenue beat.
- Violin Memory (VMEM -2%) has been started at Neutral by Sterne Agee.
Oct. 21, 2013, 9:35 AM
- Iridium (IRDM -2.7%) now expects 2013 billable subscriber growth and service revenue growth of ~10% and ~6%, below prior forecasts of 10%-15% and 6%-8%. Operational EBITDA is now expected to be in a range of $200M-$205M, down from prior guidance of $210M. (PR)
- The satellite services firm is "also evaluating its long-range outlook based on the impact of lower equipment sales, lower subscriber additions and the long-term revenue potential of its recently announced Iridium PRIMESM hosted payload initiative." Details will be provided within Iridium's Oct. 31 Q3 report.
- Iridium already lowered its full-year forecasts in tandem with its Q2 report. At the time, the company blamed "product issues" in its maritime business, and lower satellite phone subscriber growth and usage (partly due to stronger low-end competition).
Aug. 1, 2013, 5:31 PM
Aug. 1, 2013, 12:45 PM
Aug. 1, 2013, 11:50 AM
- Iridium (IRDM -17.3%) now expects 10%-15% 2013 billable subscriber growth and 6%-8% service revenue growth, below prior forecasts of 15%-20% and 8%-10%.
- The satellite services firm is also now guiding for 8%-10%/year service revenue growth in 2014 and 2015; prior guidance was for 9%-11% growth from 2013-2015. Moreover, its 2015 operational EBITDA margin target is now 55%-60% vs. a prior 60%.
- Iridium says "product issues" in its maritime business "have led to higher churn and tempered [its] growth prospects," and that subscriber growth and usage in its core satellite phone ops is falling, partly due to "increased competition in the cost-sensitive segment" of the market.
- Iridium ended Q2 with 647K billable subs, +26K Q/Q and +71K Y./Y.
- Commercial revenue (60% of total) +8% Y/Y, government -7%, equipment sales -17%.
- Commercial ARPU -2% Y/Y, government -3%.
- Q2 results, PR
IRDM vs. ETF Alternatives
Other News & PR