Satellite phone company Iridium has hit another storm with the announcement that its chief executive, Edward Staiano has resigned.
Staiano is believed to have resigned over disagreements with the board over strategy. Iridium confirmed that its board of directors has formed an executive committee to manage the company?s day to day operations.
It has appointed John Richardson, previously responsible for Iridium?s African operations, to the post of interim chief executive while it seeks a new leader.
Staiano?s departure comes as Iridium, which launched the first global satellite phone service last year, continues to struggle financially. Staiano?s resignation follows that of Roy Grant, chief financial officer, who is also departing.
In the fourth quarter of 1998 Iridium suffered a massive loss of $440 million against revenue of $186,000. The company is scheduled to announce its first quarter earnings on Monday. Iridium's subscriber numbers are believed to be well below expectations.
However, analysts are confident that Staiano?s departure does not spell the death knell for Iridium. ?It actually could be a good thing,? commented Gareth Owen, an analyst for research company Dataquest. ?He was excellent at system development, but now the company seriously needs to look at its marketing, distribution and service provision to succeed."
?Iridium really needs to address the price of its handset, other satellite operators are looking at coming in at around $600," said Owen. Iridium handsets currently cost around $3000.
Despite the rapidly growing cellular phone market, analysts believe there is a space for satellite operators. ?Cellular covers a high level of the population, but not geographically very well,? explained Owen. ?Lots of business is done outside urban areas and that is where satellite comes in."
Unlike cellular phones, satellite phones can send and receive messages from anywhere on earth.
Dataquest predicts that by the year 2003 only one per cent of cellular phone users will be satellite subscribers.
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