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Iridium CEO Resigns After Sales Miss Forecasts

April 23, 1999| From Bloomberg News

WASHINGTON — Iridium, the cash-strapped operator of the first global satellite telephone network, said Thursday that Chief Executive Edward Staiano resigned after sales growth missed forecasts and its shares plunged.

Iridium named John Richardson, head of its African unit, interim CEO. A committee was appointed to find a successor to Staiano, also the board's vice chairman.

Staiano, 62, became CEO in January 1997 and led Iridium's efforts to build the network. Now he's getting some of the blame for Iridium's inability to attract enough subscribers to pay off its debt.

Backed by a group led by Motorola Inc., Washington-based Iridium went public at $20 a share in June 1997. Its price more than tripled within a year, boosted by the promise of offering phone service everywhere. Now Iridium's phones are in short supply and it lacks a trained sales force. Its chief financial officer quit last month, and banks gave Iridium 60 days to meet sales goals or risk defaulting on an $800-million credit line.

As the company's financial position soured, its stock tumbled. Shares of Iridium, which fell $1.56 to close at $17.06 on Nasdaq on Thursday, have declined about 73% in the last year.

Staiano, 62, was an executive vice president at Motorola when he joined Iridium. The company's daily business now will be managed by an executive committee headed by Richardson.

Motorola, which has a 19.5% stake in Iridium, said it supports the management change.

Iridium will report its first-quarter earnings Monday.

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