McLean, Virginia – Iridium Communications reported recently that their second quarter results were below their expected estimates.
This is based on estimates for Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), revenue, and subscriber equipment sales decline, which caused from the government’s temporary weakness and the company’s OpenPort product’s component defect. According to management comparing to previous results, the product’s issue will lead to expected annual decline in revenue of subscriber equipment up to 10% to 15%. The company decided to lower its 2014 prediction when it comes to billable subscriber growth, operational EBITDA, and service revenue growth. Iridium Communications is still bound to face some challenges in the coming quarters. This is because of the decline of non military personnel and also lighter than common government services traffic headed to Afghanistan.
Iridium Communications believes that investors are getting concerned with the company’s standing request in adjusting some debt agreements with Compagnie Francaise D’assurance Pour Le Commerce Exterieur (COFACE). This concern is based on trends of long term business projections. However, Iridium Communications’ progress with their NEXT and Aireon products, contract renewal with the government, and improving current cash situation, the company believes there is minimal risk involve. Although their second quarter results may not be that impressive, 2014 is considered the company’s transition year and believe they can meet targets and still possess distinct competitive advantages.