Capping a string of negative developments leading up to its first-quarter earnings report this week, Iridium L.L.C. announced Edward Staiano-the company’s vice chairman, chief executive officer and most voracious supporter and motivator-resigned last week.
Reports are that Staiano and Iridium’s board of directors had disagreements over strategy, a point that has beleaguered the first-to-market low-earth-orbit satellite voice carrier since it commercially activated the network last November.
Iridium said it has formed an executive committee to manage the company’s daily operations and appointed John Richardson interim CEO until a replacement for Staiano can be found. Iridium Chief Financial Officer Roy Grant resigned earlier in the month.
Meanwhile, Iridium investors have filed a class-action lawsuit against the company, charging that certain officers and directors of Iridium and Motorola Inc. issued false and misleading statements and failed to reveal the problems associated with the Iridium system’s commercial launch.
In particular, investors claim Iridium falsely reported achievable subscriber numbers and revenue figures, which the company recently said likely would be below expectations and required a 60-day waiver on its bank loan covenants as well as their renegotiation. Additionally, investors said Iridium failed to disclose technical problems with the Iridium System and delays in handset production, which resulted in a handset shortage.
Iridium’s stock value has fallen 73 percent since last May.
Eligible for the class are stockholders on record from Sept. 9, 1998, to March 29. Interested stockholders have until June 21 to participate in the class. The law firm of Wolf Haldenstein Adler Freeman & Herz L.L.P. is handling the case on behalf of investors.
