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A new wave of layoffs has hit companies throughout the satellite industry. And the cuts are gripping established businesses, as well as less secure startups.
The list of companies that slashed sizable numbers of jobs in the past couple of months includes Teledesic, Andrews Corp. (ANDW), CONUS Communications, Alcatel Space, StarBand Communications and StarBand's majority owner Gilat Satellite Networks Ltd. (GILTF).
Deep-pocketed owners, it would seem, are no protection when a venture's promise seems to be fading. One example is Bellevue, Wash.- based Teledesic, a satellite broadband endeavor that was the brainchild of wealthy telecommunications pioneer Craig McCaw.
Construction of Teledesic satellites by Italian satellite manufacturer Alenia Spazio SpA has been suspended. And Teledesic plans to "significantly reduce" staffing as its officials evaluate alternatives to salvage its business plan.
The second thoughts on the part of McCaw, Microsoft (MSFT) Founder Bill Gates and others are especially noteworthy due to their immense personal financial holdings.
Despite previous assurances that the Teledesic broadband system would be built, McCaw recently admitted that its chances of deployment are not that good in light of marketplace realities and a tight financing market. "We do not presently see elements in place that would result in returns to our shareholders that are commensurate with the risk," he said recently.
Gargantuan Price Tag
Industry experts had estimated that the original Teledesic system would cost a gargantuan $8 billion to $10 billion to build and deploy. That kind of price tag is untenable in the current economic environment.
At the same time, Teledesic's investors have pumped in hundreds of...