Iridium Weighs on Motorola

SCHAUMBURG, Ill. — Motorola Inc. on Tuesday called on its partners to help bail out Iridium World Communications Ltd., the financially troubled global satellite phone company that Motorola has bankrolled.

Motorola also reported a strong jump in second-quarter earnings on a surge in cellular phone sales and a turnaround in its semiconductor business.

Motorola owns 18% of Iridium and has guaranteed a portion of that company’s debt. Iridium has struggled to sign up subscribers and has not been able to pay its debts.

In a statement accompanying its earnings report, Motorola said it “will not provide any further support beyond existing contractual commitments unless there is substantial participation in the Iridium LLC restructuring from all parties with significant financial interest.”

Those parties include Lockheed Martin Corp. and Raytheon Co.

Motorola said it continued to defer recognition of profits under its operations and maintenance contract with Iridium, and recorded a $126-million second-quarter charge to write down the value of the Iridium bonds that it owns. Motorola said it may take additional charges in the third quarter.

Motorola said its profit from operations climbed to $273 million, or 44 cents a share, in the latest quarter from $6 million, or 1 cent, a year earlier, on a 7% rise in revenue to $7.51 billion. The results exclude one-time items in both periods.

Schaumburg-based Motorola fell $2.50 to close at $96.50 on the New York Stock Exchange. It reported results after the close of U.S. markets.