In a market where risk in any form was getting kicked to the curb, it was intriguing to see Iridium Communications notching a new seven-month high even amid an otherwise ugly tape.

Younger investors might not recall, but this company s previous incarnation ranks among the biggest implosions of the 1990s technology boom.

Iridium Print Advertisement - 1999

In the early '90s, Motorola created Iridium with the intention of offering satellite phones to consumers frustrated by cellular s then-limited reach. Promising a service which would allow users to communicate "with anyone, anytime, virtually anywhere in the world," the company spent more than $5 billion developing a network of satellites and groundbreaking technology.

An experienced management team was assembled and the company, which went public in 1997 at $20 a share, reached an all-time high of $72.19 less than a year later. Vice President Al Gore made the network s first call.

Iridium World Communications From IPO to Chapter 11

Source: Bloomberg

Yet customers weren t biting. Phones were clunky, and at $3,000, far out of the reach of even most business executives. Service ran as high as $9 per minute and often couldn t be used indoors.

Even more damaging was the growth in cellular networks, which offered comparable options at a much cheaper price. By August 1999, the company had only 20,000 subscribers, a fraction of the 500,000 needed just to break even.

Nine months after Gore s first call, the stock had dropped to $3 and, after only 474 days in operation, the company filed for Chapter 11, becoming one of the largest bankruptcies in U.S. history.

And life went on.

Opportunistic investors bought the company for $25 million in 2000, improved the business model by refocusing on government and industrial users, and, in 2009, returned as a publicly traded company. Once shunned, shares are beating the market this year by over 15%. Now trading near $9, a close above $10 would suggest an ideal entry point for prospective longs.

Space Oddity

Iridium Communications Inc. (IRDM) - 7 months

The point is that failure is a common and oftentimes necessary part of any market economy. Yet the hundreds of billions of bailouts and intervention, from AIG to GM, Main Street to Wall Street has served only to prolong needed corrections at even greater expense.

Ten years ago anybody who would have predicted a newly launched Iridium would be beating the S&P 500 would have been called crazy. Yet Iridium s spectacular flame-out and rebirth, all accomplished without a dime of taxpayer expense, demonstrates the resilience and productivity of free markets at work.