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RIM prepares to finally make a long-awaited move to try to shake up management

Typically when businessmen or businesswomen make critical mistakes, it is the board that comes down on them breathing fire and wrath.  In the world of corporate politics, the board is a crucial check and balance -- the legislative branch checking the power of the executive branch (the CEO/CFO/CTO/COOs).  

I. RIM to Boot Balsillie, Lazaridis from Top Board Spot

But at struggling Waterloo, Ontario smartphone maker Research in Motion, Ltd. (TSE:RIM), that system of checks and balances was disrupted by a bizarre and long-standing arrangement in which co-founders and co-chief executive officers (CEOs) Jim Balsillie and Mike Lazaridis were also joint chairmen of the board.  While John Richardson, formerly with the Ontario Teachers Pension Plan, served as the board's "lead director", he reportedly deferred far too often to the iron fist of Mr. Balsillie, who reportedly exerts a tight controlling grip on the board.

But in the wake of falling sales and a string of high profile embarrassments, RIM appears to be on the verge of bowing to shareholder pressure and shaking up the executive ranks.  According to a report in The Financial Post, RIM will boot Mr. Balsillie and Lazaridis from the co-Chairman spot, appointing Barbara Stymiest to take their place as Chairwoman of the board.

Jim Balsillie and Mike Lazaridis
Jim Balsillie and Mike Lazaridis might not be smiling when RIM's board announces their decision. [Image Source: Globe and Mail]

Ms. Stymiest comes with some impressive business credentials.  She served as the chief operating officer (COO) at the Royal Bank of Canada (TSE:RY) and served head of the Toronto Stock Exchange.

Barbara Stymiest
Barbara Stymiest could become one of the most powerful people at RIM if she becomes RIM's first independent board chairperson. [Image Source: Peter J. Thompson/National Post]

Back in July, before much of the worst news for RIM, shareholders were already growing antsy.  Northwest & Ethical Investments LP, which owns 2.6% of RIM’s stock, had proposed that RIM appoint one of the two co-founders to CEO and one to chairman, eliminating the joint role.

RIM's board responded by agreeing to an independent review of the company's leadership.  The conclusions of that review -- led by Ms. Stymiest -- will be delivered on Jan. 31.  If she indeed suggests the appointment of an independent Chairperson, it would be the first time in the company's history that either Mr. Balsillie or Lazaridis was not sitting in the role.

II. Hard to Argue the Move in the Face of Recent Woes

A small minority might feel such a move to be a power grab on Ms. Stymiest's part.  But most agree that some sort of executive shakeup is necessary.  The last few months have been pretty bad for RIM:
  • Oct. 10-13
    RIM experiences a major service outage, leaving customers without messaging.
  • Oct. 17
    RIM offers free premium apps as apology.
  • Oct. 18
    RIM unveils its great OS hope, "BBX", a new smartphone OS based on QNX.
  • Oct. 21
    News arrives that RIM has been sued for scooping the name from an American software company's trademarked and active product.
  • Nov. 25
    At the debut of the BlackBerry Bold 9790, RIM's employees offer a 50 percent discount to the first 1,000 customers in Jakarta, Indonesia, provoking a riot.  Many are injured and RIM employees are arrested.
  • Nov. 28
    Inebriated RIM employees, representing their company on business, start a physical fight with flight attendants, forcing the flight to be diverted to Vancouver, off its course to Beijing.  RIM apologies and fires the pair.
  • Nov. 30
    QNX's security is breached allow jailbreaks, and raising concerns about BBX
  • Dec. 2
    RIM announces it will miss its Q3 2012 revenue outlook due to poor QNX (PlayBook) tablet sales.
  • Dec. 7
    More flaws in QNX's security are revealed, hackers defeat RIM's feeble patching attempt.
  • Dec. 8
    RIM is barred from using the trademarked "BBX", is forced to rename operating system to "BlackBerry 10".
  • Dec. 14
    The NPD Group reports that RIM is fading fast in sales and only has an 8 percent market share in the U.S., down from its peak of almost 50 percent.
  • Dec. 16
    Earnings targets are missed and the next generation BlackBerry 10 operating system is delayed due ostensibly to RIM's lofty goals for LTE performance.
  • Dec. 23
    Canada's The Globe and Mail reports that RIM is preparing for a Jan. 11 hearing over whether it stole the trademarked acronym BBM from a Canadian broadcast advocacy who used the term for six decades.
RIM Stock
RIM's stock has plummeted in price since the start of 2011. [Image Source: Google Finance]

About the only good news for RIM during this time period was the launch of a handful of promising smartphone devices such as the aforementioned BlackBerry Bold 9790.  However, these devices failed to reverse the sharp decline in U.S. market share.

Perhaps the biggest disappointment for RIM is its relative flop in the tablets market.  Its Playbook launched in April, but critics did not take kindly to the absence of RIM's popular email and calendar clients.  Largely due to these missing features, most reviewers panned the device to varying degrees.  

Sales have followed in suit, dropping from initial estimates of several million units in 2011, to the most recent estimate of 800,000 units in 2011.  

III. RIM's Ponders How to Shake Up Management Without Worsening Plight

One issue facing RIM is how to change, when the management appears to be pushing to ride the status quo.  While the top-level executives did elaborate in a December conference call about an aggressive early 2012 advertising push, their approach on the device side is expected to remain the same -- slow and iterative.

For those hoping for a shift, the question becomes how to enact that change.

On the one hand it's hard to justify resorting to a more extreme move such as firing the co-founders from both the co-CEO and co-Chairman spots.  And given that the pair each holds 12 percent of RIM's outstanding stock it would be difficult to do so, as it would be almost impossible to kick them off the board entirely.  And the pair did accept a pay cut to $1 USD/year, which at least was a decent gesture of contrition with regards to the recent struggles.

On the other hand RIM's profits dropped by almost 25 percent over the last year.  That means that within a year or two more of seeing an accelerating backwards trend RIM could be in the red.  And with only $1.5B USD in cash on hand, it's unclear if RIM could survive a dip into the red.

Canadian cash
RIM does not appear to have enough cash to survive a prolonged dip into the red.
[Image Source: Google Images]

If RIM wishes to stay independent, it clearly must reverse its losses and find its way back to the path of success, which brought it a 50 percent smartphone market share back in 2006.  It's certainly not an inconceivable turn of events, but RIM certainly has its work cut out for it in the new year.

Source: Financial Post



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Queue the pacman wav file
By retrospooty on 1/3/2012 1:08:19 PM , Rating: 2
dawanawanawanawana-put-put.

It's about time though. Hopefully with new leadership thay can salvage something.




RE: Queue the pacman wav file
By dani31 on 1/3/2012 1:18:38 PM , Rating: 2
She doesn't look like making a phone I'd buy.


RE: Queue the pacman wav file
By retrospooty on 1/3/2012 1:27:43 PM , Rating: 2
LOL...

But seriously, QNX does have potential. It's biggest problem at this point is competition. Today we have Android 4 just starting to release on phones. I have Cyanogen9 in an early alpha build on my Droid3, and I can tell you, its already freegin awesome. By the time QNX is released, we will probably have Android 5 (and IOS6)... Or at least extremely well polished Android 4. QNX has potential, but it's leaving the gate several years late by Q4 2012.

With that said, RIMM does have money, and once they get these jokers out of the way, they have a chance at making something decent, if they can quickly get rid of the culture of fail that Balsilie and Lazardis have set up. Big mountain to climb.


RE: Queue the pacman wav file
By Mitch101 on 1/3/2012 1:36:51 PM , Rating: 5
With the way their future looks maybe HP will buy them. ;)


RE: Queue the pacman wav file
By retrospooty on 1/3/2012 2:24:05 PM , Rating: 2
LOL... A match made in heaven. I can see the headlines now. HP buys troubled phone maker RIMM and a massive explosion occured when one "un-management" met the other.


By Arsynic on 1/3/2012 2:49:10 PM , Rating: 2
...that wasn't that loyal to begin with. There's no such thing as a loyal consumer. All consumers are fickle. When you resist changing to conform to emerging trends out of fear of alienating your "loyal" customers, you end up shooting yourself in the foot. Emerging trends tend to become the status quo and you're left on an island with a few consumers who are itching to get on the first lifeboat out.

The only people I see with Blackberries are my parents, who apparently just read the memo from 2004 said "Blackberries are cool." The other group are the 50-something IT Managers who fail to keep up with trends and still think that BES is actually an advantage.




Bad News is Good News.
By drycrust3 on 1/3/2012 2:52:40 PM , Rating: 2
quote:
Its Playbook launched in April, but critics did not take kindly to the absence of RIM's popular email and calendar clients.

Legend has it that Bill Gates refused to accept an email from his staff unless it had bad news in it, and it had to be new bad news and not just a regurgitation of old bad news.
No one likes bad news, but looking at a lot of the problems Blackberry have faced, like being sued for using trademarks that belong to other companies, or trying to sell a product in a competitive market without the primary "hook", and it starts to look pretty obvious that the senior management are just listening to the good news, which is bad news.
It stands to reason the missing "popular email and calendar clients" was noticed by the company sales people, and they would have known that this was a "hook" in a highly competitive market, so the responsibility for not listening to the sales people goes back to the senior management and the culture they have created.
What Blackberry needs to do is what Bill Gates did: create the culture that bad news is good news.




Really In Motion
By optimuscream on 1/4/2012 3:45:51 AM , Rating: 2
Not to be harsh .. be Research In Motion is Really In Motion right now .. :D




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