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    Home»In-depth»What RIM shake-up means for bruised BlackBerry

    What RIM shake-up means for bruised BlackBerry

    In-depth By Editor23 January 2012
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    Jim Balsillie and Mike Lazaridis

    The resignations of Jim Balsillie and Mike Lazaridis, co-CEOs of Research in Motion (RIM), are surely intended to restore faith in the BlackBerry brand and to appease shareholders angered by a 75% collapse in the company’s share price in the past year. But analysts doubt whether the resignations are more than a token gesture or whether they will do anything to arrest the smartphone maker’s decline.

    World Wide Worx MD Arthur Goldstuck says the resignation of the two men is a case of them “bowing to the inevitable”. He says if one looks at the wording of the press release that accompanied the announcement, it’s clear the pair remain in control at RIM.

    “They’ve managed the transition and the positioning of it very carefully,” says Goldstuck. “Lazaridis has stressed that the RIM roadmap that he and Balsillie outlined remains unchanged.”

    In addition, the pair has given the top job to former Siemens executive Thorsten Heins, who has reported to them for more than four years. Goldstuck says this suggests there is “no intention to rock the boat in any way”.

    In RIM’s media release, Balsillie stresses that he remains a major shareholder, and Lazaridis went as far as saying he intends to acquire more shares in the open market. Goldstuck says this is a “very clear message of intent” that the pair will “retain the final say over what happens in, and to, RIM”.

    Most alarming for shareholders and BlackBerry users is what Goldstuck calls the “startling lack of urgency in the announcement”.

    “They’re trying to manage the message around the transition and also want to manage their own positions in the transition,” he says.

    “RIM can’t afford to keep doing business as usual but that seems to be the message. By sticking to the previously decreed roadmap, they’re suggesting they needn’t change the business. And that’s wrong.”

    According to Goldstuck, RIM’s success in developing markets is being used to mask the effect of its global decline. “RIM needs to arrest the slide and nothing in the announcement suggests it’s found a way to do that.”

    Birgitta Cederstrom, a business unit leader at Frost & Sullivan, says RIM is “a company in trouble”. She says it is in turmoil and suggests replacing the CEOs could have come “too late” to matter.

    She says the announcement was an opportunity to talk about a new strategic vision for the company but that by sticking to its existing plans RIM is sending the wrong signal to the market.

    “They should have spoken about a revised roadmap and restructuring,” Cederstrom says. “RIM needs a shakeup and a new message to market. I can’t see that in the announcement.”

    There’s been a great deal of speculation in recent months that RIM could become an acquisition target and Cederstrom says that with the co-CEOs no longer running the company (at least on paper) that could now happen. “I see a direct connection,” she says.

    By stepping down, Lazaridis and Balsillie absolve themselves of the responsibility of being the ones who eventually sell the company, she adds. “Our analyst team seems to think the possibility of a sale is likely,” says Cederstrom.

    She says that although RIM is still enjoying good growth and consumer loyalty in emerging markets, this is likely to change as these markets mature.

    Shareholders and analysts will be watching RIM closely when it releases its long-awaited second-generation PlayBook, expected in the next few weeks. It will have to shake off the criticism that dogged its first foray into the tablet market. The original PlayBook, meant to compete with Apple’s market-leading iPad, failed to ignite much interest among consumers.

    Though critics liked the first PlayBook’s hardware, its software, lack of a native e-mail client and dependence on a BlackBerry handset for full functionality put off end users.

    Goldstuck says the release of the second PlayBook will represent a milestone for the Canadian company and will be an “important indication of where the platform and hardware are going”. He says the device is crucial if RIM is to restore its reputation for “thinking clever”.

    Shortly after the US stock market opened on Monday, RIM’s share was trading down by almost 7%. In the past year, it’s lost almost 75% of its value.  — Craig Wilson, TechCentral

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