Can RIM Save the BlackBerry Bush?

Black clouds are hovering over the BlackBerry bushes.

Research In Motion (Nasdaq: RIMM  ) , which designs the enterprise-focused smartphones, had its guts trampled on in a public display yesterday as mobile blog Boy Genius Report published an open letter from a purported high-level RIM executive. BGR then followed up with two more disgruntled insider missives from the rank-and-file troops.

At the same time, activist investors wanted RIM to take a long, hard look at its dual-CEO, dual-chairman structure and adopt a less convoluted model. I happen to agree with that idea.

The many charges leveled against the Canadians largely boil down to a handful of key concepts:

  • Enormous bureaucracy and piles of red tape are …
  • Defending staid and outdated business processes, which causes …
  • Halted innovation and badly slipping project delivery dates, so …
  • That's why Apple (Nasdaq: AAPL  ) and Google (Nasdaq: GOOG  ) are running circles around RIM.

Attempting to defuse the ticking PR bomb, RIM agreed to think about the management structure and responded to the open letter on its official blog. After noting that a blog post from an anonymous source might not be real (in an unsigned blog post of its own -- oh, the irony!), RIM says that "it is fair to say that the senior management team at RIM is nonetheless fully aware of and aggressively addressing both the company’s challenges and its opportunities."

But that response only serves to legitimize the complaints, and it also sounds petulant: We're big! We're growing! Of course we have to streamline things after five years of huge growth!

Even the agreement to consider a new management structure is less than a total capitulation. A committee will offer a recommendation by January, and then the board gets another month to take action -- or reject the committee's recommendations.

So something might happen in February, but don't hold your breath for big changes. After all, co-CEOs and co-Chairmen Jim Balsillie and Mike Lazaridis, who also make up half of RIM's Strategic Planning Committee, have been quite public about their fondness for the current structure.

Change from within isn't easy. After publishing his famed "Peanut Butter Manifesto" to incite changes at Yahoo! (Nasdaq: YHOO  ) , Brad Garlinghouse soon found himself behind a new desk at AOL (NYSE: AOL  ) . And the company he left behind didn't seem to take his advice to heart. Yahoo! shares are about 40% cheaper since that manifesto appeared.

Will RIM take better heed of these warnings? The only way to find out is to keep a close eye on the company. Add RIM to your Foolish watchlist, and then sit back and wait for signs of improvement. Just don't be too surprised if the needed change never comes.

Fool contributor Anders Bylund owns shares of Google, but he holds no other position in any company mentioned. Check out his holdings and a short bio. The Motley Fool owns shares of Google, Yahoo!, and Apple. Motley Fool newsletter services have recommended buying shares of Google, Yahoo!, and Apple and creating a bull call spread position in Apple. Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (6) | Recommend This Article (6)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On July 02, 2011, at 12:41 PM, etgh wrote:

    Take out the specifics around the "open letter" and this article could be a copy of hundreds of other articles posted over the past three years.

    The "employee" letter lays out some specific issues and potential strategies and all in all, I think its well written. However, I dare anyone who works for a large company to deny that the same things aren't going on in their own companies ! I have worked for several large (US) tech companies and all of what this employee reports, I have experienced as an individual contributor, all the way up to senior management.

    RIM's response was thoughtful and measured. The basic facts they included are true, high growth equals instability at all levels. And yes, poor performing corporate politicians due get promoted at the expense of good people. Again this not unique to RIM.

    The facts are; RIM is still making money, has no debt, a fat bank account, sells more and more handsets each quarter and has a great future product story. It's true they are currently in a product vacuum, but this will be over in a matter of days/weeks.

    No one can operate effectively under the intense microscope RIM is under. Any sign of weakness or misstep is publicly dissected, stories made up and article after article is posted predicting RIM's doom. If RIM does go under, it will not be because of poor products, but because of the ceaseless hounding and negative marketing.

  • Report this Comment On July 02, 2011, at 5:20 PM, etgh wrote:

    Now InfoThatHelp, did we forget to take our meds today ? Go to the medicine chest and get your pills and take a couple.

    I'm sure the world will look much clearer once they kick in......

  • Report this Comment On July 03, 2011, at 1:49 AM, Rolandos1 wrote:

    Answering to your comments about RIMM. How could you be so critical of a company with almost 15 billion in sales 3 billion in profits which has undergone massive growth? You are part of a bandwagon who probably dogged out a $7 stock with the code APPL a few years ago and you are probably part of the same group who are calling APPL the best company that ever was! What did appe do a few years ago? Brought in the New-Old CEO restructured so its brick and morter force could serve its strategy and simply conquered the world. Maybe RIMM will not conquer the world but it is a smart profitable company built and ran by smart people who saw a need in the market before anyone else did and went for it. I advise you to be more objective instead of simply voicing opinions before you lose all credibility.

  • Report this Comment On July 03, 2011, at 10:11 PM, mhonarvar wrote:

    every RIM article is dominated with post after post by "infothathelp"...we get it....you don't like RIM...your very clever for figuring out that they are'nt doing very well...now tell me something I don't already know.

  • Report this Comment On July 04, 2011, at 5:00 AM, ejohn90472 wrote:

    I have been a large RIMM shareholder for close to 3 years and management has proven to be extremely slow to respond to the changing industry. Management is tooting their horn claiming new RIMM products (Playbook as example) will be better than APPLE & GOOGLE products. They have many of us shareholders losing faith in their ability to lead with vision. I tried to hang in there but these 2 CEO's (Mike/Jim) have convinced me they are out of touch with reality and need to be replaced. An individual like Steve Jobs would be a great asset in turning RIMM around in my view. Change is desperately needed now rather than later.

  • Report this Comment On September 12, 2011, at 10:31 PM, saintsjersey wrote:

    I visited this page first time and found it Very Good Job of acknowledgment and a marvelous source of info………Thanks Admin!

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