Will RIM Live to See 2013?

In 2011, shares of BlackBerry maker Research In Motion (Nasdaq: RIMM  ) have fallen by -- please be seated, for your safety -- more than 75%. Yes, three-quarters of the market cap has evaporated in just 52 weeks. Counting back to all-time highs set in 2008, RIM is about one-tenth the market presence it once was.

As we head into 2012, RIM is facing some extreme challenges. If the Canadians can pull through, the bounce from today's depressed prices would be epic. Is that a realistic dream? Let's think about it together.

A quick fix, please!
Disgruntled investors are calling for deep changes to RIM's strategy, leadership, and corporate governance policies.

Activist investor firm Jaguar Financial is calling for co-CEOs and co-Chairmen Jim Balsillie and Mike Lazaridis to loosen their iron grip on the company. Jaguar wants the two board members best versed in corporate governance to whip up some changes, and also suggests that RIM should find a buyer -- either for the whole business or for just the handset division.

These ideas are not new. Earlier this year, Northwest & Ethical Investments put the CEO/chairman split and independent chairman moves up for a shareholder vote. But that vote was withdrawn when RIM agreed to launch a committee to study the governance structure. The committee report is due by the end of January, and the full board will then "publicly respond to the recommendations" within 30 days.

So in the fast-moving, volatile mobile industry, RIM is spending eight months to come up with a recommendation that may not be adopted in the end. Way to take firm action, eh? Yeah, I'm being sarcastic.

How will RIM process the report?
That committee report will be a good read. If the committee did its homework, we should see firm recommendations to have just one CEO, one chairman (preferably independent), and no single person or dynamic duo with dictatorial powers. A governance report commissioned by the Ontario Securities Commission in 2009 came to these conclusions, and it's also just common sense.

The impassive board's reaction to that bitter medicine will tell you all you need to know about RIM:

  • Take the hard-to-swallow pill like a good boy, and the company might make it after all. With more nimble and clear-eyed management and boardroom leadership in place, RIM would stop acting like a stubborn donkey. The company could then squeeze real value out of its BlackBerry brand and secure messaging services by forming partnerships and unloading dead wood like the handset division.
  • Or, Lazaridis and Balsillie could rebut, ignore, or otherwise discredit the report and carry on as before. Remember those OSC guidelines that were issued in 2009? They suggested one independent chairperson, more checks and balances on the powers of the co-CEOs (but didn't call for a single-CEO structure), and much more. RIM flat-out ignored the chairman recommendation, and Lazaridis and Balsillie don't seem restrained at all. If the Canadian SEC can't force RIM's hand, why would an internal committee have any more power? And the descent into madness and obsolescence continues.

What's next? (Caution: not for the squeamish)
Very dark days lie ahead unless RIM makes very drastic leadership changes. The current captains party like it's 2005, when the Apple (Nasdaq: AAPL  ) iPhone and Google (Nasdaq: GOOG  ) Android platforms were mere glimmers in their inventors' eyes. Those days are gone, and RIM has been slow to adapt. The PlayBook tablet was a bomb of Palm-like proportions; corporate managers are starting to replace the old BlackBerry hegemony with employee-owned iPhones and Androids. The time to act was yesterday.

The last chance to save the business without making any drastic changes would be if the QNX-based BlackBerry 10 platform is a smash hit. But that launch has been pushed into the back half of 2012, and some RIM insiders say that the new software just isn't any good. Don't bet the farm on this supposed savior, folks.

If RIM stays the course in classic Lazaridis and Balsillie fashion, I might write the company's obituary before next December. Maybe Hewlett-Packard wants to buy another floundering phone designer? Perhaps Google could use those BlackBerry-stamped patents as a shield in the never-ending patent wars. Amazon.com has already kicked the tires a bit. So did Microsoft and Nokia, considering a joint bid. I'm sure the BlackBerry brand can find a good home somewhere, if only management and the board of directors would let it.

It's hard to look away from this slow-motion wreckage. Add RIM to your watchlist to see what happens next. There are plenty of fine investments elsewhere in the mobile industry, though. Here are three mobile ideas from our top analysts, just to get you started.

Fool contributor Anders Bylund owns shares of Google but holds no other position in any of the companies mentioned. The Motley Fool owns shares of Microsoft, Google, Apple, and Amazon.com. Motley Fool newsletter services have recommended buying shares of Apple, Google, Microsoft, and Amazon.com, as well as creating bull call spread positions in Apple and Microsoft. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinion, but we all believe that considering a diverse range of insights makes us better investors. Check out Anders' holdings and bio, or follow him on Twitter and Google+. We have a disclosure policy.


Read/Post Comments (9) | Recommend This Article (3)

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 December 29, 2011, at 12:05 PM, etgh wrote:

    As a RIM investor, given the recent stock performance its hard to argue against a change in leadership.

    This is a company that still makes money and is growing its user base every quarter and yet its priced as if it's bleeding cash and fighting to survive.

    People believe that Blackberries don't have touch screens and can't surf the Internet. Yet even BGR agrees the Bold 9900 is one of, if not the best communication devices ever made.

    While I believe unsavory marketing practices have played a hand in causing this distortion of the truth, RIM's senior management has sat back and let these negative marketing attacks happen without lifting a finger.

  • Report this Comment On December 29, 2011, at 1:07 PM, drfool21 wrote:

    I would have to agree with you etgh.

    It is baffling to understand the stagnation with RIM management.

    If there was good reason for product delays, lack of innovation to keep up with competition and other mishaps the last couple years-- as a Blackberry user and investor, you would at least like to see some accountability from them explaining or confessing their faults. Then, if that would be the case, take the proper actions to atone for the mistakes.

    This arrogant behavior of the two Chiefs has got to change. Unless of course, they have some grand scheme planned all along to implement these delayed changes that will vault them back into contention.

    Gotta do something. And currently, what's being done is not good enough.

  • Report this Comment On December 29, 2011, at 2:35 PM, BR14 wrote:

    With due respect to current stock holders (I can only express sympathy), buying RIM stock has always been a massive gamble.

    Don't blame anyone but yourself. You might as well have laid the money as a sports bet.

    RIM certainly does have problems, but none that cannot be solved. And the company generates $20 billion a year revenue, with cash generated of $1 billiion.

    It really isn't doing that badly. The stock price has no relationship to corporate performance and is more a representation of market perception.

    A perception, at least among bloggers, that is driven by media outlets often with an axe to grind.

  • Report this Comment On December 29, 2011, at 2:56 PM, etgh wrote:

    .....Infooooo....take your meds, you're wandering into that magic land again.....

  • Report this Comment On December 29, 2011, at 5:06 PM, drfool21 wrote:

    BR14, your right. IT IS MARKET PERCEPTION THAT REFLECTS SHARE PRICE. That "market" just so happens to be first line of confidence (or lack thereof) in a company's stability and forward projection.

    The fact that RIM sales internationally, are doing well is fine... but its only a matter of time before they catch up to the interest and demand of the states' consumers and business users.

    RIM's entire future is hinging on BB10/QNX. They better bring it to the table or their done-- pain and simple (I meant to spell it that way). I have enjoyed RIM products for over 8 years now and am one of their biggest supporters but eventually, you have to call a duck a duck.

    Remember, you hear something once--It's a rumor. Twice--It's a possibility. Three times--It's truth & a pattern that needs serious attention!

  • Report this Comment On December 29, 2011, at 5:50 PM, inno1 wrote:

    RIM can survive. They have excellent individual contributors. However, the Managers, especially in Product Group, are horrible and totally incompetent. A good number of Managers (whether it is in Engineering or Marketing or any other Department) have been selected because one person knows the other. If RIM Board of Directors wake up and do their job and fire ALL Managers from to bottom (with absolutely no exception), especially that belongs to Product Group, then RIM can regain their glory. Ofcourse those two CEOs should be fired too.

  • Report this Comment On December 30, 2011, at 4:23 PM, Jojo91 wrote:

    @BlairCrow

    Calling your opinions "facts" doesn't make it so.

    1. No, they didn't. Technically IBM did, as they had the first "smartphone". RIM simply popularized it among businesses by making a business friendly phone. Just like Apple popularized it among the average user, by making a user friendly phone.

    2. Again WRONG. They didn't have a touchscreen at the time, and iOS is complete different than Blackberry OS.

    3. That's just not true. Apple was doing fine before the iPhone (remember they own the MP3 market, and Macs are becoming more popular). And if RIM disappeared it would only HELP Apple sales not hurt them.

    4. Completely baseless and ignorant comment. There is nothing to suggest RIM is planning some amazing product for 2012.

    5. Again, baseless and ignorant. All suggestions point to Apple's stock INCREASING, especially with the iPhone 5 coming next spring/summer.

    6. Pure opinion, and one that most will not agree with.

    7. Nobody knows that. RIM doesn't even seem sure about it. It's highly unlikely.

    8. Again an opinion that most would disagree with.

    If you're going to defend a company try getting at least some things right. If you like BBs go ahead and keep buying them, no need to spout ignorant dribble like this.

  • Report this Comment On December 30, 2011, at 11:34 PM, whodoi wrote:

    Back in June 2011

    they recommanded to buy APPLE

    their forecast was $600.00 +by year end

    over $10000.00 by 2014

    where does it stop

    ridiculous

    who to believe not to be fool by these analysists

    Anyway I will never do any banking on any phone except on my Blackberry Bold that I fully trust

    Don't like I Phone neither IPad these are toys for kids too many apps that are worhtless.

    How long will it last let's see how they do against samsung and androids company.

  • Report this Comment On March 18, 2012, at 5:00 PM, maxmz01 wrote:

    RIM has strange culture and self distruct political environment.

    In RIM if a new hired person figure out major problem and introduce efficient approach, both manager and his buddy group member will proof their wrong approach works. just like someone point out driving a car is right way, pushing a car is wrong way, then both manager and his buddy group member will hate you, and proof that 3 person can also move the car by pushing it. cheating email will be sent to some vice president, saying like: see, the car moving, pushing a car is a natural part of the process, in order to deny new hired contribution of introducing skill of drive a car, they have to deny merit of driving a car.

    It is very strange company culture and strange company political environment, it promote stealing and cheating skill. RIM's management may be a typical instance in MBA course.

    This culture deny or steal hardworking team members' contribution/innovation, generate strange political environment, destroy RIM.

    solve the problem, it will survive

Add your comment.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 1749999, ~/Articles/ArticleHandler.aspx, 11/27/2014 12:27:42 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...


Advertisement