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The news broke Sunday night that Jim Balsillie and Mike Laziridis have relinquished both of their co-crowns as co-CEOs and co-Chairmen, and will be replaced by former co-COO Thorsten Heins. Anyone co-confused yet? The change finally addresses the useless co-CEO and co-Chairmen structure that had drawn flak for years on end.
Musical board chairs
As expected, Barbara Stymiest will be taking the Chair spot, becoming the company's first independent Chair. The board is also seeing a new addition: Prem Watsa, CEO of Fairfax Financial Holdings, will become the company's 11th director, as Fairfax is one of RIM's largest shareholders. Lazaridis will become the board's vice-chair, and lead its new Innovation Committee, while Balsillie will simply remain a director.
Heins hails from Siemens, where he was previously chief technology officer, and has 27 years of telecommunications experience under his belt. He joined Research In Motion back in December 2007 as Senior VP for hardware engineering before becoming COO for product and sales as recently as August 2011.
Balsillie and Lazaridis had been grooming Heins as the next CEO for a while, as part of a succession plan they had "previously submitted to the Board." The pair had recommended implementing the plan, and after the board did its own homework, it unanimously voted Heins in.
Whose face are you saving?
The company was quick to point out that Balsillie and Laziridis were not ousted, but rather had both recommended the change in leadership, with Laziridis saying, "There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership. Jim and I went to the Board and told them that we thought that time was now."
On top of that, Balsillie even said the change had nothing to do with mounting investor discontent or the fact that shares lost more than three quarters of their value last year, adding, "It was not a reaction to that."
Sorry, Balsillie, but that's a pretty poor attempt at saving face, since it implies that you're oblivious to the justifiable reasons why shareholders have been dumping shares en masse as BlackBerrys get clobbered by Apple's (Nasdaq: AAPL ) iOS and Google's (Nasdaq: GOOG ) Android, whose smartphone market shares now stand at 44.5% and 46.9%, respectively, as RIM's has shrunk to 4.5%. Either that or you're fully cognizant of why RIM is a wreck and voluntarily choosing to ignore shareholders in order to do your own thing, which coincidentally is what they've been demanding. Pick your poison, Balsillie.
When I first saw the news, I immediately thought RIM would rally on the idea of getting some fresh blood at the top. Since some type of shakeup was clearly coming, I had even ended my underperform CAPScall on the expectation that shares would jump upon the announcement. How are shares doing on their first day of new leadership? Down almost 8% as of this writing.
In his first day in office, Heins is already disappointing shareholders as he has voiced his satisfaction with the status quo that Balsillie and Lazaridis had already defined. During the conference call discussing his appointment, Heins said, "I don't think that there is some drastic change needed." He's also not looking to break up or sell the company, or pursue any fundamental strategic shifts, instead going along with the plan that his co-predecessors had set into motion.
The move could also be construed as aiming to preserve countenance, as investors can now blame Heins once Research In Motion's strategy inevitably continues to fail, instead of the duo who hatched the scheme. It's like a car barreling full speed towards a cliff, when the two drunk drivers sitting in each other's laps at the wheel decide to jettison themselves, leaving the guy that's riding shotgun to hastily scoot over and inherit the doom. When the cops arrive at the scene, Heins will be the man blamed for the mishap.
Set the controls for the heart of the sun
Research In Motion will continue to bet its future on the PlayBook and BlackBerry 10 operating system. Stymiest and the rest of the board are also in full support of the status quo, crushing investors' dreams of a major strategic change that could revitalize RIM and stop the bleeding. Heins said he would consider licensing BlackBerry 10 to other vendors if it proves to be a winner.
The company acknowledged it was exploring this possibility but would only ponder it "on a case-by-case basis" once other companies expressed interest. Licensing is one of RIM's better chances of cutting its losses (albeit still not a good one), but it would need to pursue it aggressively instead of waiting for OEMs to come to RIM. OEMs already have their hands full with Android and Microsoft (Nasdaq: MSFT ) Windows Phone 7, which may even take RIM's spot in the coming years.
When I had ended my underperform CAPScall, I was taking a wait-and-see approach, and even said "shares may find themselves back on my scorecard next to a big red thumb." Well, now that I see that the shakeup isn't going to result in any meaningful game plan, welcome back to my scorecard, RIM. Get cozy sitting next to that red thumb, since it looks like you two are a match made in heaven.
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