RIM co-CEOs out; Shares sink on poor replacement choice

Krystal Peak · January 23, 2012 · Short URL: https://vator.tv/n/23bc

Balsillie, Lazaridis resign in the midst of free-falling returns for the wireless phone tech company


The highly-competitive cellphone industry offers no room for business missteps. After two decades of leading Research in Motion, the company's co-CEOs are stepping down in a serious management shuffle for the fledgling phone tech company.

Jim Balsillie and Mike Lazaridis have been at the helm of the Canadian phone company that had previously been the name to trust in business phone services but has seen a steep decline in usership and adoption over the last decade.

RIM has suffered greatly in the smartphone market as Apple and Google have brought more sleek hardware and software. 

The previous COO of RIM, Thorsten Heins, will replace the two previous CEOs now that both have simultaneously resigned in hopes of getting the company back on track. 

Shares of RIM dropped nearly 7% on the news, as some shareholders don't expect the new CEO to be any better.

“There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership," Lazardis said in a statement Sunday evening. "With BlackBerry 7 now out, PlayBook 2.0 shipping in February and BlackBerry 10 expected to ship later this year, the company is entering a new phase, and we felt it was time for a new leader to take it through that phase and beyond.”

Balsillie and Lazaridis will remain on the company board.

A little RIM history

It was nearly 15 years ago when RIM entered the wireless communication world with its first pager and then quickly introduced the first Blackberry, offering email connectivity on a phone -- innovative stuff for the white-collar worker. At the time, the device was very pricey but soon became an executive must-have.

But RIM suffered from loss of motivation when it lacked healthy competition in the marketplace -- until Apple came out swinging. 

Several companies had tried to push Blackberry out of the market -- Good, Palm and Treo -- but Blackberry held onto the lion's share of business users because of the loyalty to brand and the sleeker hardware design.

As Apple and Google entered the market, RIM was slow to bring in faster and sleeker software, let alone adapt to the new touch-screen design. Most blamed the leadership for the lack of nimbleness.

As iPhone and Android devices sparked a battle between one another and sparked the birth of a whole "app" ecosphere, RIM's stock price lost more than three-quarters of its value in 2011. And throughout the year, the company suffered several worldwide BlackBerry outages that only further illustrated the problems the company was suffering from within

The company, did try to compete in the mobile tablet market as well. But, as with all of its efforts, its Playbook was no match for Kindles or iPads.  

Between mid-2008, when the first geo-enabled iPhone launched, and June 2011, RIM’s shareholders lost almost $70 billion — or 82% of the company’s value. RIM is now worth $8 billion -- a drop in the bucket compared to Apple’s $400+ billion. 

RIM’s slow but imminent demise is concomitant with both Android and Apple’s rising market shares. As of December, ComScore's data on Original Equipment Manufacturer (OEM) mobile market share put Samsung at the top with 25.6% and LG and Motorola in the No. 2 and No. 3 spot, with 20.5% and 13.7% respectively. Apple came in at No. 4, with 11.2 % and a significant +1.4 difference from the previous month, the highest gain of the top contenders. RIM lives at a distant fifth place spot with 6.5% and -0.6 point change over the month of November.

 In December, shareholders got another shot to the gut when the third quarter earning report showed another disappointing return and both CEOs announced that they would each restructure their salaries to match the Steve Job's model of receiving a mere $1 a year -- but it appeared to be too little and too late to keep investors appeased. 

Lazardis founded RIM back in 1984 and appointed Balsillie as co-CEO several years later. Balsille alsostepped down from his role as Chairman in 2007. 

“Thorsten has demonstrated throughout his tenure at RIM that he has the right mix of leadership, relevant industry experience and skills to take the company forward," Lazardis said in a statement. "We have been impressed with his operational skills at both RIM and Siemens.  I am so confident in RIM’s future that I intend to purchase an additional $50 million of the company’s shares, as permitted, in the open market.”

The new CEO, Heins joined RIM four years ago from Siemens AG, where he was the CTO.

Heins stated that he will "continue to focus both on the the short-term and long-term growth" in his new role and the the company is "in the process of recruiting a new Chief Marketing Officer to work closely with our product and sales teams to deliver the most compelling products and services."

And RIM's Director Barbara Stymiest will take over as chairman of the board. 

It may be a swiftly executed move for the company -- just too late. In coming months, investors will get an idea if a change in leadership will be enough to resurrect this company or if the fate is investable and that RIM will be another casualty in the smartphone evolution. 


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