Jim Balsillie and Mike Lazarides, the co-CEOs and co-chairmen of Canada's Research in Motion (RIM), maker of the BlackBerry, have finally bowed to the inevitable (and relentless investor pressure) and have resigned. However, they are not actually going anywhere. Both men will stay on with the company as board members whilst Mr. Lazarides will also be vice-chairman of the company and also the leader of a new layer of bureaucracy, the "innovation committee". Martyn Warwick reports.
RIM's fortunes have declined as Apple's iPhone and Google's Android OS have taken huge chunks of market share. As recently as 2009, RIM stood at Number 1 in Fortune's list of the world's 100 Fastest Growing Companies. It's been downhill ever since as RIM's value plummeted from US$70 billion then to just $8.9 billion now. Meanwhile, the company's market share in the all-important US market collapsed from 44 per cent in 2009 to 10 per cent at the end of 2011. Many analysts believe that RIM's market share will suffer similar declines in other parts of the world over the course of 2012.
For years BlackBerry devices, with their innovative push email capabilities, were the device of choice of aspiring executives the world over, many of whom became so dependent on the handsets that, day or night, they never turned them off and became what the sections of the press called "CrackBerry addicts."
However, when the iPhone was launched, RIM became the corporate equivalent of a rabbit caught in the headlights, as, paralysed with fear and indecision, it struggled to come up with a credible competitor. It was the same story with Android devices. RIM was also very tardy in launching a tablet to rival the iPad and when, far too late, it did get its act together, its much-vaunted PlayBook device came without email - the very capability that had made the BlackBerry handsets so indispensable for so long. The PlayBook debacle (they were panned by critics and are still selling at a huge and debilitating discount) was the straw that broke the investor's backs.
As sales and market share continued to fall, rumours spread that RIM was to be sold, in whole or in part, but it couldn't be put on the market with perceived failures Balsillie and Lazarides still at the helm.
Obviously there have been lots of meetings in non smoke-filled rooms in Waterloo, Ontarion recent weeks and it is interesting to observe that the departure of the two co-CEOs/Chairmen was engineered to take place over the weekend when the markets were closed and the spin doctors would have us believe that the long-overdue change was all part of a cunning plan to ensure an orderly change from the old regime to a new on. Strange then that it bears all the hallmarks of a panic-striken secretive rush.
In a statement issued late on Sunday, Mike Lazarides says, "There comes a time in the growth of every successful company when the founders recognise 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."
Really? Investors and analysts have been demanding a change at the top for months on end now and the two men had, hitherto, resolutely declined to move on. There's more to this than meets the eye and no doubt things will become clearer in the days to come.
The former Siemens executive, Thorsten Heins, who joined RIM in 2007, becomes the new chCEO (a close examination of the events shows that he actually took over the job on Saturday morning) while Barbara Stymiest, one of RIM's independent board members becomes an allegedly independent chairperson - except of course she'll have Mike lazarides whispering sweet nothings into her ear all the time. Mr. Lazarides has made it very plain that he intends in his new role as vice-chairman to be very pro-active. No doubt "advice" will be freely and frequently given.
For his part, Thorsten Heins says his most pressing task is to rapidly increase the sales of the BlackBerry 7 touchscreen devices, deliver the dalayed software upgrade for the loss-making PlayBook and prepare the ground for the delayed launch of the BlackBerry 10 handsets that should have been on the market last year. The new CEO is also looking for Chief Marketing Officer, and (who knows?) they might even find one; heaven knows they need one.
Mike Lazarides started RIM back in 1985 and was soon joined by Jim Balsillie and both men remain major shareholders with more more than 5 per cent of RIM's stocks each. What's more, Mr. Lazarides says he is so confident in the company's future that he will buy a further $50 million worth of shares. But then he is a very, very rich man.
Reaction to the news is still coming in as TelecomTV goes to press but Vic Alboini, the chairman and CEO of Jaguar Financial, one of the investors that has been demanding change at the top of the company is of the opinion that more will be needed. "It's a good first step, but it doesn't go far enough".
He is also concerned that both Balsillie and Lazarides remain in positions of power on the board and off it when they should have left the company altogether and is scathing about Stymiest being made chairperson. He said, "She's been on that board for four years. She's been part of the problem."
And that seems to be the general impression and criticism. It's definitely too little and it might be too late. The changes are largely cosmetic and partial, no-one has been brought in from outside who would see RIM in a different light and push through desperately needed changes as quickly as possible and so it will continue on the rails on which it has already run into trouble.
please sign in to rate this article