BlackBerry Maker RIM Faces Restless Shareholders
BlackBerry Maker RIM Faces Restless Shareholders
Executives with BlackBerry maker Research In Motion faced a skeptical audience at the companys annual shareholders meeting July 10, two weeks after CEO Thorsten Heins announced another delay in the release of the BlackBerry 10 platform, a $518 million quarterly operating loss and 5,000 job cuts.
In speaking to investors, Heins again extolled the virtues of the BlackBerry 10 platformwith the first devices now scheduled for release in the first quarter of 2013and the strategy under way at RIM to streamline the companys operations, including cutting $1 billion in expenses by the end of the fiscal year and looking for other ways to leverage RIMs assets, such as joint ventures with other companies and licensing BlackBerry technology to third parties.
It was similar to a message that Heins delivered June 28, when he announced the fiscal first-quarter results, the latest in a growing string of bad news for a company that has seen its position in the smartphone market wane significantly in the face of competition from Apples iPhones and the host of devices running on Googles Android operating system. Sales of BlackBerry phones fell 41 percent in the last quarter, and RIMs share of the U.S. market has fallen to 4 percent.
I am not satisfied with the performance of the company over the past year, said Heins, who was appointed president and CEO in January, replacing longtime co-CEOs Mike Lazaridis and Jim Balsillie. He noted the major changes that already have been made at the company, and promised there will be more to come.
Shareholders quickly showed their displeasure with RIMs performance, and took aim primarily at the board of directors. At the start of the meeting, investors elected 10 people to the board, including Heins and Lazaridis, who both were re-elected. However, investors withheld more than 19 percent of votes for Lazaridis, and almost 15 percent for Heins.
Investors also questioned the makeup of the board, with one asking Chairperson Barbara Stymiest whether the board planned to aggressively pursue new board members with strong technology experience, and another questioning why the board was made up of executives from North Americaand particularly Canadawhen the company is losing share in the region and its strengths are in other parts of the world.
Stymiest stressed that RIM was pleased with the makeup of the board, including the technological and global experience of its members. Those answers didnt satisfy all shareholders. One investor said he was extremely critical and extremely angry with the board, and that all the longtime members should not have been re-elected.
Why did they just let it get out of hand so badly and so much before they did anything about it? he asked.
Yet another investor took issue with Heins himself, and his pay package, noting that until coming to RIM, he had never been a CEO anywhere else. Heins noted that before coming to RIM in 2007, he oversaw several business units at Siemens Communications Group, including several that had more than $1 billion in business and one that was a turnaround job.
Despite the sharp criticism from investors, Heins and Stymiest reiterated their belief in the strategy now in place, in the new executives Heins has brought on board and on what BlackBerry 10 will do for the company once the devices hit the market. Heins said RIM had been hurt not only by the competition from Apple and Android device makers, but also by such trends as the bring-your-own-device (BYOD) phenomenon, with employees bringing iPhones and Android smartphones into the enterprise environment that RIM at one time had dominated.
CEO Heins, Chairperson Stymiest Reiterate Their Belief in RIMs Strategy
He said BlackBerry 10 would offer users a better product not only for the enterprise, but also for consumers. The first BlackBerry 10 phones will offer full touch-screen capabilities similar to other smartphones, though other devices with the traditional QWERTY keyboard will soon follow. In addition, Heins touted BlackBerry Balance, a technology that enables the phones to be used to access both personal and corporate data.
Heins also talked about how developers are embracing the platformRIM this month announced the 3 billionth download from the BlackBerry App World storeand the decision to open it up to third-party applications, an important factor when talking about the smartphone space. At the same time, he said, some partners that he had spoken with are actually pleased that the release date had been pushed back to early 2013, saying it will coincide with more Long-Term Evolution (LTE) 4G networks coming online.
He reiterated that the reason for the delay was the vast amount of new software code going into the platform. It is taking more time than expected to get everything set, Heins said. What consumers and businesses will get is a platform that will offer vast improvements over whats on the market now, he said.
It also will give wireless network providers another alternative to offer beyond iOS and Android, Heins said.
He noted that despite the problems from the last quarter, RIM still has $2.2 billion in cash and no debt, and its plan to cut $1 billion in expenses this yearnot only through the layoffs, but also with such moves as reducing the number of manufacturing sites from 10 to three and selling a corporate jetwill give it more financial flexibility.
Analysts are less optimistic about RIMs chances, with many noting that when BlackBerry 10 does arrive, it will come at a time when Apple is gearing up or iOS 6, Google is readying Android 4.1 Jelly Bean and Nokia is rolling out Windows-based devices.
The delay of the first BlackBerry 10 smartphones, however, is the death blow, Michael Finneran, president of dBrn Associates and an analyst, said in a blog post June 29. RIM's product line is simply not competitive. Even at its best, BlackBerry 10 would have challenges, as the initial devices were to be the first RIM smartphones without a keyboard, one of the features that had kept many of the remaining RIM fans loyal. With Apple poised to introduce the iPhone 5 later this year and an ongoing torrent of Android devices pouring onto the market, this is the worst of all failings.