RIM Loses Investor Confidence

by Matt Klassen on September 7, 2011

With the continued loss in market share to the likes of Android and Apple, with the ongoing exodus of key employees, and with its inability to innovate, several stockholders in Research in Motion have a message for the Waterloo company, “Sell while the value is high.”

The overriding concern for Canadian merchant bank Jaguar Financial Corporation, the principal voice behind the stockholder dissidence, is that RIM lacks both direction and leadership and should the release of its QNX-based smartphones in early 2012 not pan out, the company could quickly become relatively worthless acquisition fodder.

Therefore, in an effort to capitalize on its current market position, suggests Jaguar CEO Vic Alboini, RIM should consider selling or licensing its patent portfolio or selling the company itself should the right deal arise. The problem, of course, is that RIM is notoriously reactive, meaning that even if management is listening, it’s unlikely any corrective action will come in time.

Its been a tumultuous year so far for RIM, as the company has come under significant pressure from investors to change its strategic plan—or simply to make one—in the wake of the failure of many of its flagship devices, the loss of almost half its stock value, and the continued loss of market share to Apple and Google.

The Waterloo company, famous for its once innovative Blackberry, has seemed almost incapable of getting itself out of the veritable technological rut it currently finds itself in, a fact made all the worse by the company’s inept top-heavy management structure that continues to operate like a stubborn and petulant 10 year old child.

Earlier this summer investors, lead by the Northwest & Ethical Investments LP group, called for a separation of the roles of chairman and CEO, as both are currently shared by co-CEOs Jim Balsillie and Mike Lazaridis, to facilitate a much needed shakeup. In response, the company has tasked a team to investigate the notion and report back by early 2012. It is exactly this sort of bureaucratic inaction, however, that has Alboini crying for change, as by early 2012 it may already be too late to reverse RIM’s fading fortunes.

In fact, calling into question the RIM’s leadership, its products, its strategic plan, and its lack of innovation, it seems clear that Alboini is demanding wholesale changes to the company. “The status quo is not acceptable, “Alboini said in a statement, “The Company cannot sit still. It is time for transformational change. The Directors need to seize the reins to maximize shareholder value before more market value is lost.”

So can we expect to see some of these wholesale changes? Truthfully, I doubt it. I can’t remember a tech or telecom company in recent history being able to endure the sort of transition that Alboini is demanding and still coming out on the other side as a viable and stable competitor in the market.

In the end, it won’t really matter though. Although losing investor confidence is clearly one more step towards the inevitable demise of this company, it’s an indicator that I would wager eludes RIM’s management until it’s far too late.

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Written by: Matt Klassen. www.digitcom.ca. Follow TheTelecomBlog.com by: RSS, Twitter, Facebook, or YouTube.

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