Research In Motion may have removed Jim Balsillie and Mike Lazaridis from the top of the company totem pole, but investors haven’t changed their minds about the Waterloo company’s fortunes. While it certainly would be optimistic to consider corporate fortunes to have shifted immediately following the announcement of COO Thorsten Heins’ promotion to chief executive officer, seeing the company lose about $1 billion in market value over the last two days has to come as a bit of a shock.
Shares in the company plunged nine percent on Monday and another 3.2 percent today to land at $15.17 in Toronto. Trading was up slightly before markets opened on Monday, mind you, but the upswing reversed once investors got wind of the fact that Heins planned on keeping things “business as usual.”
“The words they heard from the incoming CEO were not exactly reassuring,” Paul Taylor said, chief investment officer for BMO Harris Private Banking. “It seemed to imply a lack of recognition that broader change would be a good thing and they didn’t necessarily need a plan to make that change, but a plan to get a plan.”
Some of Tuesday’s trouble could be chalked up to a relatively weak day for markets overall, but it’s hard to ignore the fact that the investors still aren’t confident in RIM’s direction.
The trouble with late product launches and general instability has to be reversed in order for wholesale market change to take place, of course, but that’s not something that can be done overnight.
“It’s unclear to what extent the new CEO will be able to materially impact the vision and direction of the company in light of the rapidly changing competitive conditions,” RBC Capital Markets analyst Mike Abramsky wrote in a note to clients. ”We remain concerned RIM’s window is narrowing to pursue other strategic options should its plans prove less than successful.”
Some are also suggesting that Balsillie and Lazaridis still have too much influence with the company as they remain as directors.
“You’ve got the two former co-CEOs sitting elbow to elbow to Thorsten [Heins], so how is Thorsten going to come up with fresh thinking, creative ideas and paint his own vision when he’s got the history and legacy sitting right beside him?” said Vic Alboini, chief executive of Canadian merchant bank Jaguar Financial Corp.
RIM remains a clear example of the collapsing Canadian tech scene. Once worth over $70 billion, the company now sits at a stock market value of around $8 billion.