Carl Icahn: RIM’s Saviour or Prophet of Doom?

by Matt Klassen on September 28, 2011

Carl Icahn

Shares in the struggling Research in Motion (RIM) surged more than 6 percent yesterday over rumours that the Blackberry maker may have found its white knight, a saviour in times of ongoing financial struggles and market ambivalence.

According to Reuters, billionaire activist investor Carl Icahn is said to have bought a stake in the company, rumours that if proven true could go a long ways to helping decide RIM’s eventual fate.

But what does this mean for RIM? Should Icahn indeed buy into the company, chances are that he would push for a seat on the board, influencing the company to move in directions that would “unlock value” for shareholders, directions that would likely mean management shifts, product shifts, or the complete selloff of the company. Perhaps RIM’s saviour is actually a wolf in sheep’s clothing.

As a company, RIM has attracted a great deal of criticism of late over its lack of innovation, its inability to garner new market share, and its inept top heavy management team. The board, for its part, has taken some heat from shareholders and market analysts, many of whom feel that the board is too feeble to initiate the changes needed to stay competitive in both the smartphone and tablet markets.

It is for those shareholders and analysts that the rumoured entrance of Carl Icahn comes as welcome news, less so for people who actually work at RIM or people still interested in the company’s Blackberry products. Icahn is known in the business world for his aggressive stance towards unlocking value in companies in an effort to make shareholders money, something I don’t need to say makes shareholders of RIM very happy.

Unfortunately, Icahn’s strategies often times include radical restructuring, and one need only to look at Motorola to see the results. As a key investor in Motorola, Icahn pushed hard for the company to split into two separate entities, which it subsequently did, and then continued to push Motorola Mobility, the company’s mobile handset offshoot, to selloff its patents, which it did when it was acquired by Google earlier this summer.

But this raises the question, is what’s good for the shareholders always good for the company? There’s little question that licensing its Blackberry OS or selling off certain parts of the company or selling the entire company altogether would generate significant returns for the company’s many investors, but is that really what’s best for RIM?

In my mind, RIM would be better served by a revamped management team that had dreams for innovating the stagnant Blackberry line, a vision for how to make RIM relevant again, and the skills to lead the company into a competitive tomorrow. Although RIM has certainly had its struggles of late, the company is still a long ways off from the economic point of no return.

So while we wait for confirmation of the rumour that Carl Icahn has purchased a significant stake in the Waterloo company, I have no doubt that some are hoping the speculation is proved true, while others are praying its nothing more than idle talk.

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

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{ 2 comments… read them below or add one }

telecom audit September 28, 2011 at 1:25 pm

I think it’s a good move for RIM.

Dubeayi O October 10, 2011 at 2:53 pm

Great article. I particularly agree that RIM is still a very long way off the point of no economic return. This rumour may be good for the shareholders, but worrying for the company.

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