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BlackBerry maker RIM: Same old same old

by Olaf de Senerpont Domis | Published January 23, 2012 at 3:30 PM

A long-awaited management shake-up at Research In Motion Ltd. finally arrived with the resignation of the smartphone maker's co-CEOs, but the move was not enough to satisfy disgruntled investors Monday, Jan. 23.

Shares of the troubled maker of the BlackBerry tumbled about 7%, to $15.82, on news, announced Sunday evening, of the resignations of co-chiefs Jim Balsillie and Mike Lazaridis. The person chosen to fill the CEO role, Thorsten Heins, a RIM chief operating officer who oversees products, sales and engineering, elicited worries from analysts that the company was in for more of the same. Heins, 54, joined RIM in 2007 after serving as chief technology officer of Siemens AG.

That the company promoted the head of products explains part of the market's reaction. It's old news that RIM is getting kicked around by Apple Inc.'s iPhone and the wide range of Android-powered phones. There has also been a tepid competitive response and a chain of uninspired new product launches. Over the past eight quarters, RIM's smartphone market share has dropped from 20% to 12%, Morningstar Inc. reports.

Investors have been waiting a long time for a sale of the company, or, at least, a major change in strategy, and the appointment of Heins, at first blush, isn't it. Bank of America Merrill Lynch analyst Tal Liani argues in a research note Monday that the company needs to radically alter its R&D strategy, but any path to recover market share losses will entail a "steep uphill climb."

"While we view the news as a positive first step toward implementing long overdue changes, we are unclear as to what course of action the incoming CEO will take in order to stem share losses facing RIM," Liani writes.

Heins, during a conference call with analysts and in media interviews Monday, didn't tip his hand much, though his words didn't promise wholesale change. Rather, it appears that for now the new RIM chief plans to stick to the struggling handset maker's current strategy.

"It's going to be continuity, but it's not going to be a standstill," Heins told The Wall Street Journal. Certainly, a new CEO deserves a honeymoon period to get on his or her feet, but at a company such as RIM, whose stock price lost more than 75% of its value in 2011, it's a safe bet that "continuity" is not something investors want.

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BlackBerry maker RIM: Same old same old

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Olaf de Senerpont Domis

Bureau chief, West Coast; Editor, venture capital

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