New RIM boss: no need for drastic change
The new CEO of Research In Motion has dismissed talk of drastic change at the BlackBerry maker, a declaration seized on by impatient investors who say Thorsten Heins has only 12 to 18 months to turn RIM around.
Takeover talk, swirling around RIM for months, picked up steam as Heins took the helm at a once-dominant smartphone company that now struggles to compete. But RIM’s shares tumbled more than 8% as investors wondered whether Heins could reverse RIM’s decline.
“I don’t think that there is some drastic change needed. We are evolving… but this is not a seismic change,” said Heins, who joined RIM in 2007 and previously served as a chief operating officer.
People may have been a little disheartened that he was defending the current RIM strategy
RIM’s co-CEOs Mike Lazaridis and Jim Balsillie, the men who engineered RIM’s rise, resigned over the weekend after intense investor pressure. Their presence had been seen as a big obstacle to a possible sale of the company, although Heins insisted that was not an option he was considering.
Shareholders and analysts have grown impatient in recent months and calls for Lazaridis and Balsillie to step aside had reached a crescendo. RIM has lost market share and market value after being comprehensively outplayed by Apple and Google.
“If Thorsten really believes that there are no changes to be made, he will be gone within 15 to 18 months. He will be a transitional CEO and this will be a transitional board,” said Jaguar CEO Vic Alboini, who leads an informal group of 16 RIM shareholders calling for a radical restructuring. The group holds a little less than 10 percent of RIM’s stock.
Lazaridis and Balsillie – two of RIM’s three largest shareholders with more than 5% each – will remain board members, while Lazaridis will also head a newly created innovation committee. Their new roles suggest continuity was a goal in the transition.
Critics have called for a new leader who can rejuvenate both the design and operational sides of the business, or prepare it for sale to one of a raft of rumored buyers.
Heins, a former Siemens AG executive, said during a conference call on Monday that he would hone rather than abandon current strategy at RIM, which after years of massive growth needed to start operating like a mature business, not a startup.
The new CEO, who scored his last major promotion as RIM was shedding some 2,000 jobs last June, said no further job cuts were currently planned and that with RIM’s $1.5 billion in cash he had no qualms in spending on the right projects.
“If I have a great strategic project or a good business case I can go to the board anytime and ask for approval for additional investment and the money’s in the bank to do this,” he said.
Analysts were cautious. “People may have been a little disheartened that he was defending the current RIM strategy,” said Morgan Stanley analyst Ehud Gelblum. “I think (investors) might have wanted to hear a mea culpa.”
“People would have been happier hearing ‘we are on the wrong path’. We didn’t hear a lot of talk about change.”
Jaguar’s Alboini criticised the retention of Balsillie and Lazaridis on RIM’s board and called for several other board members to step down before RIM’s mid-year annual meeting.
“If we’re wrong, prove us wrong,” Alboini said in an interview, referring to the group of shareholders who support his view. “This group is not going anywhere. This is just putting RIM in a position where it might be able to get back into the game. It’s early days.”
Barbara Stymiest, a former banking and exchange executive, will replace Lazaridis and Balsillie as the chair of the board. Stymiest, a RIM board member for five years, is also viewed as an insider tied to the old regime.