RIM Co-CEOs Get 6 Months to Prove Themselves
Research in Motion’s co-CEOs have six months to prove the effectiveness of their shared roles, as the Blackberry maker works toward answering shareholders’ calls for changes management.
Investors last week called for the Waterloo, Ontario-based company to vote on splitting the roles of co-CEOs Jim Balsillie and Mike Lazaridis. Shareholders postponed the vote to give the joint-management concept a chance at generating business, particularly overseas.
“We wanted to give them a chance to prove that there is an actual business necessity,” said Jennifer Coulson, manager of corporate engagement at Northwest & Ethical, a major investor.
Northwest started to question the dual roles in June, and the firm proposed Balsillie and Lazaridis split their jobs, claiming the combined CEO positions hurt RIM’s ability to compete against rivals, especially as its market share plunged amid challenges from Apple’s iOS and Google’s Android devices.
Hoping to preserve their co-leadership positions, Balsillie and Lazaridis requested a committee to determine if the company’s management needed changing.
Fellow investment firm Glass Lewis & Co., however, demanded a vote to change management at Tuesday’s shareholder meeting, even if a study was permitted.
Northwest & Ethical, which asked RIM to deliver a decision on the issue of co-CEO roles by January 31, plans to draft findings about the positions and reintroduce the matter at RIM’s annual meeting next year, if necessary.
Beyond discussion over management issues, shareholders expressed their overall frustration, claiming RIM let Apple and Google take over the mobile technology market without a fight, after it led the smartphone market for years.
Apple now holds 26 percent of the market and Google’s Android-powered devices lead with 38 percent. As a result, RIM’s stock took a 49 percent drop last quarter, marking the company’s worst three-month performance since 2002.
Furthermore, investors criticized RIM’s decision to keep details about its new line of QNX-based phones private.
In June, RIM said it may halt development on its BlackBerry PlayBook 2, choosing instead to focus on its “super-phones,” which will use the QNX system. RIM is banking on QNX to breathe new life into its smartphones, but The OS is the same platform powering the failing PlayBook. Developers stated they won’t develop for the OS until RIM proves it can be successful.
Lazaridis said a new touch screen BlackBerry Bold will come out this year, and it still plans to introduce a 4G version of its PlayBook this fall.
While shareholders are split on RIM’s future, some investors said they were reassured by the meeting, after Lazaridis and Balsillie spoke with confidence to their company.
Lazaridis and Balsillie admit the transition to QNX is taking longer than expected, but maintain RIM still has a profitable future and can once again be a powerhouse in the smartphone market. The pair’s contention that the dual CEO structure will serve as the best management framework going forward has won out, at least for the short term, but will likely be called into question again if the company fails to regain traction.
RIM Co-CEOs Get 6 Months to Prove Themselves originally appeared at Mobiledia on Thu Jul 14, 2011 11:33 am.
