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New RIM CEO pledges consumer focus
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CBC News
RIM's new CEO says he wants the company to focus more on the consumer market, after taking over the reins for Research In Motion from co-founders Jim Balsillie and Mike Lazaridis.
Thorsten Heins spoke to investors about his goals during a conference call Monday morning, following his appointment as sole chief executive of the Waterloo, Ont.-based technology giant.
"I want to focus more on consumers and consumer marketing," Heins said. "I think that is the major change for us."
Heins ascended to the top job over the weekend after a press release announced that Lazaridis and Balsillie, who built what was at one point Canada's largest company, were stepping down, effective immediately.
Heins, the company's COO, was named chief executive officer on the advice of the co-founders.
Will the change be enough to turn RIM around? Have your say.
"There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership," Lazaridis said. "Jim and I went to the board and told them that we thought that time was now."
Investors appeared underwhelmed by the move, as they pushed RIM's Frankfurt-listed shares more than five per cent lower to 12.57 euros. In North America, RIM shares were down 80 cents, or more than five per cent, to $16.37 when the Toronto Stock Exchange opened.
RIM has faced intense pressure from shareholders for months to change its management structure amid concerns the company is unable to compete with rivals including Apple Inc. and Google Inc. The co-founders were initially dismissive of the iPhone from the moment it launched in 2007, choosing to focus on their traditional core business customers instead of what was popular with consumers.
'I am so confident in RIM's future that I intend to purchase an additional $50 million of the company's shares.'
—Former CEO Mike LazaridisThat strategy has resulted in RIM's stock price and market share dwindling over the years, as more and more customers switch to other devices.
Northern Securities analyst Sameet Kanade called the move "a nice first step," but said it's not a cure-all for what's been ailing RIM shares of late. "Heins is perhaps the best solution for now, but let's see what he can deliver this year," Kanade said.
The company, maker of the BlackBerry series of smartphones and tablets, was the most valuable company in Canada as recently as 2008 when its stock reached $148, but after a series of missteps the company has seen its share of the smartphone market dwindle. The share price closed on Friday at $17.24.
"My first reaction is it's positive, but then you read the fine print and you get the sense that things will stay the same," Kanade said. "The main headline is: Watch and wait."
The company says Lazaridis will become the vice-chair of the company's board of directors as well as chair of its new innovation committee. Balsillie will remain a member of RIM's board of directors in an undefined role.
"I agree this is the right time to pass the baton to new leadership, and I have complete confidence in Thorsten, the management team and the company," Balsillie said. "I remain a significant shareholder and a director and, of course, they will have my full support."
Thorsten Heins, who joined Research In Motion four years ago, was named CEO and president of the technology company. (Research In Motion/Canadian Press)Heins joined RIM four years ago from Siemens AG, becoming a senior vice-president. He was appointed chief operating officer for product and sales in August 2011.
He said Monday he will make assigning a new head to the company's marketing unit his top priority. "That's an element we need to strengthen and build," he said. "I want us to have a bit more of an ear to the consumer market, understanding trends, and not just listening to what [Bay] street is telling you."
"We need to do a better job on that," Heins said.
Although the departing co-CEOs were the visionaries behind the iconic BlackBerry, the new CEO Heins is held in high regard for his skill in operational matters. The company's current marketing strategy is largely built on the company's next generation operating system, BlackBerry 10, which is expected to launch later this year. RIM is banking on that platform to turn around the company's fortunes.
"I don't think there is a drastic change needed," Heins said. "We are evolving."
'I don't think there is a drastic change needed.'
—RIM CEO Thorsten HeinsLazaridis said Heins has the right mix of leadership, industry experience and skills to take the company forward.
"We have been impressed with his operational skills at both RIM and Siemens," he said. "I am so confident in RIM's future that I intend to purchase an additional $50 million of the company's shares, as permitted, in the open market."
Among other changes at the top of RIM, current director and former Toronto Stock Exchange CEO Barbara Stymiest will become independent board chair and Fairfax Financial Holdings CEO Prem Watsa will join the board.
"It's good to have Prem Watsa onside," Kanade said. Watsa runs Fairfax Financial, which with almost 12 million shares, is the second-largest holder of RIM stock outside the two founders. "[Watsa] knows how it works, so he doesn't want too many changes at the same time," Kanade said.
CBC News business commentator Kevin O'Leary said he expects the new board will give Heins about a year to show results, at which point they may turn to someone new. "At the board level, this forces the debate on what to do next," he said.
"As an investor … I'd say to myself this can only result in better times ahead."
Big slide in 2011
Balsillie and Lazaridis, who shared the CEO and chair titles, have headed RIM together for the past two decades.
The company took a big slide in 2011, dropping behind its peers in the lightning-paced smartphone market, suffering through the worst service outage in its history and losing tens of billions of dollars in market value.
And the PlayBook tablet, RIM's answer to the Apple iPad, failed to gain consumer support and the company was forced to offer deep discounts to help move the devices off store shelves.
The company announced that it will take a $485-million US charge before tax on the cost of discounting the price of its PlayBook tablet and $50 million in lost revenues from an October service outage that affected millions of BlackBerry email and text users. It was forced to cut 2,000 jobs to keep costs in line.
In December, RIM reported third-quarter net profits of $265 million US, well below the $911 million for the same period a year before. That came despite the sale of millions more BlackBerrys than in 2010 and a 35 per cent rise in global subscribers to 75 million.
Many investors held Balsillie and Lazaridis responsible for the company's problems and previously called for them to be replaced and also for the company to be sold or broken up.
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