Is Research In Motion the walking dead?

Management reportedly cancels a meeting wtih an activist investor in a stunning move that smacks of arrogance.

By Benzinga Oct 19, 2011 1:12PM

By Jonathan Chen, Benzinga


Research In Motion (RIMM) has been called the headless horseman before.


Now it appears that management has gone to a new level of cluelessness, reportedly canceling a meeting between an activist investor and two board members.


Company lawyers nixed the meeting that Jaguar Financial had scheduled with two of RIM's independent directors, according to reports. Jaguar was supposedly going to talk about corporate governance. It appears to be a safe bet that RIM's co-chief executives, Mike Lazaridis and Jim Balsillie, had something to do with the cancellation.


Why company management would cancel a meeting with an activist investor is beyond me. The company's stock has languished for years as Apple (AAPL) and Google (GOOG) have crushed BlackBerry's market share.


Take a look at Apple's share price since it introduced the iPhone in 2007. RIM's share performance is anything but pretty compared with Apple's. Apple has returned 252% since June 1, 2007, while RIM is down more than 50%.


RIM still has its share of defenders, as the following video shows.


Post continues below.

Jaguar Financial is no stranger to the name, having called for Research In Motion to spin off its patent portfolio in recent weeks. "The status quo is not acceptable. The company cannot sit still," said Vic Alboini, Jaguar's chairman and chief executive. "It is time for transformational change."


For Research In Motion to be so cocky and arrogant to just dismiss anything an activist investor has to say reeks of uselessness at the top. A publicly traded company's ultimate responsibility is to enhance shareholder value. It is clear RIM has done nothing of the sort.


The company announced a new mobile operating system called BBX Tuesday, which is based on the existing QNX platform it purchased in an acquisition. There is hope that BBX will trigger a resumption of growth that RIM was accustomed to, or at least something close to it. That doesn't erase that the tremendous loss of shareholder value over the years, however.


There are plenty of value reasons Research In Motion would be a buy, including increased hopes for BBX, extremely low valuations, and the potential for activists to eventually get fed up and do something.


As I wrote when RIM reported earnings, most of this does not matter. With Balsillie and Lazaridis making decisions like this, the company is headless and the top and bottom lines are shrinking fast. With a market cap under $12 billion, RIM has lost more than 25% since the disastrous earnings report was released last month.


It does appear that Balsillie and Lazaridis are blind at the top, and nothing, not even an activist investor, can save the Ontario-based company.


This is not just a headless horseman. This is a company that appears dead without knowing it.


ACTION ITEMS

Bullish. Traders who believe that Research in Motion will finally get its act together might want to consider the following trades:

  • If QNX is as successful as many believe, RIM could be a screaming buy, trading at less than 5 times earnings.
  • There is also the chance that RIM management does not take Jaguar Financial seriously, and that a larger activist investor, like Carl Icahn, could make a difference.

Bearish. Traders who believe that RIM management is pig-headed and will not listen to change may consider alternate positions:

  • This is bearish for company management, which has already tarnished their reputation. Additional actions like this would only lead to more tarnishing.
  • Marvell Technology (MRVL) derives almost a quarter of its revenues from RIM, according to Tech Insidr. However, according to a Marvell representative, RIM represents less than 10% of its net revenues. If RIM goes down, Marvell may feel the effects.

Neither Benzinga nor its staff offer investment advice nor do they recommend that you buy, sell, or hold any security. 


More from Benzinga:

6Comments
Oct 19, 2011 6:16PM
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Jaguar Financial is using RIM as free advertisement. Here is financial company that cannot run a financial business rights, no vision in their leaders and they have the balls to go after RIM.

Every time the media calls there name someone learns about them.

Look at their shares over the past 10 years and see they are nothing more than a disgrace to the financial industry.

They would love to be an Icahn but they are much too stupid.

Here is a company that has been in existence over 10 and still has a share value of .55 cents .A market cap of $5.9m that is mice nuts.

Here brain dead.RIM has a market cap of say $11.0B and you say you own 10% that is about $1B someone is not telling the truth.

If I look through my couch and in my penny jar I am sure I can buy out that company and fire those brain dead they have over there.

Where the Jaguar investors are are they as stupid as people who run this company?

Oct 19, 2011 3:12PM
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These activist  investors would sell their grandmother's liver if it would increase their stock portfolio's value. They care nothing about the company or its customers, just their stock value.

 

If given any influence in the companies direction they would drive it into the ground. Luckily these boneheads have no influence and RIMM's direction and their user base (70 mil and growing) will continue to increase as competent grownups direct the company's future instead.

 

What track record does Jaguar Financial have in creating or running smart phone businesses? If they have no expertise why would you look to them for direction?

Oct 19, 2011 3:30PM
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In my career, I had to deal with some of those so-called corporate activists investors. They usually came in demanding things that wouldn't work or were totally self serving. I don't blame RIM for not wanting to listen to their drivel.
Oct 19, 2011 3:42PM
avatar
All these hatred towards RIM is really getting a little too much... I hope people realize and move on and go get some life rather than get up in the morning and send  some hatearticle to some press using their blackberries... 

And this line is a joke  or what

"This is not just a headless horseman. This is a company that appears dead without knowing it."



THe guy who wrote this is drugged without knowin it I guess


Oct 20, 2011 6:39PM
avatar
get a new phone buddy that 8330 is an old phone. I am sure when you bought that phone droids was only a dream lets see how long it stands up to regular use.
I work in construction and thought Nokia was the best and always wanted an  IPhone until i smack the display and there went 500 bucks I bought a used BB and the rest is history
Oct 19, 2011 8:55PM
avatar
I guess they should change the name from Blackberry to Dingleberry. My 8830 started freezing up constantly and I finally dumped it for a Droid. I like some of the features of the 8830 better but it's nothing compared to my new phone.
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