Research In Motion's co-CEOs step aside

The company has struggled against the iPhone and phones using Google's Android. Shares have dropped nearly 90% since peaking in 2008, falling 75% in 2011 alone.

By Charley Blaine Jan 23, 2012 2:46AM
Updated at 11:22 a.m. Monday

What was clear late Sunday was that Research In Motion's (RIMM) co-CEOs bowed to the inevitable and stepped aside.

What wasn't clear was whether the management change will give investors, who have seen the stock fall nearly 90% since 2008, any hope that the company can mount a comeback from years of losing market share and just plain coolness to Apple's (AAPL) iPhone and iPad and mobile phones and tablets built on Google's (GOOG) Android.

If it's any indication, Rim's shares were down $1.10 Monday at $15.90.

Post continues below.
Jim Balsillie and Mike Lazaridis, who built RIM into a powerhouse in the early part of the new century, announced Sunday that they were stepping aside effective Monday. The new CEO will be Thorsten Heins, who has been one of RIM's two chief operating officers.

Lazaridis will be the vice chairman of the company's board. Balsillie will stay on simply as a director. Barbara Stymiest, a former chief operating officer of the Royal Bank of Canada, will be the chairman.

Lazaridis plans to remain active in the company and head a new "innovation committee" of the board.

Heins told reporters Sunday he was staking the company's revival on a new line of phones and a new BlackBerry 10 operating system.

He can't make the devices available soon enough. Over the past year, that project has run into a series of delays. The new phones are not expected until the end of 2012, almost five years after the appearance of the first iPhone. Meanwhile, Apple has introduced several new versions of the iPhone.

RIM has suffered other setbacks. Its PlayBook tablet computer, introduced last year, lacked crucial features like email. It is now being sold at prices below RIM's manufacturing cost and is derided regularly by journalists.

It had a hugely embarrassing network outage in October, affecting users in Europe, the Middle East and North America. Big corporations started experimenting to see whether iPhones could meet their security standards. Research In Motion

RIM's sales for its fiscal third quarter, which ended Nov. 26, were down 6% from a year ago. It was forecasting a 12% to 18% decline for its fiscal-fourth-quarter sales from $5.6 billion in fiscal 2011 to $4.6 billion to $4.9 billion.

The shares fell 75% in 2011 and 88% from a June 2008 peak of $147.55 as the iPhone and Android phones solidified their holds as must-have devices.

Both the iPhones and Android phones are showing no signs of trouble.

Microsoft's (MSFT) new phones, offered in conjunction with Nokia (NOK), are generating buzz as well, and research firm IHS has said the phones using the operating system could have a market share of more than 16% by 2015. (Microsoft owns and publishes Top Stocks, and MSN Money site.)

Speculation that the drop in RIM's value will lead to takeover approaches drove the company's stock to one-day gains of at least 5% more than 10 times since the beginning of August, the Los Angeles Times noted Sunday. Disgruntled employees even posted a letter complaining about the management talents of Lazaridis and Balsillie.

But while the stock was off 3.2% on Friday to $17, it's actually up 17.2% for the month.

In 2008, Research In Motion had a market capitalization of more than $80 billion, tops among Canadian companies. The market cap is now about $8.9 billion.

Critics, led by Jaguar Financial Corp., have been calling for a management change for months. They've also called for the company to divide into separate companies, seek a merger or sell itself.

Lazaridis and Balsillie have led RIM for more than 20 years, building the BlackBerry, with its signature email features, into a must-have device for business and political elites.

President Obama was known to be a heavy BlackBerry user before taking office in 2009. Between fiscal 2002 and fiscal 2011, sales grew from $294 million to $19.9 billion, a gain of nearly 6,700%.

But while the company successfully started marketing consumer models of the BlackBerry, it totally missed the attraction that a device with no keyboard but immediate Internet access would have for consumers.

When RIM was flying high, Lazaridis's and Balsillie's only major extravagances involved financing new education institutions in Waterloo, Ontario, where RIM is headquartered and where they live. 
21Comments
Jan 23, 2012 10:30AM
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Another company killed by their arrogance. They thought they were going to rule the industry forever and that other companies were to follow them. They isolated themselves and didn't prepared to compete; and with no new products coming out soon, people are just going to forget who they are and what they do. I was a BB user myself and have been waiting for something new and cool to go back to them. I guess it will never happen........
Jan 23, 2012 11:18AM
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As a former employee of 1 of the 4 big cellphone carriers,  I can tell you exactly why this is happening.  Every year representatives from cellphone manufacturers such as motorola, samsung, nokia, and RIM would come and speak with employees to get a feel for the market.  Every year, these companies would make changes to their devices.. except for RIM.  When they came out with the scroll ball, it was immediately brought up that the ball eventually would break and would get large deposits of dirt in it overtime.  This would cause the trackball to eve ntually stop working.  They ignored it until they made the phone for 2  years and had over 100,000 trackball complaints.  They were years behind every other manufacturer in placing cameras on phones because they considered it unncessary, and then they put in the lowest res phone you can have.  Point is, they did not heed warnings from the very companies they sold phones to and this is the results.

Jan 23, 2012 12:44PM
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The BB is for serious business purposes, phone calls, files, e-mails. If you need information to get to you and be received by others to make a living then a BB is the way to go. Have tried many “smart” phones, plain and simple the I-phone is a religion, good for the masses, but not for everyone. If you want to play all the latest games and spend hours accomplishing nothing more than having fun then by all means get an I-phone, in fact get in line every time a new one comes out. But if you want a device to help you make a living and transact business reliably and consistently then it’s a BB. No product is perfect, the i-phone pretends to be, the BB just works harder and longer. I rue the day RIM is gone and I'm forced to use an inferior alternative.

Jan 23, 2012 11:56AM
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I own an IT support company and I can tell you why they are down 90%,  BES Servers!   BLackberry Enterprise Server and their Internet Service sucks!   Why would I want to spend money on a BES when Apple and Droids Support Microsoft Active Sync/Exchange right out of the box.  Easy to manage then dealing with a BES as well.  Listen,  I love my Blackberry but if they want to compete then they need to add Exchange Support right on the phone.  That is why almost on IT support people love it when users use a Droid or iPhone.  When you have the people who make the call on what phones people should get they are not going to say Blackberry,  Because they know that supporting iPhones and Droids are whole lot easier!

 

This also means that when RIM's Networkgo down you don't

go down.  If they supported Active Sync/Exchange this wouldn't be an issue because you have a dirrect connection to your coperate mail server and you not being routed thru RIM.  Also with Exchange 2010 you have full controll over every phone and security policies.

.

I think it's had for dogs to learn new tricks!    Read this articial about it!  You willl need to replace the missing letters where the * are, T in http and the M in Com as they don't allow links here.  But great artical!       ht*P//crackberry.co*/what-does-activesync-mean-research-motionE2%80%99s-service-revenue

Jan 23, 2012 1:12PM
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I Agree with HireGoonz.

 

Unless your a business user that utilizes the BES server that way it was designed - to securly deliver content to your phone that lives in your enterprise, (it does more than just email folks like allowing access to sharepoint and other internal website and applications in your organization and  the problem is most companies only configure for email)  The iPhone, Android and Windows devices are far behind in that regard.  The users commenting here against the BB are not completely familar with BES and why it exists.

 

How with that said, if I was to carry a phone for personal use only I would prefer a iPhone or Android device over a BB - but for work I perfer to use my BlackBerry mainly because I and the System Engineer responsible for the BES server and know the strengths over the iPhone and Android devices. 

 

 

Jan 23, 2012 12:22PM
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Its funny about this phone war, reminds me of a bunch of dudes standing around talking about mines bigger. lol! i guess you have to be a follower in this modern society. Maybe just maybe some people just actually want a uncomplicated phone.
Jan 23, 2012 1:05PM
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HiredGoonz -

 

Having used both iPhones and Blackberrys in a business setting, the iPhone has it all over RIM products.  No goofy software on a PC to help interface email with an iPhone and no proprietary expensive software to be loaded on servers to remote desktop into business systems like RIM is pushing.

 

Not only are iPhones and iPads fun, but their functionality is heads and shoulders over Balsillie's offerings as well.

Jan 23, 2012 12:52PM
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HiredGoonz,
I think that was the case....maybe 6 years ago. Today's devices have as much computing power as some laptops.
Jan 23, 2012 1:37PM
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Sure, but access is different than security.  BES encrypts the data end to end - iPhone does not.  If your company is letting you view your internal documents from your corporate network on your iPhone I just pray you don't work for my bank.
Jan 23, 2012 2:19PM
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I work for a large electric company, and I'm the IT director.  I can't tell you how many times I get eMails / phone calls from co-workers wanted Active sync enable on their personal iPhone / Windows / Android phones.   They don't understand how dangers this is. 

 

Yes. Active Sync is MUCH easier to setup VS BB BES.  However, there's a trade off most don't know about.  BB encrypts your email (both ends)  iPhone doesn't do this!!! 

 

Let me just say this.. DON'T EVER use Android for you company emails not secure AT ALL.  The next Windows phone (Windows Phone 8) will be secure.  It will be intergrated into Microsoft Exchange.

Jan 23, 2012 2:50PM
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To Brian in Milwakee, Lisa Smith is absolutely correct!

While you can VPN into the company network with an encrypted connection, the issue here is email on a mobile phone.  And Blackberry is the best in the business when it comes to this.  Yes you are at the mercy of BIS (Blackberry Internet Service) servers, but how cool is it that if the Government wants to intercept your communications, they need a court order and RIM's help to do it??? Or any other hacker for that matter. Iphone and Android are easily hacked as is proof in the many security updates both these platforms have had to issue since their inception.

Jan 23, 2012 12:44PM
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Why on earth in this age of WiFi and 4g coverage would you ever want a phone running on a proprietary server? I can take an old android I have lying around with no service, turn on wifi and get email. 

Blackberry missed the boat. Microsoft created the original smartphone but got cocky and we see how long its taken them to become a player again. RIM is likely washed up now.
Jan 23, 2012 9:25PM
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All I know is I'm gonna miss blackberry if it is ever gone. It's been to hell, back and then some. two batteries and some additions later, it's still ticking. Touchscreens are a thing of the past, and If you want a cell phone and somewhere to check your email, then blackberry it is. if i want a place to play games then I'll get a gameboy.
Jan 23, 2012 3:05PM
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you're a gut buster andre - the covered wagon leaving for the wilderness is departing soon - hurry or you'll miss it - the inside is wall to wall mirrors so you can spend the trip congratulating yourself for being smarter than the rest of the universe
Jan 23, 2012 11:39AM
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Brand new week, we started on the upside but be very cautious; not a whole lot different than last week as far as plenty of manipulators going nuts trying to bring this market down..At 1010 hrs they already called to start the selling...Lets see if we can hang in there. Obviously it is still very early, anything can happen...More later.

Jan 23, 2012 1:33PM
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The iPhone can be configured to go through the current business firewalls and security protocols to access servers, PC's, emails, sharepoint, etc... with out the additional cost and licensing that comes with BES.
Jan 23, 2012 1:57PM
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Do you encrypt your data when remoting in with a PC? 

 

Same difference... 

 

By accessing the servers by either BES (which is just another proprietary level of access) or by going through a companies normal firewall, the access/security issue you are referring to is a moot point.  One needs security to get through the firewall to gain access to the system.  Just like any PC that resides at your bank or any other business that has an ounce of security for that matter.  

 

The article refers to RIM's fall from grace.  By pulling this IBM like "it's our way or the highway" attitude when it comes to network access,  many companies are finding the expense is not worth it.

 

Especially when it isn't needed...  

Jan 23, 2012 1:57PM
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my 3 yr old loves the I-phone and i-pad. its good for kids and beginners.
Jan 23, 2012 12:03PM
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if i want a toy i will buy the other phones otherwise i have no complaints about my bb bold. I've had an I-pad for over a year and its still in the box. And my wife gave my 10yr old her I-phone an got a htc. Some people are not sheep for the newest shinny car as may be led to believe. i know plenty of I-phony users who are giving them up. Me personally until apple has flash i will not be a fan. Sorry! Plus my bb is the toughest phone i have ever had how many x's a year does an average touchscreen user replace their cracked screens. I guess if u have to replace your phone 2 or 3x's a year a company numbers should be doing well.
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