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RIM Co-CEO's given 6 months to prove value of Co-CEO position

By IsaacKendall on 13 Jul 2011 05:12 pm EDT
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Co-CEO Clock ticking

The tech and business world has been reporting on the value of a Co-CEO position at RIM for quite some time.  But the chatter really picked up steam with inventor Northwest & Ethical Investments LP called for the roles to be split up last month.  At the annual shareholders meeting this week in Waterloo there was to be a vote on this proposal, but Northwest withdrew their motion and have give the company 6-months to show that this shared CEO role can work.

The rational behind this current RIM hating is a mystery to me.  If the only measure of RIM was their market share position, than I would be at the front of the line wondering WTF the boys in Waterloo are doing.  BUT that isn't the whole story.

  • Are profits increasing each quarter compared to same quarter last year?  YES
  • Are the number of devices sold in each quarter increasing over previous quarter?  YES
  • Are company revenues not tied to one single product or vertical?  YES, in fact 40% over revenue in previous quarter came from licensing, not hardware sales

"But their market share is slipping and OS7 is just rearranging the deck chairs on the Titanic!" Well OK the BlackBerry has 40% smartphone market share in 2009, but total smartphones in the US as a percentage of all cell phones was only 19%.  So RIM had 40% of a 19% market.  Fast forward to 2011 when many are predicting that Ontario Hydro will turn off the electricity at RIM because they won't have enough money to pay the bills.  Smartphones now account for 40% of all cell phones in the US.  And RIM's share is down to 24.7%.  If I was running a business selling smartphones, I'd prefer 24.7% of 40% over 40% of 19% everyday of the week.

Is Waterloo the Garden of Eden?  No, of course not.  I believe that RIM does need to get things rolling and quickly, but the RIM Book of Revelations is not here either.  Kevin's RIMPIRE Strikes Back campaign is spot on and needs our support!  The BlackBerry platform is here to stay.

Source: Bloomberg Businessweek

Reader comments

RIM Co-CEO's given 6 months to prove value of Co-CEO position

39 Comments

I think most are scratching their heads over the Co-CEO thing, but at least the ultimatum has been dropped. Prove yourselves worthy of the position, or we will change your position.

I agree.
Lets see what they can do over the next 6 months.

I believe that the shareholder vote was dropped was on account that RIM told Carol something that sounded pretty good.

(Just my opinion)

6 Months is not a long time for someone to prove themselves. But, it is definitely enough time for someone to show improvement. Most of us have been questioning the Duo-CEO position for quite sometime now. Maybe it is a cultural thing and maybe it truly does work, therefore it is only right for it to be questioned and put to the test to see if it truly benefits the company as a whole. It is difficult to share a position of power. Think of a mom arguing with a dad in front of their kid, whoever wins the argument gets respect, what happens to the other?

It is a unique corporate structure. Personally I believe that they should go to the corner of their strength. Jim's the business/finance guy and Mike is the product and ideas guy.

Focus on what you're good at and let others do what they do best.

I never got the "Rimpire Strikes Back" slogan.

Didn't the Empire lose to the Rebel Alliance in Star Wars?

Did they? Not sure if any of the nerds on the CrackBerry staff ever saw that movie. Is it available on Netflix? Seriously though, it's meant to be a catchy phrase. For fun, not taken literally.

Ya, it's on Netflix.. but you can't stream it and they don't offer DVD service in Canada.. guess I'll never know who shot first.

Even if you take it literally it still kind of makes sense if you ONLY look at the movie "The Empire Strikes Back." Because in that movie, the empire wins.

Anybody who questions whether RIM is doing badly shouldn't be allowed to write an article anywhere! Not even for a high school newspaper!! The current state in irrelevant, it is the trend that counts. And RIM with BBs is on the way down.Spin it as you like but you are only making fool of yourself.
RIM is growing thanks to its reputation. In the UK, nearly 85% of its new customers come from feature (dumb)phone owners. They recognise the brand and they buy into it. However it is very questionable if they will do the same thing once their contracts runs out. I know that BB is the right phone for me but my needs are very different compared to mainstream users. I don't recommend BB to friends, I know that in the age or super duper androids and iphones they would be disappointed.
http://goo.gl/ejgla

We know that it is impossible for 1 brand to have 100% of the market forever.
But will they have a decent part of the global market at least? ..... say 20% ?

Too much time in the sense that they should've split a while ago. In these six months we'll see BB7 phones which are nice, but nothing monumental and honestly not even super competitive; whereas in that same timeframe, we'll be seeing a new iPhone and maybe a new iPad. I dunno what Android is doing but these next six months will not be good, BB7 will not save them enough to justify two CEOs.

Good luck, I hope RIM can make a comeback.

To expand on the math above:

40% of 19% is 7.6% of the total phone market (smart and dumb phones)
24.7% of 40% is 9.88% of the total phone market (smart and dumb phones)

But even though they've increased their overall presence they are doing worse??? But then again I'm sure all the nay sayers didn't take the time to work out the math...

Revenue: up 16% year-on-year (bellow forecast)
Profits: down 9.6% year-on-year (bellow forecast)
Anything else you need to know?

Too true. It does not matter if your revenue or profits are up over last year. All that seems to matter is if you are able to hit or exceed your forecast. If you miss your forecast, prepare to pay the price. Madness. This behaviour has always puzzled me but it is the way the financial markets work.

Their segment of the industry as a part of all mobile phones grew over 100%. Their overall share of the mobile market only grew about 30%. Even if you assume an overall increase in competitors in the market or more competing phones (which hasn't been that much overall -- just increasing quality of competition) that's still disappointing. It means that their phones do not have the features that buyers want, and even if they grew slightly it paints a lousy pictures for the future (which is what investors care about).

I love my Blackberry because it suits my needs, but I have a hard time trying to convince anyone (or even making a wholehearted recommendation) because they don't have what most people want.

Bye bye Ballsack and Laz!! I am glad my playbook spends more time on the table doing nothing than it does actually doing something productive. Maybe Jim should have spent more time trying to get the company up to date with smartphone trends than persuing an NHL team! Which he also failed at! Thanks for taking my money for a useless playbook! Which will be for sale by the end of the night.

artman71, I think you are all talk about selling your Playbook!!! I do not believe you have a Playbook!!! You have a bidder who has offered you $200, which you have not given a response....

I actually DO own a playbook!! Perhaps 200 is a little lower than I would want for it, therefore I would be better off keeping it. I purchased it on April 21. Why would I say I have one that I would sell if I didn't have one? Think before you speak assclown!

artman71, you are a joke... If you are so smart, then you would tell the person what you are willing to accept to get the Playbook sold, which is common sense. I am thinking before I speak. You seem to not make any sense with your dumb comment about the Playbook. If you do not like it, then put it on Ebay and go away from this site. That is simple. We do not want to hear your annoying comments. Go post on websites that like to attack RIM. There you will fit in...

Its RIM ballwashers like you James that I could care less about RIM and their half assed products. I will gladly go to berryreview where people can actually express their feelings about RIM without fear of dealing with people like you! I am free to express my opinion anywhere I please. I will happily sell my POS of a tablet on ebay! See you on the iOS bandwagon once RIM finally dies a slow horrible death!

Now lets expand on the math as a whole. Yes, 24.7% of 40% is better (a.k.a. bigger number) than 40% of 19%. - smartphone market. Yet the fact remains, RIM didn't keep pace and someone(s) enjoying increased market share at RIM's expense. Had they keep pace and at min. maintained the 40% market share they enjoyed, they would have been at 16% of entire cell market combined.
Any way you slice it, thats a lot of business lost off the table.

I like RIM and Blackberry; don't like co-CEOs. Not because of who the co-CEOs are; just don't think it is the best way to run/manage/organize a corporation.

@dunaway

I didn't even finish the article before I posted this, but, can we get some editing and proofreading of articles before they're published? My god.

Personally, I don't see the value in "co-CEO". There are plenty of companies and people who lead organizations that have people at their right hand and no as a "co-CEO". Look at Warren Buffet and Charlie Munger. So while they're both excellent at what they do, there's no reason for them to hold the same spot.

I know many CrackBerry fans see BGR as very anti-RIM etc., but some of the comments in today's "Inside RIM" article sure ring true. While yes it is somewhat of a rehash of what we already know, there are some amazing (in a bad way) statements regarding past decisons by RIM. A few gems allegedly from Mike Lazaridis:

"There will never be a BlackBerry with a camera or MP3 player"

"Couldn't imagine people spending hours browsing or streaming content"

RIM focused on minor incremental changes like battery life, speaker, compressed data, etc.

Obviously RIM built a great business and invented secure communication devices, but it is jarring to see how badly they misread the market and dismissed the iPhone, Android, and consumer wants in general. Microsoft blew it too, but they seem to admit what they've done wrong and are throwing tremendous resources into Mango to turn it around. I hope I'm wrong but RIM sure still seems to be in denial.

I'm not giving up on them (currently have a Torch & a PlayBook) but I'm going to judge the 9900 and the 9810 against the iPhone 5, new WP7 Mango phone coming out in Fall, and whatever Android has to offer. It's not good enough to just be better than this Torch, they need to beat the competition. Here's hoping they do!

I still hold shares in RIMM and I might increase my holdings at some point. Where I think they have completely failed in the dual CEO rolls was in their guidance that they would meet their earnings targets, even when they knew that newer phones were delayed. The next part that disappointed many shareholders was the conference call, when stated they were restructuring would have been seen as a positive move, yet they called it "streamlining". To top it off, when asked about the coCEO set-up, they went into a bizarre back patting theatre routine, instead of providing a more concrete answer.

The only technical issue I have is that the software on the PlayBook is unfinished. It is almost like the PlayBook is a giant beta test and development feedback machine for future QNX phones. I still want to get one, but I think the release of many more tablets from other companies will pressure the prices lower, and I want to see more finished software.

I don't know that a report will save their dual CEO structure. More likely they have bought six months of time to prove that the interim phones will increase sales, revenues, and earning. Beyond share price, which is somewhat manipulated by huge short positions in options, the real investors want to see earnings growth over each quarter.

What would impress me is to see RiM landing a really top notch marketing lead. They place too much reliance upon their carriers to do the advertising for them. Even the coCEOs admitted that the PlayBook was their first "retail" product and that the point-of-purchase displays could be better. Make the retail experience function at places like Best Buy, and kick the television ads up a notch.

Do Y'all remember back in the day when Mike lazaridis said that there would be no camara's or an mp3 player , ever in a blackberry? That was back in '05 I think.
Somebody please explain to me why this dude is still CEO? Because apperntly this clusterfuck was 6 years in the making ,all because this dude is just so out of touch with reality and the market place.

How could we all be so surprised that BB is falling behind??

Six months is too much time for these clowns to still be at the helm. They obviously are a main reason RIM is at where it is today. To have such a huge downfall from just a couple of years ago and still allowed to be in the driver seat is a bit perplexing. Any other corp would have instituted a new ceo with different ideas that would hopefully lead to a turnaround.

After reading this piece and through various comments I can't help but think of the U.S Auto industry. For decades the U.S Auto manufacturers continuously pushed out substandard vehicles while the Japanese & German manufacturers continuously improved and delivered feature packed vehicles loaded with higher end materials, better MPG, better designs, etc. It basically took the near collapse of the U.S Auto industry to rethink their previous position and attitudes and finally deliver competitive vehicles.

If we look back to the release of the Torch 9800 and compare it to all other high end smartphone releases in that quarter- did it really compare to its competitors? Would it seem that RIM is operating in somewhat of a bubble unaware of technological advancements, new competitors, consumer trends/demands ?

Just thinking out loud here- also as per comments here is keeping Lazaridis on as head of innovation a wise thing? From his previous documented comments he either is a master of misdirection and false information or is seriously out of the loop when it comes to innovation.

I think Lazaridis needs to be moved to a "skunkworks" role where he can work on technology, but bring in a new hard charging VP of R&D and a new President (Jim can be CFO) and let the new Pres and R&D guy work to get RIM back on track without the 20 year baggage of of the founders. Many startup founders are not the same people needed at later stages of the company. Current management still will not admit admit any mistakes, as others have said, the fact they they were even CONSIDERING launching the 9900 with something less than the 1.2ghz chip shows that they are out of touch with reality. How can they say dual cores aten't available when you can buy a dual core phone today??

I don't want a 4.3" phone that goes dead by noon, but I don't want 2-3 year old tech being passed off as a "generation jump" either!