For the last six months I have been engaged in an interesting debate about Blackberry maker, RIM. When Thorsten Heins took over as CEO from founders Mike Lazaridis and Jim Balsillie in Jan 12 he declared that ‘no seismic change was needed’. I thought quite the opposite - see RIM needs ‘seismic change’. I said spouting platitudes about “improving RIM’s process execution, boosting marketing and improving communications with customers” was nothing short of a long suicide note. RIM share price was then $17.57.
HotViews readers will know what has happened since (search on RIM and you can reread our many articles). Last night Heins appeared on a US radio show saying that there was ‘nothing wrong with RIM as it exists now’. As some pundits write RIM’s obituary, the company’s global subscriber base continues to grow, to more than 78m people in 175 countries. RIM has no debt. The company also has more than $2bn in cash on its balance sheet and generated $710m in operating cash flow in its first quarter.”
RIM share price is now $7.35 – i.e. down 60% since Heins took the helm whilst NASDAQ is up 13%.
The debate is less about whether RIM has major problems and more about what you publicly say as CEO in those circumstances. Stephen Elop at Nokia chose the ‘burning platform’ approach – see my Jan 11 post “Nokia torn between burning alive or drowning”. Meg Whitman at HP also recently painted a gloomy picture of its recovery. The honest approach for both were also rewarded with massive share price declines!
I am the first to admit that changing the business/product model in a recession against the background of rapid technological change without completely destroying your current cash generating machine is extremely difficult. How much easier to start from a blank sheet! But Heins is right in pointing out that RIM does have a 78m customer base who, if we are anything to go by, want to remain loyal to Blackberry. I really want Heins to turn RIM around but I still doubt he will do that until he accepts the scale of the problem that he is facing. I hope - at least in private - that he does.