Research in Motion's new CEO struck an optimistic note Monday, as he laid out his vision for the future of the once-mighty tech company. But investors made it clear, he'll need to exact some change before RIM's fortunes turn around.
Shares of the company closed down more than nine per cent Monday, the day after RIM made an announcement that longtime co-CEOs Mike Lazaridis and Jim Balsillie is out, and chief operating officer Thorsten Heins is in.
Shares in the company lost $1.57 to close at $15.67.
In an interview with BNN Monday afternoon, Heins said he's not paying attention to how the company's stock evolves over his first day on the job.
"I'm here to create long-term value," Heins said. "And I think RIM has all the ingredients based on its data network services and on its fantastic devices to create that long-term value."
Heins said he has three immediate goals as he begins his new job. He wants to first get the company's new products to market, including the new software for RIM's foray into the tablet market, the Playbook, which is scheduled to be released next month. The new BlackBerry 10 operating system is also scheduled for launch by the end of this year.
The company must also develop stronger consumer market strategies, and to that end Heins said he plans to hire a chief marketing officer "as soon as we can."
His third goal, Heins said, is "flawless execution," a point he expanded on in a conference call with reporters early Monday morning.
In the past "we innovated while we developed the product and that needs to stop," he said. "We need to innovate, don't get me wrong, but we will do this now with much more emphasis on prototyping and concepting."
Heins added: "When we say a product is a product, execution needs to be really precise and decisive."
As the 54-year-old, German-born Heins takes over the CEO role, Lazaridis becomes board vice-chair and chair of its new innovation committee, while Balsillie will serve as a member of the board.
The new chair of the board is Barbara Stymiest, who has served as a director of the company since 2007.
"We are more confident than ever that was the right path. It is Mike and Jim's continued unwillingness to sacrifice long-term value for short-term gain which has made RIM the great company that it is today. I share that philosophy and am very excited about the company's future," Heins said.
Reflecting on Heins' confidence in the legacy of his predecessors at RIM, one major shareholder told The Canadian Press that market reaction points to one conclusion: the shakeup doesn't go far enough.
Vic Alboini of Jaguar Financial in Toronto said that RIM needs to undergo a major strategic review, which could lead to the sale of the company or its divisions. The continued influence of Balsillie and Lazaridis is also an issue he said, not only given their roles on the board, but in light of their personal ownership stakes.
What's Ahead?
While their operational duties are reduced, RIM co-founders Lazaridis and Balsillie remain among the company's biggest shareholders.
In their two-decade history with the company, the pair built Research in Motion from the ground up, making their company Canada's most successful at one point.
Their products helped define a product category with the introduction of the BlackBerry in 1998. The little device went on to transform corporate communications, percolating the popular consciousness along the way.
But the Waterloo, Ont.-based company has struggled to keep up with its competitors' pace of product launches and popular appeal.
According to technology analyst Carmi Levy, the company suffered from arrogance bred by the early success of its signature robust, secure messaging services.
"They essentially dismissed products like Apple's iPhone and later Google's Android," Levy said.
Dismissing the potential for easy-to-use touchscreen-based devices was a major misstep, Levy said.
"Nobody really cares what your latest success was, they care about what's coming next. And if you don't have a constant supply of new stuff that's compelling, they'll find it across the street," he said.
That message hit home in early 2011, when RIM's entry into the growing tablet computer market led by Apple's wildly successful iPad fell flat. The Playbook's debut not only disappointed critics, it failed to generate sales. The company wound up spending nearly $500 million to discount the devices.
Add a conspicuous service outage that affected millions of users worldwide to the mix, and the BlackBerry-maker's situation has not looked good for some time.
Investors have reacted in kind, sending the share price to a low of $12.80 in 2011. That year the company saw its value plunge from more than $70 billion to less than $8 billion. Its market capitalization is now pegged just shy of $9 billion.
After several failed attempts to renew the appeal of its BlackBerry devices, RIM has now pegged its fortunes on the debut of an already-delayed new software platform. And it's up to the German-born Heins to make sure he's got a handle on the company before then.
Heins told BNN that he doesn't plan any job cuts at the company, and intends to keep hiring to address staffing needs.
However, he is promising to make some changes that make employees more accountable.
"I want to go to a very, very clear leadership structure with very clear accountabilities and responsibilities," Heins said.
"It will not be a major shake-up of the company, but there will be adaptations to a lean, mean model that allows people to assume responsibility, to be accountable and to also enjoy the results of their work."
While it retains 75 million users worldwide, RIM has seen its share of the growing smartphone market slip worldwide.
According to the latest report from measurements firm comScore, of the 8 million Canadians who owned a smartphone in September 2011, approximately 36 per cent were using BlackBerry devices. That was good enough to hang onto the No. 1 spot, but down 6 per cent from the previous report in June.
Apple was down one percentage point to 30 per cent marketshare, while Google's Android platform had jumped 12 per cent to hold 25 per cent of the smartphone market.
