Research Immobilized: Time for a Management Shake-Up?
Wall Street’s already dim view of Research In Motion is growing dimmer by the day with more brokerages downgrading its stock and, increasingly, questioning management’s ability to right the company from a nasty yaw.
Seems the incremental advances RIM showed off at BlackBerry World this week did almost noting to convince the Street that the company can reverse continuing market share losses and reinvigorate its pioneering BlackBerry platform. As Needham analyst Charlie Wolf said in a note to clients Wednesday afternoon, RIM is a one-trick pony whose one trick no longer works.
“RIM has attempted to keep pace by adding the standard checklist of features to its BlackBerries, as defined by the iPhone,” Wolf said. “Unfortunately, RIM’s skills as a hardware manufacturer have been more than offset by it ineptness in software development, the focus of competition today. The blame must be laid at the feet of the company’s Co-CEO’s who in their actions and words, appear to have no clue on how to mount a successful response.”
A brutal assessment. Tough to disagree with it, though, given RIM’s performance this past year.
Recall that last year about this time, co-CEO Mike Lazaridis was claiming that the company’s forthcoming BlackBerry 6 operating system would make “anyone that looks at it…say ‘I want a BlackBerry.’” It didn’t and now a year later the company’s rolling out BlackBerry 7 which isn’t likely to make anyone utter those words either. Meanwhile, it’s said that QNX for BlackBerry–an OS which might actually reignite interest in the platform–won’t be available until 2012.
Add to this the poor critical reception given RIM’s PlayBook tablet,
the company’s warning that current quarter sales and earnings will fall short of earlier estimates amid lower-than-expected sales of its “aging” BlackBerry devices, a series of PR gaffes by co-CEO Mike Lazaridis and co-CEO Jim Balsillie’s penchant for speaking in tongues and, well, it’s not hard to see why some analysts are saying RIM might be better off under new leadership.
Charter Equity Research analyst Edward Snyder is one of them. He says that RIM’s caught in the same sort of downward spiral that wreaked havok at Nokia and Motorola and the only way to escape it is a change in management.
“As with RIM today, the optimism of management in the face of consistently poor results betrayed an intransigence that eventually led to a change in leadership at every major handset OEM that struggled in phones,” he writes. “The political inertia of past mistakes was too great for incumbent CEOs to overcome in order to pursue the aggressive changes required to save the business. The inability to execute in high-end phones over many quarters combined with a detachment from details and meandering, heavily scripted conference calls are symptoms of the malaise. …while it is possible for the company to break from its past and field smartphones that can prevail against Apple, Samsung, HTC and Motorola, we don’t expect that to occur until after a change in leadership.”
Another brutal assessment. But, again, it’s one that’s difficult to disagree with--unless you’re Jim Balsillie.