During a media briefing at BlackBerry World this week, RIM CEO Thorsten Heins told attendees to expect a 4G LTE-enabled PlayBook “later this year.” He provided no details beyond that, revealing nothing about potential carriers, specs or pricing.

So, for now, we have only RIM’s word that the device is coming relatively soon. Which is encouraging and somewhat dubious at the same time. Remember, RIM first announced plans to release a 4G version of the PlayBook in January of 2011, promising to deliver it that summer.

In June, former RIM President and co-CEO Mike Lazaridis reiterated that plan, but pushed the launch date to the fall.

“We are now on a steady cadence of features and applications releases using our industry leading automatic wireless software update for PlayBook, including Facebook and video conferencing,” he said. “We are soon to release native email and BBM in our Android player later in the summer. To be followed in the fall with 4G PlayBooks for WiMAX, LTE and HSPA+.”

But that never happened. Sprint scrapped its WiMax PlayBook plan in August. And a promised LTE version of the device didn’t debut that fall, and hasn’t shown up since.

Of course, 2011 was a rocky year for RIM, and the company had more important things to worry about than the LTE PlayBook — like taking a $485 million writedown for discounting the first version of the device. Perhaps now, with its new leadership in place and BlackBerry 10 presumably on track for launch late this year, RIM finally has the focus and chops to deliver the device during the window Heins has promised.

However, a new report says Jim Balsillie was pushing a radical shift at the BlackBerry maker in the months leading up to his departure. Reuters said on Friday that Balsillie wanted the company to support non-BlackBerry devices on its data networks.

The challenge of running its own networks, though, became clear last year after a high-profile, three-day outage last fall.

Instead, RIM appears to be doubling down on its hardware business, pushing forward with new devices running BlackBerry 10. The new software is based on the QNX operating system that powers the PlayBook tablet. So far, the PlayBook hasn’t supported many of the core RIM services, such as BlackBerry messenger.

RIM representatives did not immediately respond to a request for comment.

Balsillie and former co-CEO Mike Lazaridis were replaced atop the company by Thorston Heins in January. RIM announced earlier this month that Balsillie was also stepping down from RIM’s board as two other top executives exited the company.

RIM has recently introduced software that lets RIM’s server software manage Android and iOS devices, but this plan would have gone even further, sending data traffic from other smartphones onto its networks.

One of the advantages of the BlackBerry is the fact that data travels securely on its networks and then gets compressed before being sent to the devices. For that, RIM gets service revenues each month.

The Reuters report says Balsillie had been talking with carriers about extending that to other devices, aiming to give entry-level smartphones efficient, inexpensive access to social networks and other data.

Seriously?

Seriously, says RIM director Roger Martin, who scoffs at anyone who argues that the strategic missteps that left RIM in the sorry state it’s in today might have been avoided had RIM appointed a new CEO sooner. Until newly appointed CEO Thorsten Heins stepped up a few months back, there was no one qualified to do that.

Just infants and idiots and the critics calling for RIM to hire one of them.

“So we’re supposed to hand it over to children, or morons from the outside who will destroy the company?” Martin told the Globe and Mail. “Or should we try to build our way to having succession? … I laugh at the vast majority of critics when they say ‘Oh, you should have made this CEO transition, like, four years ago.’ Yeah, right — like, to who?”

Oh, I dunno. Someone less myopic than the company’s previous leadership. Someone less complacent, someone who didn’t have their head in the sand when Apple’s iOS and Google’s Android first began to emerge as a threat back in 2007 — or at least pulled it out before 2011. Someone capable of infusing RIM with the culture of innovation it so sorely lacks?

But evidently that’s just too difficult for an entrenched RIM insider like Martin to see.

To be fair, Martin — who also serves as dean of business at the University of Toronto — does concede that RIM’s former co-CEOs Mike Lazaridis and Jim Balsillie had made mistakes. But he insists that ousting them earlier would have been sheer folly. “People just don’t understand the depth of understanding these guys have of their business, the connections,” Martin said. “[Critics] ask ‘Why can’t you be more like Apple?’ So we should go bankrupt and fire our founders and bring in a moron? That’s what we should do?”

Have I mentioned Martin is dean of U of T’s Rotman School of Management?

Anyway …

I think it’s safe to say that no one is suggesting RIM appoint an imbecile CEO. What they are saying is that RIM has lost its competitive edge, that its stock is a falling knife after an abysmal 2011, and that they have little faith in the management team responsible — a team that will continue to dictate the company’s course going forward.

Bringing in a moron at this point would be sheer folly.

Clearly, the company’s got one too many to deal with already.

That commitment to the current strategic direction of the company, that complacency, suggested to many that Heins — just like his predecessors — hasn’t fully recognized the dramatic loss of traction RIM has suffered in the market it once dominated. Add to this the fact that he served as RIM’s COO during a time when the company made a number of operational missteps, and Heins really didn’t inspire much confidence. Meet the new boss, same as the old bosses, right?

Maybe. But perhaps Heins isn’t quite as oblivious as former RIM co-CEOs Mike Lazaridis and Jim Balsillie. In a Thursday chat with CNBC, he sounded a bit more realistic about RIM’s plight, acknowledging its missteps and conceding that the company has suffered as a result of them.

“It hurts me to see us losing market share in the U.S.,” Heins said. “There was a paradigm shift, and we did not shift with it. I know we’ve made mistakes, and I know I’m in for a fight. We want to stop the bleeding.”

Sounds far more encouraging than his spiel in that abysmal “meet the new boss” video RIM posted earlier this week, right? Certainly, it’s more honest. And admission is the first step in recovery …

Chris Hughes | © University of Waterloo, Graphics, Photo/Imaging

Adding Prem Watsa to the company’s board of directors.

CEO of Fairfax Financial, Watsa has been described as the Canadian version of investing god Warren Buffett. So he brings considerable business acumen to RIM and a commitment to its success.

But, more crucially, he brings a lot of the company’s stock.

You see, Fairfax has been quietly buying up RIM shares for some time now. Today, it holds a 2.3 percent stake in the company. Which makes it RIM’s fourth-largest shareholder, after Lazaridis and Balsillie, who each hold about 5.1 percent of the company, and Primecap Management, which owns a 5.5 percent stake.

And according to reports, Fairfax is planning to add to its position, a strategy driven by Watsa’s belief in the long-term value of the company.

So what RIM has in Watsa is not just a savvy investor and highly strategic thinker, but a guy with a stake in the company that’s large enough when combined with those of Lazaridis and Balsillie to protect it from investors like Jaguar Financial, which have been pushing RIM to sell all or parts of its business, and to put an end to distracting takeover rumors.

So what?

In handing the CEO reins over to an unknown insider who has vowed to follow the course already laid out by his predecessors, Mike Lazaridis and Jim Balsillie, RIM’s big change really seems to be no change at all. Indeed, watching Heins’s video introduction last night, he sounded a lot like the company’s oblivious founders.

“Sometimes RIM innovates too much.”

“We sometimes think the unthinkable. And that is fantastic.”

“If we continue doing well what we’re doing, I see no problems with us being in the top three players worldwide in the next years in wireless.”

Balsillieisms — all three of them. And together they describe a complacency that doesn’t do much to inspire confidence. Certainly, Wall Street was quick to voice its skepticism over Heins’s appointment. Below, a selection of analyst reactions:

Charlie Wolf, Needham:
Mr. Heins joined RIM in 2007 from Siemens Communication Division and since 2009 has been Chief Operating Officer overseeing the BlackBerry product portfolio worldwide. During this period, RIM introduced one failed model after another up through BlackBerry 7. This does not offer us great confidence that he can turn BlackBerry around, even excluding the fact that Mr. Lazaridis and Balsillie will be looking over his shoulder throughout.

Amitabh Passi, UBS:
While we think this is a small step in the right direction, we are surprised RIM has decided to go with an operations minded insider, especially since we consider the challenges tied more to strategy. We don’t believe these announcements (likely propelled by shareholder and, quite possibly, some Board pressure) will produce much change in the short-medium term, and much will depend on the success of BB10.

Pierre Ferragu, Bernstein:
Thorsten Heins remains an insider, and we lack conviction on whether or not he will be making the sort of bold moves required (Android adoption, strategic partnerships) to put the company on a better track. We continue to believe that a strategy based on the development of a proprietary ecosystem is bound to fail and initial comments in the press release and Canadian press suggest the new management team remains unfortunately committed to the current strategic direction of the company. We are also worried that the new CEO doesn’t seem to fully recognize the dramatic loss of traction we see in the market for BlackBerry products.

Ed Snyder, Charter Equity:
At first blush this seems more like window-dressing than a real reorganization. COO Thorsten Heins took direction from Balsillie and Lazaridis when they were co-CEOs, and as the newly appointed CEO he’ll still be under their review as Board members. And with Lazaridis already talking up his intent to play an active role in innovation by committee, today’s announcement seems more like window-dressing than real reform.

Ehud Gelblum, Morgan Stanley:
We view this as a good first step in the right direction, as the board of directors finally appears to be doing what a board should always do, which is to make sure the CEO is effectively doing his or her job leading the strategic direction of the company. However, we do not believe this move is enough, especially as Heins is an internal hire and not an independent fresh voice. We also worry that Heins has had little experience setting a vision or strategic direction for the company, and has instead been more involved implementing the products and strategy devised by Mike and Jim.

That’s the takeaway from new RIM CEO Thorsten Heins, who told analysts this morning that he thinks the company is in pretty good shape, all things considered. Sure, in the U.S., it has been roughed up by Apple’s iPhone and Google’s Android, but it’s still used by lots of people, has lots of fans in big companies and big government agencies, and lots of users around the world.

And the new tech that the company has in the pipeline — a revised version of its PlayBook tablet, and a new operating system due out in the fall — are great. You’ll see: “I don’t think there is a drastic change needed.”

No surprise there, given that Heins, RIM’s former chief operating officer, has been at the company for the past four years. If RIM really wanted someone to blow things up and start over again, they’d bring in an outsider.

Instead, the only external help Heins seems to think he’ll need will be the talents of a new marketing guru, whom he is counting on to reach out to consumers, in particular. But if RIM can’t make a better product than its competitors — or, at the very minimum, one that’s at least as good — I don’t see how messaging will help.

EARLIER

Time for a change. But not too much change!

That’s the messaging around Research In Motion’s CEO swap. The company has yielded to irate investors by moving out longtime co-CEOs Jim Balsillie and Mike Lazaridis. But they’ve moved up an insider — former Chief Operating Officer Thorsten Heins — into the top spot. And if you listen to him, RIM is doing great.

Here’s the “meet the new boss” video that the company put out last night, where Heins says that “sometimes we innovate too much.” And that he likes to ski, but that the hills around RIM HQ in Waterloo, Ontario, don’t really compare to the Bavarian mountains in his native Germany:

Wall Street doesn’t seem overly impressed with the move, or the suggestion from a Wall Street Journal source that the company refuses to consider a sale, and RIMM shares are down 3 percent in pre-market trading. [Correction: RIMM shares are up 3 percent in pre-market trading.]

Now we’ll see if Heins can help make his case in person: He is hosting his first conference call, and we’ll cover it live here, starting at 8 am ET.

8:02 am: Greetings. Apologies in advance, because our nifty liveblog tool seems to be MIA this AM, so things will be a little slower than usual here.

RIM official sets expectations: No financial guidance here. Just Heins and new BOD chair Barbara Stymiest.

Stymiest: Thanks much to Mike and Jim for building RIM. “It is, still today, one of the leading brands in the world.”

Stymiest: Runs through Heins’s resume, heaps praise on him. “The board is very excited about RIM’s prospects for the future.”

Heins: Thanks! RIM isn’t “just a device company,” it’s an integrated service company, with devices and networks. Unique opportunity. “We have an exceptional foundation to build upon.”

“RIM has undergone, and is still completing, a major transformation.” Sure, has “hit a few bumps along the road here and there,” but that happens. Purchasing QNX to create new platform for company was a bold move, and we’ll see that it was the right decision over time. PlayBook 2.0 will be great. So will BlackBerry 10.

Q&A:

Q: Please go into detail: What are your priorities for the next 100 days?

Heins: We need to get better at market communications. We have strong tech, strong customer base, growing overseas. “The U.S. is a bit different.” Public opinion there is that we’re still strong in enterprise, but we need to be better about explaining ourselves as a consumer company. “We need to engage more with the consumer base … we need to take them with us on the journey of exploring BlackBerry in the future.” Also, we need to execute better. We have to scale processes further, need to have “rigid” management for product development, etc. Gotta understand RIM has grown very quickly. But “we innovated while we were defining the product,” and “that needs to stop” — need to have “way better execution.” “I’m pretty sure this will really help us a lot, and really help our customer base a lot.”

Q: Seems like lots of your success has been in the “low-end market” in Asia. Thoughts on that? Also, thoughts on getting BlackBerry 10 out next fall as planned?

Heins: You say “low end”, I say “entry level.” We can’t make phones with less power. But there’s a big market that is still using feature/“dumb” phones, and we can move them to smartphones. They won’t go to the most powerful phones right away. We need to give them a good landing point. Once we prove to them that BlackBerry is a great place to start, we’ll move them up the ladder. “That’s the strategy behind the ‘BlackBerry for Everyone’ strategy.” As far as BlackBerry 10 — it’s not just a new OS, it’s a whole new infrastructure. Need to be clear about that. “That work is underway.” By the way, we’re also going to have an Android player with PlayBook 2.0, so we can leverage the “long tail” of all those apps, if people want those.

Q: Last year, you also were bullish about QNX. Why are you still confident about that? That seems like a “me-too OS, that is just catching up” to Android, iOS.

Heins: Again, QNX is an existing OS. Used on power grids. “It is a proven OS.” Allows true multitasking — “I mean, true multitasking.” “It is an extremely competitive OS as of today.” Very smart of Lazaridis to buy this instead of trying to build our own.

Q: On last RIM call, you guys talked about strategic options the company was looking at. Those options still available?

Heins: You mean licensing? Let me be clear: We can’t just be in the device-only business. “We are strong because we have an integrated solution … I want to build on that. I will not in any way split this up.” As far as inbound licensing requests, I’ll listen to them, and if they make sense, but “it’s not my Focus One.” Apple, “the other fruit company,” only other company with this kind of integration, and I want to take advantage of that strength that we have, too.

[Missed Q, but Heins is now talking about marketing, which he says needs to get better, specifically with consumer marketing.]

Q: You’ve been here four years. What can you do now as CEO that you couldn’t do as COO?

Heins: We were still kind of a start-up when I came on. But “start-up processes don’t scale.” So we need to change that. I’ve been able to study how the culture works. “I don’t think there is a drastic change needed”; we are “evolving.” “I don’t feel I was held back in any way to do what we needed to do.” But we do need to get better about “processes.” Again, I do want us to focus more on consumer marketing.

That was a fast call, and now it’s over.

RIM confirmed late Sunday that it has installed former co-chief operating officer Thorsten Heins as its new CEO. Board member Barbara Stymiest will take over the board chair position, with former co-CEO Mike Lazaridis assuming the role of vice chairman, and his counterpart, Jim Balsillie, remaining on the board as a director. Stymiest had been expected to assume the board chair spot.

However, by appointing both a current executive as CEO and an existing board member as its new chair, it is unclear if the market will see the shake-up as sufficient. In interviews with The Wall Street Journal, both Balsillie and Lazaridis said the decision to step down was theirs and not made in response to investor calls for their removal.

In making the move, Lazaridis said he hoped the executive changes would “return the public’s focus to what is most important,” that being the company, its brand and its products.

Balsillie offered a similar sentiment.

“I agree this is the right time to pass the baton to new leadership, and I have complete confidence in Thorsten, the management team and the company,” he said in a statement. “I remain a significant shareholder and a director and, of course, they will have my full support.”

The BlackBerry maker has seen its shares tumble in recent months, as the company has been late with new versions of its products, and failed to make a dent in the tablet market with its PlayBook.

Despite missing both product deadlines and financial targets, Balsillie and Lazaridis had resisted those who had called for their ouster.

Heins characterized these major stumbles as “growing pains.”

“As with any company that has grown as fast as we have, there have been inevitable growing pains,” he said in a statement. “We have learned from those challenges and, I believe, we have and will become a stronger company as a result.”

For those who have never heard of Heins, he is a former Siemens executive who spent 23 years at the German electronics firm before joining RIM in 2007.

In addition to naming Stymiest as chairman, RIM also added an eleventh member to its board, Fairfax Financial Holdings CEO Prem Watsa.

News of the executive shuffle was reported earlier on Sunday by The Wall Street Journal.

Read the rest of this post on the original site »

Sources close to the company say that co-founders Mike Lazaridis and Jim Balsillie will soon relinquish their titles as co-chairmen of the board, officially ceding that position to board member and Royal Bank of Canada exec Barbara Stymiest.

“Stymiest is a lock for chairwoman,” one source told AllThingsD. “The only thing that’s unclear right now is the timeline for her appointment.”

A second source confirmed the likelihood of Stymiest’s appointment, but cautioned that a final decision hadn’t yet been made.

Earlier this week the Financial Post reported that RIM’s board was leaning toward tapping Stymiest as chairwoman. So evidently things are moving apace up in Waterloo, and it’s only a matter of time until RIM begins the executive overhaul it hopes will keep it relevant.

But at this point, is removing the co-CEOs from their shared board chair duties enough?

RIM’s share price ended 2011 near a seven-year low; the precipitous tumble that took it there trimmed $27 billion from its market cap. That’s $7 billion more than Nokia is worth right now.

Jefferies analyst Peter Misek says Stymiest’s appointment could help, but not for a while: “We would view such an announcement positively as we believe she will initiate a formal strategic review, possibly trim costs in the hardware business, and possibly announce additional partnerships; however, we continue to see an outright sale in the near-term as unlikely and see near-term results as challenged.”

But RIM’s gruesome downward spiral was caused by a string of foolish missteps and disappointments that will not be easily reversed, particularly not with a simple board chair swap. While Stymiest’s background is impressive — executive positions at the Royal Bank of Canada and Toronto Stock Exchange parent TMX — it is largely financial. She seems to have little background in consumer electronics. Presumably, some experience in that area would be helpful.

More helpful still would be a chair who hasn’t been so steadfastly supportive of Lazaridis and Balsillie, who seem to be engineering RIM’s decline just as deftly as they once engineered its ascension to dominance in the smartphone market. Their inexplicable optimism in the face of near-catastrophic screwups; their early indifference to the iPhone and similar devices that would ultimately undermine their business; and their bizarre mutual egocentrism in the face of product delays, successive quarterly earnings slips and declining smartphone market share — getting past all of that will require some serious readjustment at the company. Is Stymiest the person to provide that? And if she is, why hasn’t she done so already?

Recall Lazaridis’s remarks during a June earnings call, remarks made while investors gutted the company’s stock in reaction to a truly crappy quarter:

“Jim and I have the perfect balance to make the hard decisions. This is fun. … We’re changing the world. We’re transforming the way people work. … We birthed a tablet in a year! … We transitioned to a new operating system!”

As I wrote at the time, “The only thing more tiring — and frustrating — than listening to the company’s repeated ‘just you wait, our new device is a quantum leap over anything that’s out there’ promises is hearing the two guys who make and then break them congratulate each another on what a fantastic job they’re doing navigating a transition they didn’t have the foresight to prepare for — or see.”

In the end, for RIM to reverse its downward trajectory, there must be more than a simple board change.

“There’s a bigger problem than the market share erosion and product delays,” said one analyst, who declined to speak on record. “It’s Mike and Jim.”

Reached for comment, RIM offered the following:

“As previously disclosed, RIM’s Board has established a Committee of independent directors with the mandate to study the Company’s governance structure and report their findings by January 31, 2012. The Committee is on track to meet this schedule and the Board will then publicly respond to the recommendations of the Committee within 30 days.”

Another three months have passed and it is time, once again, to hear how great RIM is just after hearing how not great its last quarter’s results were.

RIM is set to address investors on a conference call in just a few minutes and, Wi-Fi co-operating, AllThingsD will have live coverage here.

Earlier, joining the call in progress:

RIM co-CEO Balsillie: “We recognize our shareholders may feel we have fallen short.”

Asked board to cut his and Lazaridis’s salary to $1 per year.

He says the company is reevaluating everything it does. “We are leaving no stone unturned.”

More from Balsillie. To improve business in the U.S., the company plans to invest in advertising and promotions — moves that will impact next year’s earnings.

The first QNX-based BlackBerrys are now due in second half of the year.

2:18 pm: Balsillie is talking aboout the PlayBook, and while I’m paraphrasing, he’s basically saying that while the sales could have been better, he’s confident that it’s going to catch on because it’s secure and aimed at the enterprise.

2:19 pm: Porting of games to PlayBook is an extremely attractive proposition for developers. “Applications developed today for BlackBerry 10 using a native SDK will also benefit future smartphones.”

380 connected apps on App World, representing 20 percent of downloads on App World. BBM Music is seeing strong uptake in Canada and other markets.

“We currently have a major cost optimization initiative under way.” It’s called CORE and is focused not on headcount reductions, but on efficiency and supply chain management. It includes the creation of a data monitoring center.

2:22 pm: Here’s an update on BlackBerry 10 smartphones. They’re not expected until the “latter part of 2012,” according to the slide deck.

Part of the reason is that the chipset RIM has selected won’t be available until the middle of 2012.

“We ask for your patience and confidence.”

Oops, that was Mike Lazaridis talking before.

2:24 pm: Now CFO Brian Bidulka is speaking.

U.S. sales were down 20 percent. Sales outside North America accounted for 61 percent of sales.

14.1 million phones shipped in the quarter.

150,000 PlayBooks, and sell through during the quarter was higher than this based on RIM’s internal data. Demand is increasing, and 800,000 units in total have been shipped.

Service revenue was $970 million.

The service interruption reduced service revenue by $50 million.

Gross margin was 37 percent, in line with guidance, but lower than Q2.

Mike Lazaridis said during his chat that, despite being delayed, BlackBerry 7 devices are doing well in the market with some 1,000 acceptances from carriers around the world. He then delved into Fantasyland, suggesting new BlackBerry Bolds are seen as one of the best phones on the market. He spent more time there arguing that while he would have preferred that the PlayBook launch had gone better, the tablet is one of the most advanced on the market. (Um, it still can’t do native email without a tethered BlackBerry.)

Operating expenses declined 10 percent.

ARPU (average revenue per user) was down as the number of people using BIS-tiered plans increased.

2:28 pm: For those noting a bit of jumping around, I have had major Wi-Fi issues and a bunch of the crack staff at AllThingsD have been chipping in. Thanks, gang!

And here’s the outlook.

Edel Ebbs, VP investor relations: Q4 unit outlook, we plan to invest heavily in new marketing programs but we don’t expect them to help us sell more phones in the quarter.

We expect to ship 11 million to 12 million smartphones in Q4.

Revenue 4.6 to 4.9 billion. Service revenue to be stable to slightly higher. Gross margins of 38 percent.

EPS will be 80 cents to 95 cents.

$100 million investment coming in marketing and consumer retention programs.

Now we’re into the QA. There’s a question about the delay on the BlackBerry 10 phones. Lazaridis says we “wanted to target a higher efficiency, lower power consumption chipset in the U.S. We wanted to make sure U.S. consumers will get the power and performance expectations.”

2:33 pm: The software development work that is going for the PlayBook is directly applicable to the BlackBerry.

Morgan Stanley asks: Now that you have written off the PlayBook inventory, how does that run to P&L? How does that work and impact the margin?

Also, of the 75 million subscribers, how many are in the U.S. and how many in Europe?

How many in the quarter were BlackBerry 7?

Brian Bidulka: While we will get revenue, there will be an associated cost. The gross margin dollars will be nominal.

2:35 pm: Edel Ebbs says the company doesn’t break out U.S. versus Europe subscribers.

2:38 pm: Question: Given the shift of business to Latin America and Asia, how do you think about your future growth prospects?

Balsillie: There’s a very powerful opportunity at the entry level. But over half of the phones in the world are feature phones.

Q: This CORE program. There’s still a fairly high level of inventory and receivable compared to peers. Can you make a meaningful squeeze?

Bidulka: There’s a lot to the CORE program. We’re looking at a lot of aspects that we’re looking at.

2:41 pm: For more on RIM’s move to delay the QNX-based BlackBerrys, check out this just-posted story.

2:42 pm: Sorry for the double-post. Let’s say “high-speed broadband” ain’t always.

2:40 pm: Question from Thinkequity on QNX/BlackBerry 10. How much are you going to be changing on the infrastructure side? The Network Operations Center?

Lazaridis: The PlayBook 2 software will be able to interface to the BlackBerry Enterprise Server. It’s part of our secret sauce. It plays right into the security that we have. Our enterprise customers are excited about it because they can re-use their investment in BES.

Balsillie: We’re looking at leveraging our strengths.

Question from Citi: There was some commentary about some additional EPS pressure. Was that just referring to year-over-year EPS pressure, or with the OPEX ramp, should EPS trend lower after February?

Edel Ebbs: We’re not giving any more detailed guidance.

Q: Opex up quarter on quarter, on advertising, and then something about royalty retention.

Edel Ebbs: That is loyalty retention.

Lazaridis: That $100 million isn’t all in OPEX.

Q: When are you finished with your restructuring efforts?

Lazaridis: We’ve talked about that. CORE program is not about headcount, it’s about how we do things.

Balsillie: This is not business as usual at RIM. We’re totally redoubling our efforts for shareholders.

2:45 pm: Question about BB7 and how it seems RIM wasn’t happy with pickup in the U.S. Could you please explain thinking around price-cutting on the BlackBerry.

Balsillie: We are planning a set of marketing and promotional plans. You’re going to see that imminently. We’re excited to promote the BB7 to consumers in the U.S. Special offers, marketing campaigns, advertising.

Question from UBS: How do you intend to keep us updated on the CORE program?

Bidulka: We haven’t thought that through but we can get back to you on the next call.

Q: Why is it that ahead of BB10 shipments don’t get worse?

Lazaridis: The BB7 devices are rejuvenating the BlackBerry experience around the world. BB7 is such an advance that it really has changed the way that people perceive the product. The fit and finish and material choices is just amazing.

Balsillie: We realize we’ve not met expectations, but we plan a comprehensive set of marketing and advertising programs. We have to execute with a laser focus.

2:50 pm: Balsillie: PlayBook OS2 is a major upgrade.

Balsillie: It’s difficult to be in the smartphone business and not in the tablet business. It’s very early in the tablet market still.

Balsillie: It’s still very early in the launch of the PlayBook.

Last question, from Morgan Keegan: It looks like that was a $374 million purchase of intangible. What was it?

Service revenues are up. Are subscribers not churning as fast as feared?

Bidulka: That relates to payments for certain license agreements.

Balsillie: I’m not going to paint anything overall optimistic or pessimistic. We are seeing lots of growth in subscribers and lots of growth of traffic. Yes, there’s a very powerful system that we have here and it’s up to us to make sure that we use it in a way that executes well for our shareholders.

And that’s all.

On Tuesday, the BlackBerry maker’s stock closed below $20 for the first time since 2004, dragged down by a Veritas report predicting the company’s market share is globally headed for the single digits. “Clearly, it’s now single-digit market share in the United States — soon, I think it will be single-digit worldwide,” Veritas analyst Neeraj Monga told the Globe and Mail.

Today brought with it more ugly news. RIM shares continued their downward spiral, hitting a new 52-week low of $18.61, well below its book value of $18.92 at the end of last quarter, according to Bloomberg. That move dropped RIM’s already much-diminished market cap south of $10 billion — $9.78 billion as I write this.

A brutal decline for RIM, whose shares once traded at $147.55, and a nasty hit to the personal wealth of its founders, who are little more than half-billionaires now. With 28,143,312 shares, or 5.37 percent equity, RIM co-founder Mike Lazaridis is worth about $523.7 million (assuming a share price of $18.61). With 28,680,490 shares, or about 5.09 percent equity, his partner, Jim Balsillie, owns about $496.5 million.

Ugly. Clearly, Balsillie’s not going to be bidding on any hockey teams any time soon.

That is, unless RIM can get its act together, something it desperately needs to do. As Canalys analyst Tim Shepherd said in a research note today, “RIM needs to deliver new, fresh, exciting products to the market and increase its pace of innovation and execution if it is going to have any chance of reasserting its position in North America. It badly needs to deliver on its potential with its new BBX platform.”

PREVIOUSLY:

• RIM Co-CEOs to Critics: We’re Awesome and We’re Not Going Anywhere
• RIM CEOs Insist Outsiders Don’t Get It, but Are We Really the Ones Confused?
• RIM Talks to the Street After BlackBerry’s Rough Quarter
• Research In Motion Slashes Its Forecast Amid BlackBerry Weakness, Plans Layoffs
• Break Out the Pepto-Bismol — RIM Reports Earnings Today
• Mission RIMpossible: Full-Year Earnings of $7.50 Per Share

But on the first of a three-day developer conference here, the company disappointed some of the developers it was hoping to woo by not demonstrating the system on a prototype smartphone. RIM executives also didn’t provide many details about how the platform would be implemented on its next line of smartphones, nor did they give a more specific time frame for when those new phones are expected to reach stores. Initially, RIM has signaled the phones will be launched early next year.

Read the rest of this post on the original site »

Early on Monday, the company announced it would give BlackBerry users a package of free apps in an attempt to mend fences with angry customers.

In a statement, RIM said it was offering more than $100 worth of apps “as an expression of appreciation for their patience during the recent service disruptions.”

“Our global network supports the communications needs of more than 70 million customers,” RIM co-CEO Mike Lazaridis said in a statement. “We truly appreciate and value our relationship with our customers. We’ve worked hard to earn their trust over the past 12 years, and we’re committed to providing the high standard of reliability they expect, today and in the future.”

The apps will be made available for download beginning on Wednesday, with more rolling out over the coming four weeks. Titles include the games Sims 3 and Bejeweled, utilities such as translation and photo editing apps, and entertainment titles like Shazam Encore and Nobex Radio Premium.

Business customers will also get one free month of technical support, RIM said.

“We are grateful to our loyal BlackBerry customers for their patience,” added Lazaridis. “We have apologized to our customers and we will work tirelessly to restore their confidence. We are taking immediate and aggressive steps to help prevent something like this from happening again.”

Whether these steps will be enough to hang on to the customers, though, is an open question.

“BlackBerry services are operating well globally,” the company said in a statement. “Some customers in Canada and Latin America who are sending messages to other regions may see intermittent message delays. Support teams are actively addressing this.”

The outage began earlier this week after what RIM said was a core switch failure followed by a problem that caused backup systems not to kick in as anticipated.

The company held a conference call, which AllThingsD covered.

Earlier on Thursday, RIM posted a video apology from co-CEO Mike Lazaridis, as well as an update noting that it is starting to see service levels improve.

Here’s the liveblog of the call:
7:06 am: Call kicking off now.

7:07 am: Both RIM co-CEOs are on the call, along with CTO for Software David Yach.

Lazaridis: I want to personally update you on what is going on.

“Before I do, I want to personally apologize to all of the BlackBerry customers we have let down.”

As he noted in his video, “You expect better of us. I expect better of us.”

“We’ve now restored full services.”

7:09 am: Going through what happened. Also says taking immediate steps to make sure the same thing doesn’t happen again, and to restore trust.

We’re working with vendors to prevent the failure mode that happened, conducting analysis of why system took longer than expected to restart.

7:10 am: On to Q&A.

7:11 am: First question on whether recent layoffs affected response.

Lazaridis: No. “That would not have affected this.”

7:11 am: Second question: Are you willing to talk about reparations, and do you have arrangements with customers guaranteeing service?

Co-CEO Jim Balsillie: Focus has been on restoring service, though he did say the company does have service-level agreements.

7:12 am: Was this incident preceded by any changes to the network, and who is the vendor of the switch that failed?

RIM: No recent changes were made. The system is provided by multiple vendors, and until the company has the root cause, it is not identifying those vendors.

7:14 am: Are there any customers still experiencing issues?

Lazaridis: All the services are back up globally.

7:15 am: With the outage starting on Monday, why was the video apology not posted until Thursday?

Lazaridis: “I was very much involved in the management of the procedures to bring (the services) up.”

Another RIM executive notes that Lazaridis was directing the team responding to the issue, and notes that no one at RIM has been going home.

7:17 am: As I am sure you are aware, you have a lot of angry customers asking, “How are you going to make this up to us?”

Lazaridis: “That is something we are now turning our attention to.” Our priority right up until this moment was making sure our system was up and running.

In response to another question, Lazaridis notes this was the largest outage in the company’s history and the first major disruption in 18 months.

7:20 am: Another compensation question. This time asked about how RIM will compensate carriers.

Balsillie: “I’ve talked to global CEOs of carriers.” From the heads, their issue was one of support, not about compensation.

“This kind of discussion was not the priority.” In this sort of situation, everyone pulls together. “Everyone was focused on how do we work together.”

Of course, with the service back up, I’d imagine those same carriers will be ready to talk about those issues any time now.

7:23 am: Are you concerned you are alienating potential customers on the eve of the launch of the new iPhone?

RIM: “We’ve worked 12 years since the launch of the BlackBerry … We’re going to fully commit to win that trust back.”

7:28 am: All right. Well, there ya go.

But Research in Motion said during the investor call this afternoon that it will try a combination of offering new features and a lower price to spur new sales and reinvigorate interest in the device.

The 64 gigabyte PlayBook currently sells for $700, and a 16GB model costs $500, but they lack some standard applications –including native email, calendar and contacts — and common entertainment features. Not to mention that during the quarter the PlayBook was facing steep competition from the HP TouchPad, which was discontinued and marked down to a bargain price of $99.

During the second quarter, RIM said, PlayBook shipments totaled just 200,000 units, well below what many analysts had been hoping for.

Going forward, RIM will implement promotions and rebates to spur sales, and will roll out a significant over-the-air software update, which it will show off next month at its developer conference, and release shortly after.

During the call, co-CEO Mike Lazaridis said rather than trickle out the updates for the PlayBook, RIM plans to bundle a number of features together to make a bigger impact. Updates will include native email, calendar and contacts, an Android app player, which will enable the tablet to run some applications from the Google operating system, an enhanced Web browser and a BlackBerry video store, which will offer access to 10,000 movies and TV shows.

Most of the call was spent praising the recent launches of the latest BlackBerry 7 devices, which were already comprising 35 percent of sales in North America by the final two weeks of the quarter, the company said. So far it has launched seven BlackBerry 7 devices, with more than 90 carriers in 30 countries.

Despite questions about RIM’s future, and the lack of timing being announced for its next-generation operation called QNX, the BlackBerry maker was still able to grow its subscriber base 40 percent year over year to 70 million. Lazaridis declined to mention timing of the release of the first QNX phones, which will miss this year’s holiday season, but said RIM will be prepared to show off prototypes in the not too distant future.

That’s the gist of the call for action put forth by RIM shareholder Jaguar Financial, which has clearly grown tired of watching the company’s sad scramble to regain relevancy.

“The status quo is not acceptable, the company cannot sit still,” Jaguar CEO Vic Alboini said in a letter to RIM’s board of directors. “It is time for transformational change. The directors need to seize the reins to maximize shareholder value before more market value is lost.”

And RIM’s lost plenty of that already. The company’s share price has plummeted more than 80 percent since June of 2008, when it hovered around $149. It has fallen nearly 50 percent this year alone, despite management’s “just you wait” assurances. So Alboini figures it’s about time RIM establish a committee of four or five independent directors to consider the company’s options if the big transition to the QNX operating system doesn’t rejuvenate the BlackBerry as hoped.

“You cannot put all your eggs in one basket,” Alboini told Bloomberg. “The board should be saying, ‘What if these products don’t pan out?’ You don’t want RIM to turn into another Nortel. … This decline in the company’s standing can largely be attributed to significant execution delays, inadequate mobile applications and the lack of a competitive product that addresses the needs of the consumer marketplace.”

However, the company made no changes to the piece of the org chart that has gotten the most criticism — the fact that Jim Balsillie and Mike Lazaridis both serve as co-chairman and co-chief executive.

In addition, RIM announced only one executive departure as part of the restructuring — the retirement of COO Don Morrison, who has been on medical leave since last month.

“Investors may have been expecting or hoping for a bit more turnover in the senior executive ranks,” Morgan Keegan analyst Tavis McCourt said in a research note on Monday. That said, McCourt took some solace in what RIM didn’t say on Monday.

“At this point, any time RIM makes a public statement and doesn’t bring down guidance, we take it as at least a modest positive,” McCourt said.

Meanwhile, RBC Capital Markets analyst Mike Abramsky noted that the moves “appear more adjustments than fundamental management reorganizations, and leave senior management unaffected.”

However, he said that the 2,000 layoffs, which represent about 10 percent of the company’s workforce, are more significant. On a percentage basis, he said, the moves are greater than those undertaken at Nokia and leave RIM with more revenue per employee than Google, Motorola and Nokia (though less than Apple.)

RIM shares were trading on Monday morning at $27.00, down 91 cents, or three percent, though it should be noted that it is a generally down day with most tech stocks in the red.

And, in case you were wondering, that image is a replica of a deck chair from the Titanic, as seen on display at the Nova Scotia Museum.

Turns out, the firm has put RIM and its leadership on probation, giving it six months to make the case that its unusual co-chair/co-CEO structure should be maintained. “We wanted to give them a chance to prove that there is an actual business necessity,” Northwest & Ethical’s Jennifer Coulson told Bloomberg.

If RIM’s able to do that by January 31 of next year, co-CEOs Jim Balsillie and Mike Lazaridis will retain their roles unchallenged. If not, Northwest & Ethical may reintroduce its original proposal. Said Coulson, “We wanted to secure the potential for filing again next year. So if we’re not satisfied, we have that opportunity.”

There was no ornery mob, no activists spoiling to give co-CEOs Jim Balsillie and Mike Lazaridis the drubbing that many would argue they richly deserve. 

Instead, the roughly 300 shareholders assembled re-elected RIM’s entire board of directors, despite a recommendation by proxy advisory firm Glass Lewis to withhold votes for lead director John Richardson. And while a few castigated the company’s management for its strategic missteps, no one questioned its unusual dual leadership structure, which has been the topic of some debate recently among Wall Street analysts and corporate governance experts. There was barely a word from the activist shareholders who recently withdrew a motion to force Lazaridis and Balsillie to relinquish their shared roles as board chairmen.

Rather than hearing an apology for RIM’s current sorry state — and an explanation for the strategic missteps that have left it struggling to catch up with competitors that didn’t even exist five years ago — RIM shareholders were treated to the same what-me-worry narrative Balsillie and Lazaridis have been spinning for years now. RIM is poised to regain its leadership position in the smart device market, and its current co-CEOs are the right guys to make it happen.

“RIM’s foundations are very strong,” Balsillie said. “We’re on the verge of one of the biggest global product launches in our history … We’re not perfect, but we give our very best every day. We literally don’t take a day off.”

Good thing for that, because RIM’s shares, which traded at around $150 in the halcyon days, continue to dog-paddle at about $28, following two downward revisions to its earnings projections for the year.

Evidently, RIM’s shareholders — or at least those who bothered to attend the meeting — aren’t much bothered by that.

The move represents a significant retreat for the BlackBerry maker, which has long defended a structure that places two executives, Mike Lazaridis and Jim Balsillie, at the head of both the company’s management and its board.

Read the rest of this post on the original site »