Blog Post

Will demoting RIM’s CEOs save the handset maker?

Stay on Top of Enterprise Technology Trends

Get updates impacting your industry from our GigaOm Research Community
Join the Community!

Research In Motion (s rimm) is one of those rare companies with not only co-CEOs but co-chairmen, and all four roles are held by the same two executives. But after the year the company had, it appears Mike Lazaridis and Jim Balsillie may be losing their chairmen titles, according to a report in the Financial Post.

The Post said the board, which has been reviewing a potential separation in the roles of CEO and chairman, is about to unveil a plan that would strip Lazaridis and Balsillie of their chairmen titles and replace them with a single independent chair. The new chairperson would be director Barbara Stymiest, former head of TMX Group Inc. and former chief operating officer at Royal Bank of Canada, who joined RIM’s board in 2007. The upcoming report is due by Jan. 31, with Lazaridis and Balsillie provided 30 days to respond.

The move wouldn’t be a complete shock, considering the year RIM had. After pinning high hopes on the BlackBerry PlayBook, sales have been sluggish, thanks in part to delayed software upgrades, which aren’t due until February. The company has also been slashing forecasts, with fourth-quarter estimates for smartphone unit sales expected to come in below the third quarter. And the long-awaited move to the QNX-based operating system for RIM’s smartphones has been pushed back until the second half of 2012, the latest in a line of delays for the company. Also, RIM’s smartphone marketshare in the U.S. and internationally continues to fall.

The question is whether removing Lazaridis and Balsillie from the board will be enough to turn things around and also instill some investor confidence. If this is just a way to appear sensitive to angry shareholders without a real change in the way RIM operates, it may not do much for RIM’s stock price over the long run. (The stock is up almost 9 percent today.) But more importantly, it doesn’t address concerns that RIM is responsive enough at the top and capable of executing quickly and effectively in the way that RIM needs.

RIM’s co-CEOs made a show of cutting their salary on the latest quarterly call to $1, but it didn’t impress many analysts. More damning were the delays to QNX-based smartphones and the belief that a stepped-up marketing campaign would help pull RIM out of its doldrums.

To be fair, an independent chair could help be an important check on Lazaridis and Balsillie and show the company is prepared to make big changes when necessary. But the proof will be in the pudding. Getting rid of Lazaridis and Balsillie’s chairman titles will buy the duo some time, but they’re still looking at a long 2012 with RIM’s next generation of smartphones potentially not hitting until  the next holiday season. It’s hard to see how PlayBook sales will start flowing again without huge discounts, which is something RIM is now undertaking. But more importantly, it’s going to be tough to hold the line on smartphone sales in the coming quarters when consumers are being told something better is on its way later this year. RIM has a chance to keep expanding sales overseas, which is taking up a bigger and bigger portion of its business, but even that success will come under threat as cheaper Android (s goog) devices proliferate.

RIM’s co-CEOs have to hope that 2012 can ultimately end on a positive note. But the way things are going, I wouldn’t be surprised if they don’t get that far.

4 Responses to “Will demoting RIM’s CEOs save the handset maker?”

  1. Don’t blame CEO, they want RIM win.

    RIM has strange culture and self distruct political environment.

    In RIM if a new hired person figure out major problem and introduce efficient approach, both manager and his buddy group member will proof their wrong approach works. just like someone point out driving a car is right way, pushing a car is wrong way, then both manager and his buddy group member will hate you, and proof that 3 person can also move the car by pushing it. cheating email will be sent to some vice president, saying like: see, the car moving, pushing a car is a natural part of the process, in order to deny new hired contribution of introducing skill of drive a car, they have to deny merit of driving a car.

    It is very strange company culture and strange company political environment, it promote stealing and cheating skill. RIM’s management may be a typical instance in MBA course.

    This culture deny or steal hardworking team members’ contribution/innovation, generate strange political environment, destroy RIM.

    So don’t blame CEO, some of their VPs and VPs’ expert generate terrible culture and self destruct political environment.

  2. Even the Blogsphere lost interest in this already … I feel for all the good Canadian people who will suffer from their management failure. Its always the same story …

  3. Unfortunately, not here in the United States. It may buy the company a bit of time oversees, but, RIM doesn’t have, nor, will they have a product that doesn’t seem inferior in every to Android phones, the iPhone, and Windows Phone 7 devices less maybe physical keyboard and battery life until late this year at the earliest.