RIMplosion 2012: Corporate Shakeup Signals Change for BlackBerry
With disappointing earnings numbers, the departure of its former co-CEO and more layoffs looming like a dark cloud, RIM's new CEO is initiating a corporate shakeup that could have a lasting impact on the beleaguered handset maker.
By Al Sacco
Yesterday was a big day in the world of BlackBerry.
Research In Motion (RIM) announced its fourth quarter 2012 financials, and the numbers were particularly grim. The company said its former co-CEO and board member Jim Balsillie is retiring. RIM’s CTO, David Yach, and COO, Jim Rowan, are also leaving the company, and reports suggest other high-level firings are in the works. And Thorsten Heins, the current BlackBerry chief executive, said RIM will refocus its efforts on the enterprise and “explore all the company’s options,” including licensing agreements and even a straight sale.
The year 2012 is turning out to be a very tough one for the BlackBerry maker. On the surface, it appears RIM is slowly imploding. Though this latest set of challenges could represent the beginning of the end for BlackBerry, it could also signal the start of some positive change within the RIM ranks. Here’s why.
RIM’s Q4 2012 Earnings
I don’t have anything good to say about RIM’s latest numbers for the fiscal year, which ended on March 3, but they do provide an adequate representation of just how far RIM has fallen and why a major change is necessary for BlackBerry. Here’s a quick breakdown:
Q4 2012 revenue was $4.2 billion, down 19 percent from the previous quarter
GAAP net loss in Q4 was $125 million–the first quarter loss for RIM since 2005
RIM shipped 11.1 million BlackBerry smartphones in Q4, 21 percent fewer than Q3 2012
Fiscal year 2012 revenue was $18.4 billion, down 7 percent from $19.9 billion in fiscal 2011
Bye Bye, Balsillie
After 20 years with the company, Jim Balsillie, former co-CEO of RIM and current member of its board of directors is severing all ties with the BlackBerry maker. This is significant news, not just because Balsillie is leaving the company, but because it signals a true changing of the guard at RIM.
“As I complete my retirement from RIM, I’m grateful for this remarkable experience and for the opportunity to have worked with outstanding professionals who helped turn a Canadian idea into a global success.”
In early January, before both Balsillie and his co-CEO Mike Lazaridis stepped down from their chief executive roles, the men were stripped of their chairmen of the board titles but not their seats on that board. At the time, I wrote a post detailing why I thought this move was simply a gesture to appease frustrated shareholders and it wouldn’t have any sort of lasting impact on RIM. Balsillie’s departure from RIM is sure to have a very significant impact on the company, and even though Lazaridis is still hanging on to the company he founded via a seat on the board, RIM is for the first time in years undergoing a real metamorphosis. And that is a much-needed change.
What RIM has been doing clearly isn’t working anymore. And having its former leaders sit on the board of directors probably isn’t helping Heins make the strategic change the company so badly needs. So while I mean no disrespect to Balsillie, it’s a good thing for him and RIM to part ways at this point. I also wouldn’t be surprised if Lazaridis leaves in the coming year.
More BlackBerry Executive Turnover
In addition to Balsillie’s departure, RIM announced that its CTO David Yach will also be hitting the road after 13 years with the company. No further details on the reason why, but it’s safe to assume Yach felt it was time for a change. Jim Rowan, RIM’s COO of Global Operations, also decided to leave RIM after four years, though again, no specifics on why were provided.
Balsillie, Yach and Rowan are the latest in a long line of high-level RIM employees to jump ship during the past year or so, including a CMO, BlackBerry Enterprise Server (BES) VP, chief of developer relations and a PlayBook tablet product manager.
While Yach and Rowan’s departures are voluntary, The Globe and Mail reports that a number of additional RIM SVPs and VPs are about to get pink slips. So it appears that Heins is really shaking things up in hopes that some fresh blood will revive and recharge the hurting BlackBerry brand–and with significant financial losses predicted for the short-term future, cutting a few salaries can’t hurt, either. Whether or not Heins’ plan will work remains to be seen, but such a shakeup can only be a good thing at this point.
Possible BlackBerry Licensing Deals, RIM Sale
Given the challenges we face, we believe it is prudent to explore all the company’s options, Heins said yesterday.
The BlackBerry CEO spoke specifically about licensing deals, under which RIM might allow its software to run on handsets or tablets made by other manufacturers, saying he will consider them. Rumors about deals between RIM and other major electronics makers, including Samsung, have been bouncing around for months, though the question remains why a company like Samsung would want to cozy up to RIM when the BlackBerry maker has so clearly fallen out of consumer favor. RIM’s enterprise strengths and expertise could be attractive to potential buyers, but betting on RIM right now would be a taking a chance, to say the least. Regardless, licensing deals could be in RIM’s future, and they could lead to new, interesting BlackBerry products.
Heins didn’t specifically say that he’s considering a sale of the company, but the CEO did say he’s exploring all options, and such a sale must be one of them. Read “Why RIM Should Not Sell the BlackBerry Brand–and Why It Should” for more information on the benefits and risks of RIM sale. Though I don’t expect to see a BlackBerry sale in the near future, I wouldn’t rule one out either.
“We believe that BlackBerry cannot succeed if we try to be everybody’s darling and all things to all people,” Heins said. “Therefore, we plan to build on our strength.”
It’s unclear how exactly RIM will strengthen its enterprise focus, but it recently released a new set of security and management tools that let IT manage and secure iPhones and Android devices, and not just BlackBerrys, showing it has already started to broaden its business focus.
RIM has spread itself too thin for years, and as a result, the company missed a number of major product release targets and released a handful of half-baked products that were then blasted by reviewers. Heins seems to have acknowledged this issue, and he may be attempting to address it by hinting that he will no longer try to cater to “everybody.”
This new focus could lead RIM to shrink its product portfolio and dedicate more time and energy to perfecting handsets, tablets and accessories instead of rushing them out the door to meet target release dates.
It’s impossible to say that RIM is in good shape right now; it’s not, the company is in a very bad place. But for the first time in years, it looks like RIM’s leadership is going to at least try to initiate a major change. And that’s a step in the right direction.