BlackBerry Maker RIM Faces Restless Shareholders
Executives with BlackBerry maker Research In Motion faced a skeptical audience at the company's annual shareholders meeting July 10, two weeks after CEO Thorsten Heins announced another delay in the release of the BlackBerry 10 platform, a $518 million quarterly operating loss and 5,000 job cuts.
In speaking to investors, Heins again extolled the virtues of the BlackBerry 10 platform--with the first devices now scheduled for release in the first quarter of 2013 and the strategy under way at RIM to streamline the company's operations, including cutting $1 billion in expenses by the end of the fiscal year and looking for other ways to leverage RIM's assets, such as joint ventures with other companies and licensing BlackBerry technology to third parties.
It was similar to a message that Heins delivered June 28, when he announced the fiscal first-quarter results, the latest in a growing string of bad news for a company that has seen its position in the smartphone market wane significantly in the face of competition from Apple's iPhones and the host of devices running on Google's Android operating system. Sales of BlackBerry phones fell 41 percent in the last quarter, and RIM's share of the U.S. market has fallen to 4 percent.
"I am not satisfied with the performance of the company over the past year," said Heins, who was appointed president and CEO in January, replacing longtime co-CEOs Mike Lazaridis and Jim Balsillie. He noted the major changes that already have been made at the company, and promised there will be more to come.
Shareholders quickly showed their displeasure with RIM's performance, and took aim primarily at the board of directors. At the start of the meeting, investors elected 10 people to the board, including Heins and Lazaridis, who both were re-elected. However, investors withheld more than 19 percent of votes for Lazaridis, and almost 15 percent for Heins.
Investors also questioned the makeup of the board, with one asking Chairperson Barbara Stymiest whether the board planned to aggressively pursue new board members with strong technology experience, and another questioning why the board was made up of executives from North America--and particularly Canada--when the company is losing share in the region and its strengths are in other parts of the world.
Stymiest stressed that RIM was pleased with the makeup of the board, including the technological and global experience of its members. Those answers didn't satisfy all shareholders. One investor said he was extremely critical and extremely angry with the board, and that all the longtime members should not have been re-elected.
"Why did they just let it get out of hand so badly and so much before they did anything about it?" he asked.
Yet another investor took issue with Heins himself, and his pay package, noting that until coming to RIM, he had never been a CEO anywhere else. Heins noted that before coming to RIM in 2007, he oversaw several business units at Siemens Communications Group, including several that had more than $1 billion in business and one that was a turnaround job.
Despite the sharp criticism from investors, Heins and Stymiest reiterated their belief in the strategy now in place, in the new executives Heins has brought on board and on what BlackBerry 10 will do for the company once the devices hit the market. Heins said RIM had been hurt not only by the competition from Apple and Android device makers, but also by such trends as the bring-your-own-device (BYOD) phenomenon, with employees bringing iPhones and Android smartphones into the enterprise environment that RIM at one time had dominated.