TORONTO — Finally bowing to pressure from disgruntled shareholders, the two men who head BlackBerry maker Research in Motion (TSX:RIM) will step down from their positions as co-chief executives of the troubled Canadian high-tech company.
Jim Balsillie and Mike Lazaridis will turn over operational control of RIM (TSX:RIM) to new CEO Thorsten Heins, the company’s former chief operating officer, RIM’s board said in a statement Sunday.
While Balsillie and Lazaridis have left day-to-day operations altogether, they both still remain on RIMs board and will be able to exert significant influence through their large ownership stakes.
A number of RIM’s shareholders have demanded changes at the top for months, blaming Balsillie and Lazaridis for several years of poor performance that have resulted in a precipitous drop in the company’s stock market value — shares in RIM were once so highly priced it was briefly Canada’s most valuable company.
Balsillie, 50, and Lazaridis, 50, have headed Waterloo, Ont.-based RIM together for the past two decades but investors lost patience with the pair in 2011 as the company dropped behind its peers in the lightning-paced smartphone market, suffering through the worst service outage in its history and losing tens of billions of dollars in market value.
Prominent among RIM’s disgruntled shareholders has been Vic Alboini, president and chief executive of merchant bank Jaguar Financial Corp. in Toronto. Alboini launched a campaign last year to have Balsillie and Lazaridis replaced or the company sold as is or in parts.
While Alboini had praised the two for their past work in putting RIM on the map, he pushed for a new leader and a strong independent chairman. Alboini and his supporters make up almost 10 per cent of RIM’s shareholders and he’s said that stake is expected to grow to about 20 per cent as they continue to push for major change.
Heins, 54, who was chosen by Balsillie and Lazaridis as the most appropriate successor, will be tasked with navigating RIM back to its former competitive form and will have to assuage a host of less-than optimistic shareholders. The publicly little-known executive joined RIM four years ago from Siemens AG.
“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,” Balsillie said in a statement.
“I remain a significant shareholder and a director and, of course, they will have my full support.”
RIM founder Lazaridis, who will shift from co-chair to vice-chair of RIM’s board, said the move is intended to “return the public’s focus to what is most important: the great company we have built, its iconic products, global brand and its talented employees.”
“Thorsten has demonstrated throughout his tenure at RIM that he has the right mix of leadership, relevant industry experience and skills to take the company forward. We have been impressed with his operational skills at both RIM and Siemens. I am so confident in RIM’s future that I intend to purchase an additional $50 million of the company’s shares, as permitted, in the open market.”
Heins joined RIM in 2007 and has worked as senior vice-president for hardware engineering and chief operating officer for product and sales.
“RIM earned its reputation by focusing relentlessly on the customer and delivering unique mobile communications solutions. We intend to build on this heritage to expand BlackBerry’s leadership position,” Heins said.
“We have a strong balance sheet with approximately $1.5 billion in cash at the end of the last quarter and negligible debt. We reported revenue of $5.2 billion in our last quarter, up 24 per cent from the prior quarter, and a 35 per cent year-to-year increase in the BlackBerry subscriber base, which is now over 75 million.”
“As with any company that has grown as fast as we have, there have been inevitable growing pains. We have learned from those challenges and, I believe, we have and will become a stronger company as a result.”
Among other changes at the top of RIM, current director and former Toronto Stock Exchange CEO Barbara Stymiest will become independent board chairwoman and Fairfax Financial Holdings (TSX:FFH) CEO Prem Watsa will join the board.
Though RIM is by no means at death’s door, it has fallen far behind its peers in the smartphone market.
At the beginning of 2011, RIM was in fine shape and gearing up to launch the PlayBook, its answer to Apple’s hugely successful iPad. But its spring rollout left critics largely unimpressed. From then on, the news for RIM was mostly bad.
The company announced that it will take a US$485-million charge before tax on the cost of discounting the price of its PlayBook tablet and $50 million in lost revenues from an October service outage that affected millions of BlackBerry email and text users. It was forced to cut 2,000 jobs to keep costs in line.
In December, RIM reported third-quarter net profits of US$265 million, well below the $911 million for the same period a year before. That came despite the sale of millions more BlackBerrys than in 2010 and a 35 per cent rise in global subscribers to 75 million.