TORONTO — Research in Motion (TSX:RIM) shares soared Tuesday amid reports of a possible boardroom shakeup that investors hoped could lead to a turnaround or sale of the BlackBerry maker.
News reports say Mike Lazaridis and Jim Balsillie are considering relinquishing their titles as co-chairmen of the RIM board. The two also run the company as co-CEOs.
However, the company has not commented directly on an anonymously sourced report in the National Post’s financial section, that Barbara Stymiest, an independent member of the RIM board since 2007, is the leading candidate to take over the position.
“It’s not surprising if something like that happens, I think the question is: is this too little too late?” asked William Blair & Co. analyst Anil Doradla. “Obviously, like in any other position, any other job, people have to be answerable and the status quo will not be tolerated.”
The Waterloo, Ont.,-based company’s board launched a review of how it’s governed several months ago under pressure to do something to improve its dismal stock performance.
When asked for comment Tuesday, RIM issued an email response saying only that a committee of seven independent directors, which includes Stymiest, is due to report its findings at the end of the month.
RIM says the board will publicly respond within 30 days of that.
Lazaridis, who co-founded RIM, and Balsillie, who joined the company early in its history, are frequently credited both with building the company into a global technology leader and for RIM’s failure to remain at the top of the smartphone industry.
On the Toronto Stock Exchange, RIM shares closed up 91 cents or 6.15 per cent at $15.71, although the stock remains a shadow of what it was before RIM’s BlackBerry and its senior managers lost investor confidence.
Traders seemed to posit that a new chair of the board would lead either to a turnaround at the iconic Canadian smartphone maker or a sale of the company or parts of its business, Doradla noted.
There are also questions as to whether the shakeup would simply rearrange the same directors to give the impression of change, or whether it would truly be the beginning of something bigger, he added.
Some analysts have speculated that a new chairman might oversee a strategic review of Research in Motion as some of the company’s shareholders want. That could lead to a splitup of the company or an eventual sale of the business to potential suitors such as Microsoft or Amazon Inc.
Though RIM is by no means at death’s door, it has fallen far behind its peers in the smartphone market. Many investors hold Balsillie and Lazaridis responsible for the company’s problems, including a slowness to bring out new products to meet the new market competition.
Among the most public critics of Lazaridis and Balsillie is merchant banker Vic Alboini, president of Jaguar Financial Corp. in Toronto, which has been pushing for a change in the board structure for several months.
At the beginning of 2011, RIM was gearing up to launch the PlayBook, its answer to Apple’s hugely successful iPad. But RIM’s tablet failed to catch on in the market and, from then on, the news for RIM was mostly bad.
It was forced to cut 2,000 jobs to keep costs in line. A worldwide, four-day BlackBerry outage in October cost it more than $50 million in revenues and tarnished its reputation. And it warned investors it would book a $485-million charge on the cost of discounting the price of PlayBooks by more than half to help boost sales.
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.
Lazaridis urged investor “patience and confidence.” Balsillie noted the company is “not satisfied with the performance of the business in the United States.” Both had their salaries reduced to $1.
Perhaps the nastiest bit of news for RIM was that the delayed launch of a new generation of BlackBerrys — known as the BlackBerry 10, which some have seen as a ray of light for the company — from early to mid-2012 due to availability of the chipset that will power the new BlackBerry.
Given the company’s dismal performance over the past two years and uncertainty about RIM’s future product announcements, investors who believe there could be a turnaround “don’t have a lot to hang your hats on,” Doradla said.
“The BlackBerry 10 was a make or break... and they’re proving that it’s becoming more of a break rather than a make story,” he added.
As for a potential sale of the company in the next year, Doradla said the pieces of RIM could be attractive to many players.
“But if you are a potential acquirer, and you know a company is shrinking, is losing market share, and you’re not too worried about someone else taking over the company ... what is the rush to acquire them?”