Research In Motion Ltd. is expected to bow to shareholder pressure by restructuring its board and naming a new chair to study strategic options, but investors looking for dramatic change may be disappointed.
The BlackBerry giant has lost significant share in the United States, its most valuable market, and its stock has plunged by more than 70 per cent over the past year amid disappointing quarterly results and delays to crucial products, even as it finds huge success in emerging markets.
The troubles prompted activist investors to push for change to the company’s traditional structure, under which the co-chief executive officers also co-chair the board of directors. The company in turn struck a directors’ committee to examine the governance structure, and RIM says it is on track to report by Jan. 31.
Analysts and sources familiar with the company expect the committee to recommend a division of duties, replacing Mike Lazaridis and Jim Balsillie as co-chairs, though not as CEOs. They expect the company to tap Barbara Stymiest, who is well known in business as the former chief operating officer at Royal Bank of Canada and ex-CEO of what is now TMX Group Inc., as the new chair.
But Ms. Stymiest, who has served on the board since March, 2007, is seen by many industry observers as an insider who may be unable to take the company in a radical new direction, even though news of her possible appointment boosted RIM stock on Tuesday. Change at RIM is also likely to take some time, since few observers think the board can force the company to bring out compelling new technology, which is what many feel is needed to change RIM’s fortunes.
“Our checks indicate RIM is likely to name Barbara Stymiest as chairman,” Jefferies & Co. analyst Peter Misek said Wednesday. “We believe she will initiate a formal strategic review.”
The review will likely cover much ground, such as licensing RIM’s next-generation BlackBerry 10 software, which the company is preparing to install on smartphones whose release was recently delayed until late 2012, Mr. Misek said. He added RIM may already be agreeing to license the software to Samsung Electronics Co. Ltd. and HTC Corp., which currently use Google Inc.’s Android mobile software to power their smartphones.
A shareholder activist group also wants a new chair to examine the possibility of breaking up RIM’s various operations – including the handset business and the secure communications servers – to get the most for shareholders. Some members of this group, led by Toronto-based merchant bank Jaguar Financial Corp., have been in talks with management and have attempted to meet with board members.
“In technology, time stands still for no one – you don’t have a lot of time to think about this,” said one significant shareholder, who did not want to be named but is part of the investor group, which holds nearly 10 per cent of RIM shares. “We’re not saying sell the farm, break the farm up. But they should look at [that]as at least one option. … They need to look at whether they can be a long-term survivor. And that really comes down to finding the right people to look at it.”
Several sources said news of Ms. Stymiest’s possible appointment constituted an olive branch to an investment community that has pummelled RIM’s shares in recent months, and was an attempt to halt any further declines. But some close to the company were not expecting any big changes in the coming months and were surprised the market reacted so positively.
Shareholders contacted by The Globe were heartened by the possibility of board changes. Various members of RIM’s board declined to comment when contacted, and RIM referred to a previously issued statement. Ms. Stymiest also would not comment.
Jaguar has publicly called on Ms. Stymiest, as well as fellow board member and Rotman School of Management dean Roger Martin, to take action in the name of shareholder value at a time when RIM’s share of the U.S. smartphone market has slumped to just 6.5 per cent.