Research In Motion Ltd.'s new chief executive officer set out the first steps in his turnaround plan, telling investors that the BlackBerry maker will become “more marketing-driven” and more focused on meeting consumers' tastes.
But Thorsten Heins, who took over after a huge weekend shakeup that saw former co-CEOs Jim Balsillie and Mike Lazaridis resign their posts, balked at the idea of a quick fix to raise RIM's share price, such as breaking up the company, as some investors have suggested.
Speaking to analysts for his first time in the top job, Mr. Heins admitted Monday that RIM has made errors and said it still acts like a startup in some ways, despite the fact that it has $20-billion (U.S.) in revenue. To turn the firm around, he said it will have to ramp up its marketing efforts, particularly in the U.S., and streamline the development of new products.
“We need to be more marketing driven. We need to be more consumer-oriented because this is where a lot of our growth is coming from,” he said. “We need to engage more with the consumer base.”
Investors, however, were not convinced by what they heard, and some panned RIM's decision to install Mr. Heins, the former chief operating officer and a hardware specialist, at a time when the firm has fallen far behind Apple and Google.
RIM shares fell more than 9 per cent in Toronto, their largest one-day decline this month, in heavy trading.
While some took comfort from hearing a RIM executive acknowledge that the company faces many obstacles, investors and analysts worry the firm isn't tackling its root problem: inferior smartphones.
There are also fears that by promoting an insider, RIM may not have done enough to shake up the firm. Before Mr. Laziridis and Mr. Balsillie resigned, Mr. Heins was one of their trusted deputies. The new CEO, who previously worked for German cellphone maker Siemens AG, plans on delegating the company's marketing and consumer outreach to a new, yet-to-be hired chief marketing officer.
“I doubt Steve Jobs could resurrect RIM to its former status,” said Kris Thompson, an analyst at National Bank Financial. RIM, he said, still has inferior products and is “losing market share remarkably fast. Time is running thin,” he wrote in an e-mail. “Thorsten needs to have some impressive magic tricks. Tricks that encompass change management, operating cost control and timely product innovation.”
“It kind of feels that the time has passed for hardware specialists to be in charge of these companies,” said analyst Stuart Jeffrey with Nomura Securities in New York. The chief executive officer should be someone who not only understands how consumers interact with their phones but can also can build a thriving ecosystem of applications, he said. Apple, for instance, has control over the components it uses, such as customized chip sets, has its own operating system and runs a top-notch app store.
But even if RIM can get its marketing in order, a key focus for the firm, Mr. Jeffrey is quick to point out that “does not address RIM's fundamental issue – a lack of compelling and competitive devices.”
Still, not all is lost for RIM in the eyes of Corporate Canada. “I think you have to remember that they are far and away the dominant player in the enterprise market, in the e-mail market,” said Wade Oosterman, president of Bell Mobility, who believes the firm still has a lot to build on.
Leveraging these assets will require recruiting the best of the best, and that is becoming a much harder task. Hongwei Liu represents this struggle. A second-year student in the University of Waterloo's electrical engineering program, he has worked two co-op stints at RIM but is now taking a year off from his studies to make a go of it with a small tech startup that builds digital maps for sprawling shopping centres.
“Everyone thinks they're great guys and great entrepreneurs, and we give them props for that,” he says. “But RIM is no longer sexy to work for.”