Research in Motion shares are now trading below book value and the previous argument for not tossing co-CEOs Mike Lazaridis and Jim Balsillie to the curb revolved around disruption.
Here's what Balsillie said June 16 on RIM's fiscal first quarter earnings conference call:
Mike and I would like to address some of the concerns that have been expressed in the media and analyst community surrounding the executive management structure at RIM and particularly about the joint nature of our leadership. Mike and I have been partners in this business for almost 20 years, and over that time RIM has grown to $20 billion in annual revenue and has successfully navigated through many challenging times. We are currently approaching the tail end of a significant transition in our business, and frankly, few companies would have been able to survive. But we have. And I believe, and I think Mike would agree, that neither of us could have taken the Company this far alone and that completing the transition and taking the Company to the next level of success and growth is also something neither of us can do alone. It's something that would be incredibly challenging for someone from outside the Company to manage successfully at this critical time in RIM's development.
Lazaridis chimed in:
I also believe that this strong, consistent leadership is critical to successfully leveraging the substantial investments we have been making in BlackBerry 7, QNX and all the products that are about to launch in fiscal 2012. Our commitment to RIM is stronger than ever, and we know what we have to do jointly to accomplish and take RIM to next stage of growth and success.
Jim and I recognize each other's strengths and regularly discuss and work together to determine the best way to execute on the incredible market opportunity ahead of us. We understand that weathering this transition has been difficult for our shareholders and also for our employees. We are grateful for the support you have shown us. I truly believe we are approaching the final phase of this transition.
Here's RIM's performance since those comments were made. Now RIM is trading below book value.
That stock chart can be summed up in two words: No confidence. There's no confidence in RIM management, its product roadmap or the company's ability to get QNX out the door on time and save the day with BlackBerry superphones. RIM can't even get its QNX-based PlayBook 2.0 OS out the door.
Now RIM is below book value and worth less than $10 billion. RIM is screaming for a buyout, but the company is too integrated to split apart easily. Jefferies analyst Peter Misek recently said in a research note:
We believe any potential acquirers will wait until the QNX transition is completed as they will not know what they are buying otherwise. Also, we believe acquirers will wait to see if Windows 8 becomes the third mobile ecosystem as its success or failure will dramatically alter the strategic situation and RIM's valuation. We also believe it will be difficult to extract value from RIM in a break up or a management change scenario.
In other words, RIM is screwed. And when a team is screwed you typically fire the head coach. RIM needs change and it needs it now. It's unlikely that the latest BlackBerry are going to be able to withstand demand for Apple's iPhone 4S and a wide range of Android devices hitting the market. Tossing Balsillie and Lazaridis may not be a miracle cure, but it will certainly make RIM watchers feel like something is being done.
I leave you with RIM's 10-year chart. It was a nice ride, but it's time to change course.