After criticizing the leadership of former Research in Motion (RIMM) co-CEO's Mike Lazaridis and Jim Balsillie back in September, I voiced some skepticism on the selection of former COO Thorsten Heins when Heins replaced the duo in late January.
Heins' first public interview -- given to Toronto's Globe and Mail -- was far from reassuring to RIMM investors and observers who were clamoring for a change in strategy at the struggling company. "There's no need for me to shake this company up or turn it upside down," Heins told the paper.
I had predicted back in September that the resignation of the co-CEO's would "instantly" create a billion dollars in shareholder value; after the stock's long fall, I revised that prediction to half a billion, and was almost exactly right. In pre-market trading on January 23 -- the morning after Heins' appointment was leaked -- RIMM opened up 5%, adding about $445 million in market capitalization for shareholders.
And then Heins started talking on the company's introductory conference call. As TheStreet.com noted, RIMM went from being up 5% to down 2% before the call was even completed. It would close down 8.5% by day's end; from the start of the conference call to the end of the day, RIMM's market capitalization would drop by over $1 billion.
It wasn't hard to see why; Heins sounded much like his predecessors, attributing the company's struggles to "a few bumps in the road" and cheerleading for the so-far unsuccessful QNX platform and the disappointing and poorly released Playbook tablet, which shipped initially without a native email program. About the possibility of licensing RIM software, or proceeding through partnerships with other vendors, Heins was adamant [emphasis mine]:
So my view on RIM is a very, very clear view...I will not in any way split this up or separate this into different businesses. Now on the licensing piece, I mean if -- I'm absolutely confident that BlackBerry 10 will prove itself as a platform. If there is [a] request coming towards Research in Motion to talk about licensing that platform to other companies, I will entertain those discussions. I will listen. I will assess the business opportunity for RIM. And if it makes sense strategically and tactically to go down that path and then I will make the decision together with the board. But it's not my focus one. My focus one is strengthening RIM's business based on that integrated approach because there's not many companies out there that have this.
But the Thorsten Heins who spoke on Thursday evening's call sounded very different. It may have been the 10 weeks in the CEO chair; it may have been the departure of former boss Jim Balsillie; or it may have been Heins feeling a bit less pressure to be diplomatic to the former co-CEO's who had originally brought him on at RIM. But Heins' opinion of the company -- at least his public opinion -- has changed dramatically, a change he addressed early in his prepared remarks:
I did my own reality check on where the entire company really is...[I]t is now very clear to me that substantial change is what RIM needs.
This statement alone is a notable one for Research in Motion. It is a sentiment that Balsillie and Lazaridis never broached publicly, and it stands in stark contrast to Heins' original comment to the Globe and Mail that there was "no need" for a shakeup at RIM.
Heins' words don't appear to be intended to mollify investors and analysts, but appear to reflect a genuine change of heart. Heins noted plans to cut back the company's services business -- built mostly through acquisitions Heins now publicly admits were misguided. Heins plans to emphasize the company's legacy strength in the enterprise -- where the security of its platform remains the industry standard -- while also combating the growing trend of "BYOD" (bring your own device) through better higher-end products. And Heins -- who sounded reluctant to consider the possibility of licensing deals in January -- now announced a strategic review of the company's assets and product lines noting the company was "seeking strong partnerships." In response to a question about a possible sale of the company, Heins admitted he would consider a sale if the upcoming strategic review made him question the company's ability to turn itself around.
In short, Heins admitted the company's mistakes; offered strategies to fix those mistakes and improve the company's product lines; and showed humility and understanding toward the shareholders, employees, and developers whose frustration with RIM is nearing a breaking point. Yes, this is what CEO's do, particularly when a stock is trading 90% below its all-time high; but not at Research in Motion, at least not for a long time.
In his introductory call, Heins thanked the former co-CEO's Lazaridis and Balsillie for their support, and called them "visionaries who not only created an iconic company, but also pioneered the development of the smartphone industry." He praised the "bold step" of purchasing the QNX software: "we are more confident than ever that this was the right path to go."
On Thursday, Heins noted that Balsillie was leaving the RIM board of directors. The new CEO noted flatly, "I'd like to take the opportunity to thank Jim for 20 years of service and leadership in the name of RIM and wish him well in the future." And that was it. Heins' tone was markedly different from his treatment of Balsillie on the introductory call; the deference was clearly gone. In this -- and on most of the call -- Heins sounded far more authoritative, far more involved, and far more in tune than in his first conference call. He sounded like a man who was taking control of his company, and who was comfortable stepping away from the shadows of the giants who preceded him. Granted, it may be too late for RIM and its shareholders. But the Thorsten Heins whose introduction to the investing world in January cost shareholders over a billion dollars is not the same Thorsten Heins who spoke on Thursday. It may not be enough for RIMM -- but it's something investors should consider.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
