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RIM appoints new CEO

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BlackBerry maker Research In Motion (RIM) today announced that it was replacing its co-CEOs with Thorsten Heins, ostensibly paving the way for a new phase in product evolution, but possibly also preparing it for sale, writes ARTHUR GOLDSTUCK.

A civilised “passing of the baton”” at BlackBerry maker Research in Motion (RIM) may well presage a messy struggle to find the right buyer for the company.

The announcement of the appointment of Thorsten Heins as President and Chief Executive Officer was couched in deeply diplomatic terms, to ensure that it is characterised as planned succession, rather than the former co-CEOs bowing to massive pressure from investors, industry and media.

A formal statement from RIM began: “”The Board of Directors of BlackBerry maker Research In Motion (RIM) today announced that, acting on the recommendation of its Co-Chief Executive Officers to implement the succession plan they previously submitted to the Board, it has unanimously named Thorsten Heins as President and Chief Executive Officer. Mr. Heins was also appointed to RIM’s Board. The Board acted after conducting its own due diligence. Both appointments are effective immediately.””

Former Co-CEOs Mike Lazaridis and Jim Balsillie, who have long resisted shareholder pressure for change, each own more than 5% of RIM’s shares, giving them a powerful hand in how the company is run. It also means that they are controlling the positioning of the transition tightly.

Lazaridis has been named Vice Chair of RIM’s Board and Chair of the Board’s new Innovation Committee, whileBalsillie remains a member of the Board. Barbara Stymiest, a member of RIM’s Board since 2007, has been named independent Board Chair.

As Vice Chair, said Lazaridis, he will work closely with Heins “”to offer strategic counsel, provide a smooth transition and continue to promote the BlackBerry brand worldwide””.

Heins, for his part, said: ‚Mike created a whole new way of communicating and I look forward to continuing our close collaboration.‚

Elaborating on the transition, Lazaridis, deliberately avoided mention of the challenges facing RIM: ‚There comes a time in the growth of every successful company when the founders recognize the need to pass the baton to new leadership. Jim and I went to the Board and told them that we thought that time was now. With BlackBerry 7 now out, PlayBook 2.0 shipping in February and BlackBerry 10 expected to ship later this year, the company is entering a new phase, and we felt it was time for a new leader to take it through that phase and beyond. Jim, the Board and I all agreed that leader should be Thorsten Heins.‚

Balsillie echoed these words: ‚I agree this is the right time to pass the baton to new leadership, and I have complete confidence in Thorsten, the management team and the company.””

He also took the opportunity to remind the market who calls the shots: “”I remain a significant shareholder and a Director and, of course, they will have my full support.‚

Meanwhile, Lazaridis intends to gain even greater control: “”I am so confident in RIM’s future that I intend to purchase an additional $50 million of the company’s shares, as permitted, in the open market.‚

That, of course, would be a clever move if the company is close to being sold. There is little doubt that any buyer would pay a premium over the current $8.5-billion market capitalisation, which is lower than the asset value of the company. Strong speculation emerged last week that RIM had tried to engage Samsung in acquisition talks, but that the latter wasn’t interested.

A more likely buyer would be one of the lesser phone brands that has struggled to get a look into the current global smartphone war, where the chief combatants seem to be Nokia, Samsung and Apple, with BlackBerry and HTC maintaining the high ground in some markets. The outsiders include Sony and LG, whose market shares have slumped in recent years. Even the emerging Chinese brands Huawei and ZTE, who are about to take on the developing world with cheap Android-based smartphones, understand the appeal of BlackBerry at the high end of these markets.

The buyer could also come from outside the phone market. Microsoft is often cited, as is Google – although the latter may not have the appetite for it after the lukewarm market reaction to its Motorola acquisition. Could BlackBerry’s e-mail and Messenger application be incorporated successfully into Windows or Android phones? That development challenge may be too costly for either organisation, even if the purchase price is right. Then there may be candidates out of left field, who would be interested in the corporate user base BlackBerry has built up, and do not have an operating system legacy to defend. That could apply to any laptop maker, although most are already in the Android fold for their tablets. The most likely purchaser, ultimately, would be a consortium of investors. Should that come to pass, it should also be expected that existing executive management would not be around for long, following the sale. The focus would be on turnaround, and then all bets would be off for the current BlackBerry roadmap.

However, it is likely that RIM would wish to sell to one of the market leaders in Western markets – if they have the luxury of that choice. Laziridis would prefer the market turn its attention away from that debate, saying he had decided to move to the Vice Chair role in order to return the public’s focus to what is most important, i.e. ‚the great company we have built, its iconic products, global brand and its talented employees.‚

The announcement did not suggest a greater sense of urgency around the need for BlackBerry to respond more quickly to shifts in market demands. Quite the contrary: Heins endorsed current management style: “”It is Mike and Jim’s continued unwillingness to sacrifice long-term value for short-term gain which has made RIM the great company that it is today. I share that philosophy and am very excited about the company’s future.‚

Heins joined RIM from Siemens Communications Group in 2007 as Senior Vice President for Hardware Engineering. He became Chief Operating Officer for Product and Sales in August 2011, and has thus been part of RIM’s transition from smartphone market leader to a company battling against declining market share.

However, in his sales role, he is keenly aware of the fact that the company’s demise has been severely exaggerated.

‚We have a strong balance sheet with approximately $1.5 billion in cash at the end of the last quarter and negligible debt. We reported revenue of $5.2 billion in our last quarter, up 24% from the prior quarter, and a 35% year-to-year increase in the BlackBerry subscriber base, which is now over 75 million.‚

The near future is already mapped out for Heins, and he expressed no intention to change its current development path:

‚Mike and Jim took a bold step 18 months ago when RIM purchased QNX to shepherd the transformation of the BlackBerry platform for the next decade. We are more confident than ever that was the right path.

‚Going forward, we will continue to focus both on short-term and long-term growth, strategic planning, a customer- and market-based product approach, and flawless execution. We are in the process of recruiting a new Chief Marketing Officer to work closely with our product and sales teams to deliver the most compelling products and services.‚

Nevertheless, it is inevitable that behind the scenes, the debates must be raging. Waiting for the end of 2012 for a new operating system, when the old one is clearly inadequate for the apps revolution, may be too much of a stretch for the market. However, Blackberry’s reputation for innovation and market responsiveness will, to some extent, also be riding on what the PlayBook 2.0 tablet can deliver when it is launched in the coming weeks.

RIM’s founders may have stepped aside, and they may well be hawking the company around, but the BlackBerry brand is not ready to go away.

Thorsten Heins biography (as supplied by RIM)

Thorsten Heins, 54, is a respected business leader with 27 years of broad experience and expertise in wireless networks and consumer electronics devices. Mr. Heins has a global reputation for his organizational and leadership skills and his ability to build successful organizations that deliver on their commitments. Prior to today’s announcement, Mr. Heins was one of RIM’s two Chief Operating Officers and, before that, Senior Vice President for the Handheld Business Unit. He played key roles in the creation of RIM’s product portfolio. Mr. Heins came to RIM in December 2007 from the industrial conglomerate Siemens AG. He joined Siemens in 1984 after graduating from the University of Hannover in his native Germany. At Siemens, Mr. Heins rose through the ranks of R&D customer service, sales and product management positions. After serving as Chief Executive Officer of various business divisions in the communication business, Mr. Heins moved to Chief Technology Officer and member of the Group Board of the Siemens Communications Group. He came to RIM after being impressed by the level of innovation displayed by founders Mike Lazaridis and Jim Balsillie. Mr. Heins is married with a daughter and a son. Away from RIM, he is usually outdoors bicycling, motorcycling, skiing or hiking.

* Arthur Goldstuck is editor-in-chief of Gadget and managing director of tech research company World Wide Worx. Follow him on Twitter on @art2gee

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