Research In Motion Ltd. (RIM)Â shook up its top management, replacing co-Chief Executive Officers Jim Balsillie andÂ Mike Lazaridis, who guided the BlackBerry maker for two decades and struggled to compete againstÂ Apple Inc. (AAPL)
Thorsten Heins, a chief operating officer who joined RIM four years ago from Siemens AG, will replace the pair in the CEO post effective immediately, RIM said in a statement. Director Barbara Stymiest will take over as chairman, as the two also cede their co-chairmen positions. Lazaridis, who founded RIM in 1984, will become vice chairman; Balsillie will remain a board member without any operational role.
The shakeup comes after Balsillie and Lazaridis showed little sign of being able to stop Apple andÂ Google Inc. (GOOG)â€™s gains as the Silicon Valley companies remade the mobile-computing market with devices such as the iPhone and iPad. Waterloo, Ontario-based RIMâ€™s stocktumbledÂ 75 percent last year as sales slumped, and the two men, both 50, drew investor criticism for releasing products without the features necessary to compete.
Still, Lazaridis, Balsillie and Stymiest all said the decision to step down was the menâ€™s own and not a response to outside pressure. The shift is a result of the companyâ€™s evolution and the introduction of new technologies that will give RIM more competitive products, Lazaridis said.
â€œThis marks the beginning of aÂ new eraÂ for RIM,â€ he said in an interview. â€œIt was a bit of bumpy ride. Weâ€™ve done it as best we could. Thorsten is the ideal choice. He has the right skills at the right time.â€
RIMâ€™s share of the global smartphone market sank to 11 percent in the third quarter from 15 percent a year earlier, according to research firm Gartner Inc., stung by customer defections to the iPhone, and handsets that use Google Inc.â€™s Android software, including Samsung Electronics Co.â€™s Galaxy.
RIM, once the most valuable company inÂ Canada, fell 3.2 percent to $17 at the close in New York Jan. 20, giving it a market capitalization of $8.9 billion. RIM has lost 88 percent since its peak in 2008, when soaring BlackBerry sales pushed its market value to more than $80 billion. Last quarter,Â salesÂ fell about 6 percent to $5.17 billion.
The company faced a Jan. 31 deadline to report the findings of a review of its management structure. RIM agreed to the review to fend off an effort to overhaul management by investorÂ Northwest & Ethical Investments LP, which had proposed the company split the chairman and CEO roles.
Still, other investors led byÂ Jaguar Financial Corp. (JFC)Â kept pushing for leadership changes and called for RIM to divide into separate companies, seek a merger or sell itself. Investors owning 8 percent of RIM supported the effort, Jaguar has said.
RIM is hurt by â€œmanagement dominance and a lack of board oversight, which leads to a leaderless company,â€ Jaguar CEO Vic Alboini said in October. â€œThe timing is very ripe now for a new CEO to step in.â€
Speculation that the drop in RIMâ€™s value will lead to takeover approaches drove the companyâ€™s stock to one-day gains of at least 5 percent more than 10 times since the beginning of August. RIM didnâ€™t put itself up for sale or consider a sale, according to a person familiar with the matter, who couldnâ€™t comment for attribution because the information isnâ€™t public. Tenille Kennedy, a spokeswoman for RIM, said the companyâ€™s policy is not to comment on rumors or speculation.
RIMâ€™s market-share slump in the past two years was driven by the U.S., where consumers were quick to adopt Apple and Android devices. RIM, which dominated the U.S. smartphone market before Apple and Google entered it, had its share of salesÂ dropÂ to 16.6 percent in the three months ending in November, according to ComScore Inc. Googleâ€™s Android boosted its share to 46.9 percent and Apple increased to 28.7 percent.
The BlackBerry, which gained popularity among bankers, lawyers, executives and politicians for its reliability, has also began losing its hold of the corporate market as more companies allow workers to use iPhones and Android handsets.
The BlackBerry is â€œa secular loser to Apple and Android devices,â€ Ittai Kidron, an analyst at Oppenheimer & Co. inÂ New York, told investors in a note last month. There are few signs RIM can recover as â€œexecution issues remain a drag,â€ he said.
As the U.S. market evolved, RIM decided to place more emphasis on growingÂ international sales, Balsillie said in an interview. While sales inÂ AsiaÂ andÂ Latin AmericaÂ rose, they werenâ€™t enough to offset the slump inÂ North America, resulting in RIMâ€™s first revenue drop years in nine years in September.
â€œThe biggest dilemma was the U.S. market went down the path of mobile high-end computing on a 4G platform, and our products were suited for a global marketplace,â€ Balsillie said. â€œThe greatest dilemma was resources and capacities, where do you put them. We couldnâ€™t do both.â€
Former Siemens Manager
With Heins, 54, RIM is banking on an executive who has remained largely in Balsillieâ€™s and Lazaridisâ€™s shadow. In July, he was named to the enlarged position of chief operating officer for product and sales, overseeing engineering, hardware and software.
In an interview, Heins cited RIMâ€™s 75 millionÂ subscribers, â€œstrong balance sheetâ€ and negligible debt as advantages. He said the companyâ€™s focus on its own software will yield results in the long term. About 18 months ago, the company considered and decided against adopting another operating system, he said.
â€œJim and Mikeâ€™s strategy of not sacrificing long-term value for short-term gain is the right one,â€ said Heins, who worked at Siemens for more than 20 years before joining RIM. â€œI share that value.â€
RIMâ€™s strategy of relying on its own software mimics that of Apple. Other handset makers, such as Samsung, HTC Corp. andÂ Motorola Mobility Holdings Inc. (MMI), have boosted sales by using the Android software Google gives away for free.
Last yearâ€™s promotion of Heins, a German national originally from Munich, was part of a plan to accelerate product development. Still, the companyâ€™s missteps since have included delays with a new operating system the company is betting on to challenge Apple and Google. In December, RIM said the first BlackBerrys based on the new system, called BB10, wonâ€™t be available until the latter part of this year.
The company also suffered a nine-month delay in getting e- mail onto the PlayBook tablet. The technical difficulties and marketing missteps have left PlayBook shipments at a little more than 1 percent of those for Appleâ€™s market-leading iPad.
Heinsâ€™s challenge isnâ€™t just fighting Apple and the Android-camp led by Google, which dominate the smartphone and tablet markets. He will also need to fend off competition fromÂ Microsoft Corp. (MSFT), which is working with carriers such as AT&T Inc. and device manufacturers includingÂ Nokia Oyj (NOK1V)Â to gain ground in the smartphone market.
RIMâ€™s PlayBook meanwhile is now just one of dozens of tablets seeking to gain share from Appleâ€™s iPad.Â Amazon.com Inc. (AMZN)â€™s newest such device hit store shelves on Nov. 14 and quickly surpassed more-established tablets from Samsung Electronics Co. and Barnes & Noble Inc.
Lazaridis founded RIM when he was a senior at the University of Waterloo in Canada. The company began working on wireless products three years later, developing a pager that evolved into what is known as the BlackBerry. Balsillie, a 1989 graduate ofÂ Harvard Business School, joined RIM in 1992.
In addition to his vice-chairman role, Lazaridis will runÂ the boardâ€™s innovation committee. He said he will work closely with Heins and provide strategic counsel.
â€˜Here to Fightâ€™
Lazaridis also said he plans to boost his RIM stake by $50 million. Balsillie said he will remain a significant shareholder. They eachÂ ownÂ about 5 percent of the company now.
Stymiest, a former Royal Bank of Canada executive, became a RIM director in 2007. She previously was a partner at Ernst & Young LLP and chief financial officer of BMO Nesbitt Burns Inc. RIM will also name Fairfax Financial Holdings Inc. CEO Prem Watsa a director, bringing the number of board members to 11.
As part of the overhaul, Heins said he will also seek a new marketing chief for the company. Balsillie had taken over the those duties after RIMâ€™s first marketing chief, Keith Pardy, left in March, less than two years after joining the company.
â€œWe are in a competitive world, but we believe in our own strength,â€ Heins said. â€œIâ€™m here to fight.â€