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RIM CEO Faces Investors, Charts Path To BB10

Research In Motion's CEO and board of directors faced investor backlash today at the company's annual gathering in Waterloo, where they promised to use RIM's strengths to 'right the ship.'

Research In Motion's annual gathering of shareholders saw a testy lot of investors pepper RIM's management with questions about the firm's finances and future. CEO Thorsten Heins did his best to deflect the queries from the crowd, assure investors that the company in fact has a future worth investing in, and offer a peek at what RIM has planned for the next six months.

First, Heins discussed the company's cost-cutting measures. The company already announced plans to lay off 5,000 workers, or about one-third of its workforce. Heins called the decision "painful, but necessary." The company has cut a swath out of its middle-management ranks, hired new executives, and believes the new management structure will streamline decision-making and other processes.

RIM also plans to sell one of its two corporate jets as part of its bid to save $1 billion over the next year. It is exploring strategic options such as licensing models and investment schemes, but nothing has yet been decided.

[ Is Microsoft RIM's best hope for salvation? Read Microsoft Looms As White Knight For RIM. ]

RIM's financial position is actually pretty good. The Blackberry maker has about $2 billion in cash on hand, and no debt. Heins said the company has sold about 49 million BlackBerrys in the last 12 months, and about 1 million Playbook tablets during the same period. Heins predicted a tough few quarters ahead, but he believes the company's cash and debt stance will help see it through the dark months in the future. It will rely on sales of its existing BlackBerry 7 device lineup to keep it afloat until BB10 launches.

Earlier this year, RIM warned that it needed to write down nearly $1 billion in unsold inventory of BlackBerry smartphones, clearly showing a lack of demand for its devices.

The company is still shooting for a first quarter of 2013 release for its BlackBerry 10 platform. While it would like to get BB10 out the door as soon as possible, RIM wouldn't make any promises other than "sometime in the January - March period."

Heins explained that RIM hasn't made any expense cuts that would affect its BB10 development team. He insisted that the company continues to receive excellent feedback from developers and carrier partners on BB10, and the company will capitalize on its strengths with the new platform.

The company will first launch an all-touch BB10 smartphone because, said Heins, it needs to compete in that market quickly. It will follow that "immediately" with a QWERTY-equipped BlackBerry. "We own the QWERTY market, [but] we're not as competitive as the full-touch market," said Heins. "That's why we're targeting the full-touch market first." RIM will also focus on fewer smartphone models in an effort to keep production costs down.

Speaking of production, RIM said it does not and will not manufacture devices in China. The decision is based purely on security, said Heins, as the company believes its software could be stolen and used by other manufacturers. It's possible RIM could save some money by manufacturing in China, where many of RIM's competitors have their devices assembled.

Despite RIM's woes, Heins remains upbeat and positive about the company's prospects over the long haul. In a showing of support, both Heins and former CEO Mike Lazaridis were re-elected to the board by shareholders, as were other standing board members.

Heins said that he's not satisfied with RIM's current position, but the BlackBerry maker is doing everything it can to right its listing ship.

At this year's InformationWeek 500 Conference, C-level execs will gather to discuss how they're rewriting the old IT rulebook and accelerating business execution. At the St. Regis Monarch Beach, Dana Point, Calif., Sept. 9-11.

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Andrew Hornback
Andrew Hornback,
User Rank: Apprentice
7/12/2012 | 1:35:43 AM
re: RIM CEO Faces Investors, Charts Path To BB10
Really thinking that if RIM was serious about staying afloat, they'd drop the all touch screen model and stick with the QWERTY models. I think it would make more sense to get the new software version out on a model that will sell (some people simply will not give up their physical keyboard), and then move from there into the touch screen market. Stick with what you do best, then set your sights on conquering another market segment.

They also really need to re-think their sales projection models - eating $1B in hardware every production cycle isn't good for the bottom line.

Andrew Hornback
InformationWeek Contributor
User Rank: Apprentice
7/10/2012 | 8:43:03 PM
re: RIM CEO Faces Investors, Charts Path To BB10
RIM needs to just close shop. They had a good run and $2 billion in cash.
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