Saturday, March 31, 2012

Fake it till you Make it

As a value investor we are always looking for a reflection  of the quality of management. Do the executives have the shareholders' interest in mind when they make decisions? I am really intrigued by what is happening at Research in Motion (RIMM). A new CEO, Thorsten Heins, has recently taken the reins after being hand-picked by the two original co-founders of the technology company. The two co-founders, originally acting as co-CEO, moved to the board of directors.

The new directive from Mr. Heins seems confusing. If you listen to the latest conference call, the audience can seek whatever message their viewpoint supports. Of course, Mr. Heins has only been on the job for 10 weeks now. So his insistence that he is reviewing everything that would be in the best interest of the company has wisdom. He does seem to have cleaned house and forced several top executive to depart. One of the co-founders, Jim Balsillie will retire, either by force or design.
I hope Mr. Heins has the fortitude to carry-through the needed changes.

Research in Motion new directive in his words are {or at least my interpretation, and call me on it if I'm wrong}
  • BlackBerry Enterprise Service Business - Enterprise services
  • Prosumer market - which is characterized by users who use the device for personal and business
  • Consumer market - "bring your own device/phone" end user market
No, can't differentiate their new strategy from that..... Let's try to differentiate by revenue then:
  • Services
  • Software
  • Hardware
  • Other
{my interpretation, and call me on it if I'm wrong}
Mr Heins was talking about reducing the broad array of phones from the 7 new BlackBerry Smartphones to 3 or 4. He was talking about a possibility of licensing the software,  reducing or eliminating the hardware & accessories, repair, maintenance and warranty programs to a strategic partner. Maybe a joint venture? That's a big chunk of the current revenue. It will be interesting to see the evolution in the next 6 months and in the release of BB10.

Here is the elevator speech from the rim website:
RIM is the leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and service that support multiple wireless network standards, RIM provides platforms and solutions for seamless access to information, including email, voice, instant messaging, short message services(SMS), internet and intranet-based application and browsing. RIM technology also enables a broad array of third party developers and manufacturers to enhance their products and services through software development kits, wireless connectivity to data and third-party support programs.

What are RIM's Competitor's Strategy?
A quick glance at the top competitors strategies in the field:
Apple - Hardware & accessories, Software for the consumer; Just branching out to the Enterprise
Google - Software for the consumer - (Android )
Windows/Nokia - Hardware Partnership and Software (Window 7)

RIM - what is next?
Mr Heins was heard to say in the conference call:
"with BB10 we are getting ready not just for the smartphone, ...getting ready for mobile platform for the next decade"

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