RIM CEO Changes Are Irrelevant

When I named Research in Motion co-CEOs Mike Lazaridis and Jim Balsillie worst CEOs of the year, the flipside wasn’t "If they would only leave the company would improve."


All you need to do to see how bad things are at RIM is look at the year-over-year changes in revenue and profit. It’s nothing short of dramatic.

At best, it is a slow bleed -- made less bad (for the time being) by its ability to positive free cash flow and more cash than debt.

But don’t let the balance sheet and cash flow statements fool you. If earnings and the overall business continue to decline, so will cash flow -- and so will the balance sheet.

RIM is a broken company, hobbled by bad and slow decision-making in the face of an assault from Apple and Google .

It’s also a company living in denial or possibly a land of fantasy.

In announcing the change, the co-CEO’s said (in separate comments) that it was time to “pass the baton,” and that it was going to Chief Operating Officer Thorsten Heins, who is virtually unknown outside the company. (Oh, and by the way, Lazaridis and Balsillie are not leaving the board.) In addition, RIM brought in Fairfax Financials CEO Prem Watsa, viewed by some as the Warren Buffett of Canada, as an independent director. To others he is known as somebody who sues short-sellers; a multi-year $8 billion suit against Jim Chanos’s Kynikos and Third Point’s Dan Loeb was recently dismissed.

Here’s the best part: Not only is a turnaround at RIM unlikely – it’s not even on the table. That’s perhaps the most intriguing part of this story, which increasingly is the story of a company out of touch with reality.

In an interview with my college Jon Fortt last night, Heins said:

"This is not a turnaround company…The company at the moment isn't valued as it should be, if you look at the financials."

He added: "I truly believe — and the board is with me on this assessment — that we are very, very strongly positioned as an integrated, vertical player. There is no plan on my side or the board's side to sell any of these important, constituting elements of our future success."

And there you have it.

P.S.: On Twitter this morning Idealab’s Bill Gross was saying that “If RIM could reverse/improve, wouldn’t that be the turnaround story of this decade like Apple last decade?”

I responded: “It would be the turnaround of the century. (Okay, it has been only 12 years.) But it ain’t happening! No Steve Jobs there.”

More like a Kodak moment.

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