Freshman Research In Motion (RIM) CEO Thorsten Heins said yesterday during a fourth-quarter earnings call that he has done his own “reality check” on where the company really is and has come to the conclusion that “substantial change is what RIM needs.”
Heins made the comments after RIM reported another dismal set of numbers for its fiscal fourth-quarter 2012, while simultaneously announcing the retirement of co-founder Jim Balsillie from his role as president of RIM’s Board of Directors.
RIM reported smartphone sales had dropped 21 percent over the previous quarter to 11.1 million units. Revenue fell 19 percent to $4.2 billion, and the company posted a loss of $125 million. Perhaps most troubling is the timetable for BlackBerry 10 devices, which pegs an initial launch sometime in 2013.
Heins acknowledged that this is a trying time for RIM stockholders and stressed the importance of the company returning to its roots as a leader in the enterprise space, thrashing a number of consumer-oriented initiatives.
RIM cannot succeed if it tries to be everybody’s darling and all things to all people, he said.
“Therefore, we plan to build on our strengths to go after targeted consumer segments,” Heins said, adding that RIM would will seek partnerships to deliver consumer features and content that are not central to the core strengths of BlackBerry, such as media consumption applications.
Heins said the company would do away with consumer-oriented, value-added services business that RIM has attempted to build over the past 2.5 years through numerous various acquisitions. After a 10-week evaluation of the company, Heins said it became clear that it would be extremely difficult for RIM to develop this initiative into a profitable business.
“As a result, we will be looking at ways to scale back these activities and refocus resources on developing an integrated services offering that leverages RIM’s strength, such as BBM, security and manageability,” Heins said, adding that the intent would be for these services to add value for customers and generate service revenue for the company.
In light of the long wait for BlackBerry 10 devices, RIM will continue to push its BlackBerry 7 devices to sustain the subscriber base. The company has plans to aggressively incentivize BlackBerry 7 smartphones through the implementation of programs to both drive upgrades from older BlackBerry products to BlackBerry 7 and to onboard feature phone customers to BlackBerry 7 for their first smartphones.
In the end, RIM will focus on four strategic areas going forward, including the launch of the BlackBerry 10 platform and product; leveraging the BlackBerry platform and other RIM assets; and increasing operating efficiency.
The abandonment of many of RIM’s consumer strategies might come as a surprise after Heins had said soon after his appointment that he didn’t think any “significant change” was needed for the BlackBerry maker to succeed going forward. While Heins later clarified those comments in an interview with Crackberry.com, saying he wasn’t talking about “drastic or seismic changes,” yesterday’s earnings call sounded drastic, especially given Balsillie’s resignation from his role as president of RIM’s Board of Directors.
“As I complete my retirement from RIM, I’m grateful for this remarkable experience and for the opportunity to have worked with outstanding professionals who helped turn a Canadian idea into a global success,” said Balsillie in a statement.
Add to Balsillie’s resignation the simultaneous departures of David Yach, CTO of Software, as well as Jim Rowan, COO of Global Operations, and the news out of RIM almost took on a desperate tone.
Heins said that RIM is currently on the hunt for a new chief marketing officer (CMO) and the company would appoint someone to that position “very soon.”
RIM doesn’t expect things to improve anytime soon. Heins made it clear that “financial performance will continue to be challenging for the next few quarters.”
While the company stressed that it would remain transparent about its finances, it declined to be specific in its guidance, citing a number of factors for the uncertainty, including ongoing weakness in its U.S. smartphone business and the adoption of more aggressive price initiatives in smartphones to increase the sell-through of BB7 smartphones.
While investors have plenty of reasons to worry, they reacted positively to Heins’ frank assessment. Shares were trading up 5 percent to $14.69 early Friday.