No doubt investors of Research in Motion (RIM) and investors at large have heard the news that co-CEOs Mike Lazaridis and Jim Balsillie have been replaced with Thorsten Heins as the new CEO of RIM.
The market, as of 10:00 am EST, has made its verdict of the move by pushing the price of the common stock down 7.25%.
This shouldn’t come as a surprise to any well informed investor and certainly comes far too late.
When fear and anxiety take hold in a stock or brand investors and the market need the reassurance of a proactive approach and plan. The move announced today, while trying to be spun by RIM’s PR as a positive development, is a reactive move that should have come 6-12 months ago.
That’s what the market is pricing into RIM today; a lack of confidence in the plan. The present timing, execution and future timeline from which things will develop.
“The company will immediately set out to hire a chief marketing officer to help repair the BlackBerry’s dented brand…”
Really? Again you don’t think this should have been done 6-12 months ago?
Management is key and at this very moment there is significant doubt that the company has a good handle on the pulse of the business. RIM is a viable company and may turn out to be a very valuable investment at some point in time (even now). But the reality is that the current move is more one of damage control than change of the corporate culture at RIM.
There is certainly the possibility that this move will begin the change necessary to create value within the company and long term growth, but completing such a move so late makes an investor wonder who really knows what’s going on within this company. If the move has been completed to appease investors than this arrogance of the company will reflect in the stock price (which it is so far today).
Even though I don’t view RIM, at this time, as a value trap I don’t view it as a value opportunity. There is far too much strong competition in the consumer smart phone market for a company to lack the motivation for change when change is necessary.
Disclosure: I do not hold any investments in RIM at the time of this post.