What a surprise it was yesterday morning to learn that Jim Balsillie and Mike Lazaridis had stepped down as Co-CEOs of RIM. I believe RIM is about to stun the mobile world at large with Playbook 2.0 (their new operating system to be released next month), so I thought they would stick around to grab a little glory after all they have been through in 2011 (75% stock dive, constant media negativity, and in some cases outright insults from those who have achieved nothing of note and know nothing about RIM to speak of). So I consider this action magnanimous on their part.
I listened to Thorsten Heins (the newly appointed CEO) with great interest over at Crackberry and I have to say I like what I hear. He is a believer in RIM and fired up about their prospects going forward, which is not what the market wanted to hear. He has guts and smarts. Most analysts want to hear about a merger or outright sale of RIM, considering it history. That is why today’s current valuations, at below book value, do not attract comment. It is assumed that it’s all over for RIM by the analysts and their media parrots, who have almost unanimously made this judgement. Even though they are a Canadian company, they suffer the same mindless coverage here. Virtually no one ever mentions the good things that are happening (which would take a little research) – they just report the negative views on RIM – after months of this it gets a little sickening…
RIM has been busy anyway. The new Playbook OS 2.0, judged “too little, too late” at the CES 2012 by most analysts (at least those whose opinions were typically reported) is in fact awesome. RIM is not playing catch up here – they are clearly ahead, but the world doesn’t know it yet. Very little has been reported about Mike Laziridis’ acquisition of QNX in 2010, which was brilliant. This operating system, invented by some other bright Canadians, is a multi-threaded micro-kernel operating system which is extremely reliable and has a touch interface built in, along with native support for HTML 5, Flash, Adobe AIR, “Cascades” and will include an Android player. So the argument that they have no apps will be eliminated. Also, the OS is a true multi-tasking OS and highly efficient. This OS is also not catching up to Android and iOS as Mr. Heins points out, but has been around for years, running CISCO’s multi-core processors in their internet routers amongst other high profile operations.
What the QNX team has done is integrate this multi-tasking into the Playbook beautifully, allowing apps to run in parallel and providing easy transfers between them. In the new native email application, one in-box window shows social media feeds like LinkedIn and Twitter along with regular email. Not only can you read everything in one place, you can reply to a Twitter message say, right there as well. This is beyond anything on any other mobile platform, and for that matter anything anywhere. So Jim Balsillie wasn’t lying when he spoke of “leapfrogging” the competition. They are going to do it, and the world is going to wake up next month – an entire new architecture is being born this year, which will be very hard for others to compete with.
I have been enjoying my 64 gig Playbook, which is already pretty awesome. It has better hardware than the competition and with just a micro hdmi cable (get a good one) you can turn your television into a media powerhouse, where you can surf the web, look at videos, play your music etc. Very cool! Just by running audio out to your stereo from your TV, you now have a pair of great speakers playing your music from the Playbook. The current OS 7.1 update has wi-fi hotspots and remote control for the Playbook. Additionally, the Playbook is a presentation powerhouse – while in presentation mode your Playbook can show your slide-show, videos etc. while you check your notes and do other things on it – another example of the great multi-tasking this OS provides.
About RIM’s stock price – if the market was rational, losing the entire American market would be reflected in the price. In other words, about 10% of revenue would be lost, and the stock would decline 10% or so. That’s right, the American market accounts for only about 10% or so of RIM’s revenue. Yet traders have hammered RIM down to below book value, while they are in a difficult, time consuming transition to BB10, based on QNX. TD Waterhouse estimates RIM’s book value at CDN $17.06, Bloomberg at $19, yet the stock plunged over 8% yesterday and 4% today on the news that RIM did not hire a star outsider to come in and shake things up. Thorsten Heins, a relative unknown, had the audacity (in most analysts’ minds) to say yesterday that no “seismic change” was necessary, and was widely quoted and attacked for it. But he is the guy to believe, IMHO. He knows the culture and he knows RIM. Go Thorsten!
I like hearing that Barbara Stymiest is the new Chairman of the Board. She is reportedly one of the best business minds in Canada. Also, Prem Watsa is on the board now, and is a RIM believer with big skin in the game. Finally, contrary to what some have said about them, I am personally relieved that Jim and Mike aren’t going anywhere.
*** Update – Friday January 27, 2012 ***
- RIM’s new CEO, Thorstein Heins, in response to much criticism that his statement no “seismic change” is needed at Research in Motion, has clarified that he was addressing calls to break-up divisions of the company or sell it outright. So snap judgments on the part of the majority of “analysts” are once again misleading. I am liking Thorsten a lot. He sees the value in RIM, and I believe they will be doing a lot more communicating of that value. I believe he can execute – all reports so far from people I respect say he will be good for the company.
- Nokia announced another huge loss (over 1 billion) for their most recent quarter, the third losing quarter in a row, yet the stock trades at 23.5 x earnings. Compare that ratio to RIM’s (3.8 x earnings), which had no losing quarters in 2011, when it was pounded down 75%, for the sin of losing market share in the U.S., where they derived 11% of their revenue.
- Also, today it was announced that Prem Watsa doubled his stake in RIM this past week, giving him approximately the same number of shares as Mike and Jim. Great news…
Think this take on RIM is overly sunny? Maybe. But what I would like people to do is look past the negative media brainwashing to what is really going on at RIM. They were slow to adapt to the iPhone – granted. But they are on a great path now.
