December 15, 2011 / 3:05 PM / in 7 years

RIM activist renews call for leadership change

TORONTO (Reuters) - Research In Motion faced renewed calls for a change in its leadership on Thursday, hours ahead of the quarterly results that could fuel criticism over the BlackBerry maker’s poor performance and sagging share price.

A woman walks outside Research in Motion's (RIM) headquarters in Slough, southern England October 13, 2011. REUTERS/Olivia Harris

Jaguar Financial, an activist shareholder that has asked the BlackBerry maker to sell itself in whole or parts, once again called on two of RIM’s independent directors to push for a separation of the roles of chairman and chief executive.

For months, Jaguar and other dissident shareholders have pushed for the replacement of Mike Lazaridis and Jim Balsillie, who share both top roles. The two are RIM’s largest shareholders and the most powerful figures in its management.

“It strains credibility to believe that a CEO requires the title of chairman to sell RIM products but the RIM directors have apparently bought into this unconvincing rationale,” said Jaguar, which has claimed support of investors that hold about 8 percent of the stock.

Shareholder discontent with RIM centers around its poor performance in the face of stiff competition from Apple Inc’s iPhone and iPad, and devices powered by Google’s Android system. The BlackBerry’s market share has been steadily eroding, while the PlayBook, RIM’s late entry in the tablet market, has generated anemic sales.

The latest call for change comes ahead of RIM’s third-quarter results announcement, due after the close of regular trading hours.

RIM has already warned the market that it will take a big hit on its unsold PlayBooks in this quarter and that it will ship fewer smartphones in the current quarter than in the third quarter, which just ended. The warning has pushed RIM’s share price to its lowest since 2004.


Graph on RIM's 2012 EPS


“At this point we believe investors have lost faith in the ability of the RIM management team to carry out a proper game plan to restore value,” said Jaguar CEO Vic Alboini in a statement.

“Jaguar believes that the road map to value restoration lies in a sale of RIM whether as a whole or in separate parts.”

The group called on RIM to sell its handset business and monetize its patent portfolio, while retaining its service business under new leadership.

Jaguar argues that RIM has lost its ability to compete in the consumer hardware segment. A sale or spin-off of the business would help restore value to shareholders, it says.

Jaguar, which invests in underperforming and undervalued companies, sees RIM’s service business as RIM’s most valuable business given its recurring revenue and high margins.

In its statement, Jaguar called on two of RIM’s independent directors, Barbara Stymiest and Roger Martin, to initiate some drastic changes in governance at the beleaguered smartphone maker.

Stymiest, a former chief operating officer at Royal Bank of Canada, also served as TSX Group’s chief executive. Martin is the dean at the Rotman School of Management at the University of Toronto.

“They should step up and take the lead in making dramatic governance change or else resign from the board if they are unable or unwilling to initiate appropriate governance changes,” Jaguar said in a statement.

Shares of RIM, which closed at $15.08 on the Nasdaq on Wednesday, were down 12 cents at $14.97 in early trading on Thursday. Its Toronto-listed shares were down 21 Canadian cents at C$15.48.

Additional reporting by Maneesha Tiwari in Bangalore

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