Thorsten Heins is either the proverbial ostrich with its head stuck in the sand, or he may be about to engineer the greatest turnaround in the history of the electronics industry. Right now, though, one has to ask the new CEO of BlackBerry (Nasdaq: RIMM; Toronto: RIM) exactly what numbers he was looking at when he recently concluded the company is not in a "death spiral."
That's right. Heins thinks RIM is just going through some minor problems. He told a Canadian radio show "there's nothing wrong with the company as it exists right now," according to news reports. He added: "I am not talking about the company as I, kind of, took it over six months ago. I'm talking about the company (in the) state it's in right now."
He's not done. On July 3, Heins wrote an opinion piece
in the Globe & Mail newspaper of Canada to advance his belief that the company is now well positioned to overcome its challenges. Here are excerpts from his article:
We believe RIM is a company at the beginning of a transition that we expect will once again change the way people communicate. As we prepare to launch our new mobile platform, BlackBerry 10, in the first quarter of next year, we expect to empower people as never before. BlackBerry 10 will connect users not just to each other, but to the embedded systems that run constantly in the background of everyday life -- from parking meters and car computers to credit card machines and ticket counters.
Those are big promises, I know; and some doubt whether RIM can pull it off. I am the first to admit that RIM has missed on important trends in the smart-phone industry -- especially in the consumer domain, focusing on its core value system for successful products and services.
As some pundits write RIM's obituary, the company's global subscriber base continues to grow, to more than 78 million people in 175 countries. In many of those countries -- some of the fastest growing markets in the world -- RIM is the top smart-phone; and in some, RIM devices account for the top three spots. We have relationships with 650 carriers around the globe; RIM's reliability and security make it the first choice for countless government agencies and are part of the reason more than 90 per cent of Fortune 500 companies deploy BlackBerry in their enterprises.
RIM has no debt. The company also has more than $2-billion in cash on its balance sheet, and generated $710-million in operating cash flow in its first quarter. Simultaneously, RIM is undertaking a corporate overhaul that we expect will reduce annual operating expenses by more than $1-billion by the end of our fiscal year. Unfortunately, that requires us to become a much more focused and smaller organization.
I don't doubt Heins's sincerity, but I have heard this narrative before. The high-tech community is littered with the carcasses of companies that believed they would somehow engineer a remarkable turnaround, regain old glory, and prove skeptics wrong. RIM had its chance; so did Motorola and Nokia. They helped lead the industry to where it is now but seem to lack what it needs to reach even higher.
If Heins was trying to allay Canadians' fears about the country's future role in high-tech, he may need to reframe the message. RIM's problem is not a reflection on Canada; rather, this is about a company that tripped after dominating in its section for a while. RIM may survive, but it won't in the near future dominate its market segment. That's clear to everyone and should be obvious to even a praise-singing CEO.