RIM, Yahoo: Knowing When to Fold or Hold

The Yahoo Inc. (Nasdaq: YHOO) board of directors isn't getting roaring applause from investors for its appointment of PayPal president Scott Thompson as the Internet search engine provider's new CEO. After the announcement of Thompson's appointment, Yahoo's stock price fell 3 percent on Wednesday and continued the decline in pre-market trading on Thursday. Investors, it seems, don't much like the move, nor do they see it as a panacea for whatever ails Yahoo.

It isn't about to get a ringing endorsement from me here, either. Thompson might turn out to be Yahoo's much-desired savior, but there's no denying the extensive damage that has been done to the company by the dithering of the board of directors and their inability to take difficult decisions in the past. It has lost significant ground to Google in the search engine market, and it's failed to expand into other market areas where it could leverage the millions who visit the site daily.

Yahoo didn't have to be in this position. The company is troubled today partly because co-founder Jerry Yang didn't recognize a great deal when one landed on his lap. This is the bottom line: Yahoo should have sold itself to Microsoft when it had the opportunity four years ago. In February 2008, Microsoft offered to purchase Yahoo for approximately $46 billion. Yahoo declined the offer and has since been stuck in a rut. Today, Yahoo has a market value of about $19.7 billion, about where it was when Microsoft made its offer in 2008.

BlackBerry (Nasdaq: RIMM; Toronto: RIM) has a lot to learn from Yahoo's experience. Hopefully, it isn't too late for the Canada-based BlackBerry phone maker. Just as the best deal that could have led Yahoo out of the murky waters was turned down by Yang, RIM has reportedly also declined overtures from Amazon and Microsoft. (See: Six Strategic Options for RIM.)

The muddle RIM is in was a creation of its co-chairmen and co-CEOs Michael Lazaridis and James Balsillie. Lazaridis founded the company in 1984 and with Balsillie built a great company that once dominated the smartphone and enterprise messaging markets. Unfortunately, neither seems to understand how to migrate the company to a new level. Rather than carve out a definitive growth future that may involve some sort of partnership, they are holding on tightly to a sinking ship and desperately grasping for flotsam to help it stay afloat in the middle of the ocean. Help is nearer, though, even if it may have to come from nearby and bigger vessels -- competitors, telecom partners, or even new entrants into the market, including Amazon.

What RIM needs is a new direction and a drastic change of course, but are the current CEOs able to provide this -- even if this might result in their departure -- or will they rather hold on tightly to the bitter end? The company faces major challenges: Its products aren't as hot as they were, rival designs are selling faster, the enterprise market it once dominated is being attacked (successfully) by Apple and Android-device makers, and the window of opportunity for making a deal is closing, slowly but surely.

This is why Yahoo's appointment of a new CEO, years after it received a great acquisition offer, can serve to remind RIM shareholders and directors that there is a time "to hold 'em" and a time to "fold 'em." Just in case they don't know, here's a part of the lyrics from Kenny Rogers's "The Gambler." I hope RIM's co-CEOs get it:

You got to know when to hold 'em,
Know when to fold 'em,
Know when to walk away,
Know when to run...

RIM may not need to fold, but, as the the song continues:

The secret to survivin'
Is knowin' what to throw away
And knowin' what to keep.

I am interested in your thoughts on what RIM should be throwin' away and what it should keep.