RIM Updates: Shareholders Get Another Crack at Replacing Management in January

November 29th, 2011 by Trefis Team
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Research In Motion

Research in Motion (NASDAQ:RIMM) may face a fresh round of calls for management reforms from Northwest & Ethical Investments LP (NEI), should it fail to meet the January 31 deadline for submitting a previously agreed upon management review report. [1] NEI withdrew its earlier proposal for splitting the roles of Chairman and CEO in June this year after it was promised a role in studying management changes at RIM; however, little communication from the company in this regard has NEI concerned. If RIM fails to fulfill its promises, NEI will be refiling its proposal for the next year’s annual shareholder meeting. RIM continues to cope with pressure from shareholders asking for a stake sale or a management overhaul at the company as it struggles to compete with Apple (NASDAQ:AAPL) and Google (NASDAQ:GOOG) in the smartphone and tablet markets. Its stock has declined at a rapid rate from a high of $70 at the beginning of the year to $19 as of today.

See our complete analysis for RIM stock here

NEI is not the only shareholder group dissatisfied with RIM’s management. Last month, activist shareholder Jaguar Financial Corp said it has the backing of around 8% of the company’s investors supporting it in its campaign to urge the BlackBerry maker to sell itself, seek a merger partner or split itself into a number of companies. [2]

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However, we have cautioned in the past that RIM might make a poor acquisition target considering the management’s unwillingness to consider a sale in the past, a lack of a strategic fit for potential buyers and a comparatively weaker patent portfolio, something we discussed in our earlier note titled Why RIM Makes a Poor Acquisition Target. A complete management overhaul will be relatively easy to achieve for the shareholders, however, the two co-CEOs Balsillie and Lazaridis own a combined 11% of the company shares and their approval will be a very important factor. [3]

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Notes:
  1. RIM May Face Renewed Investor Push for Management Overhaul, Bloomberg, November 23rd, 2011 [↩]
  2. Jaguar Says Support Grows for a RIM Shake-up, Reuters, Oct 11th, 2011 [↩]
  3. The two co-CEOs own 11 percent of the stock, Bloomberg, September 28th, 2011 [↩]