Lazaridis puts $50M where his mouth is

Dateline: New York

From afar, the RIM situation doesn’t look as bleak as the coverage of the annual meeting might have led us all believe. I think the TV and print media did a good job laying out the cut and thrust of the Q&A show, and the dichotomy of a photo of Jim Balsillie that was posted on Twitter doing a Communitech event across town spoke to the reality that life marches on for everyone.

But what are we shareholders to do? A couple of new board members won’t help; the horse is already out of the barn. And no matter how good the BB10 software, our new CEO isn’t going to bring back the consumer users we’ve already lost to Apple.

Walking around a huge crossover-type fund shop in Boston yesterday, I saw plenty of Blackberry’s. On one elevator ride, all three of our fellow passengers whipped them out; not an Android device in sight. According to one of the general partners there, he’ll never get an iPhone: “you can type on them.” Amen.

Pick any Starbucks in NYC, however, and you’ll be into iPhones wall-to-wall. I did a “Rick Segal-type” iPhone survey this morning, in fact. Deployed for music, paying for the coffee with the preloaded Starbucks card app, noodling Facebook posts…. This is our new reality, fellow RIM shareholders.

What we need is a sign from on high, that there’s a chance that RIM will avoid Nortel’s fate. The lack of a massive debt load is the key difference, of course, which should keep us out of bankruptcy court. A few negative events, however, such as the rumoured class action or IP troubles, could hit our cash reserve. But we aren’t in bad shape.

If we were to play “if only”, the one thing we might wish was that when I pointed out that Apple’s cash hoard was 10x ours, perhaps Jimmy could have taken advantage of the $60 or $140 share price – those were the days when the ducks were quacking – and raised a couple of billion of fresh equity rather than buying back $775 million of stock a quarter (see prior post “RIM chooses share buyback over an 8.5% dividend” Jan 13-10). That’s an average buyback price of $63/share for those who don’t want to do them math themselves (to be fair, I was pointing out the benefits of a RIM dividend vs. a Lehman-like buyback — not an equity offering).

Now that the stock’s at $7.50, and plenty of water has passed under the bridge since late 2009, there’s not time for second-guessing. But there is the tricky issue of the January 22 press release. It seemed so bold at the time:

“Thorsten has demonstrated throughout his tenure at RIM that he has the right mix of leadership, relevant industry experience and skills to take the company forward. We have been impressed with his operational skills at both RIM and Siemens. I am so confident in RIM’s future that I intend to purchase an additional $50 million of the company’s shares, as permitted, in the open market.”

That was RIM Founder Mike Lazaridis’ quote in the presser announcing the appointment of Mr. Heins as CEO. According to the SEDI site, Mr. Lazaridis (indirectly) acquired more than 3 million shares on January 25th in a newly formed holding company. He’s put his money where his mouth is.

Although the stock has dropped by 50% since then, perhaps some investors will take his $50 million of buying as the proverbial “sign from on high”. The more cynical will remind us that entrepreneurs often “smoke their own dope”, even when there’s only downside before their very eyes.

For my money, the answer for the next 12 months is simple:

1. Stop hyping the new software. It’ll never live up to expectations, no matter how good it is.

2. Build one or two keyboardless devices that’ll retain our Soccer Mom contingent. The Storm was a decent try; at this point, just copy what everyone else has done.

3. Tweak the 9900 for the full QWERTY keyboard crowd. There’s nothing wrong with the current Bold handset. It just needs a better music app that interfaces with iTunes each time you sync it, not just the first time; it needs one friggin’ stock watch app that actually works for more than 10 quotes (unlike Blue); it needs a map app; more storage; and a longer battery. If I need the PJStatTracker app, I can check my iTouch or Playbook.

4. Lastly, build a direct relationship with the millions of BlackBerry users you already have. Just like the Tuesday emails from Apple, or Wednesday blasts from Air Canada. Send me something once a week telling me about a new app or feature that I can easily download. I shouldn’t have to check the company’s Twitter feed all day to see what you’re up to; and the TV ads extolling the BBM only reminds me that many of my 2010-vintage BBM buddies have moved on to “greener handsets”.

MRM
(disclosure – I own RIM)