New Research in Motion CEO Thorsten Heins has been making the rounds with analysts as the company outlines its path forward. The catch? Analysts want to believe, but just can't.
The conundrum for analysts goes like this. RIM could be a great value in the long run. However, there are few signs today that RIM can get its act together. In other words, Wall Street needs a leap of faith in RIM and everyone knows hope isn't much of a strategy.
On Friday, Jefferies analyst Peter Misek illustrated the conundrum. Misek downgraded RIM to an underperform and admitted that he wanted to believe.
The problem: Thorsten is likely to delay OS licensing plans and its BBM/social networking app to continue to compete directly with Apple and Android. Misek upgraded RIM on Dec. 21 based on the theory that all the bad news was baked into the stock. Now Thorsten is in charge that's uncertain. Heins is expected to present his plan to the board in two weeks.
Also: Lazaridis and Balsillie: The two RIM hosers that destroyed the BlackBerry empire | RIM co-CEOs finally step aside, Thorsten Heins to take over as CEO by himself | RIM focuses on one next-gen BlackBerry: Good or bad? | Analysts on RIM's CEO swap: Naming Heins a missed opportunity | RIM's new chief: Five things I'll change | RIM: New CEO but same old problems, failed strategy
We recently met with Heins and found him engaging, articulate, and thoughtful. We see no evidence that he is under the influence of the former management in any way. But we respectfully disagree with him. We believe that a 1 year delay in licensing BB10 (what we believe to be an excellent OS) is a mistake. We believe decelerating efforts to offer enterprises the ability to get their fast secure Blackberry email on an iPhone or an Android device is a mistake. We want to believe in RIM, but see the near-term risks as too high.
In other words, things will get worse for RIM. Kris Thompson, an analyst with National Bank Financial, said that RIM will lose market share internationally.
We met with RIM’s new President & CEO, Thorsten Heins, where he outlined his near-term BB10 smartphone strategy to focus on “quality, wow factor and experience” above launch date. The company clearly learned lessons from launching a half-baked PlayBook tablet, which lacked native email, calendar, contacts, BBM and BES integration. Our concern is that RIM will miss the very important 2012 holiday season if management can’t bake “quality, wow factor and experience” into the first BB10 smartphone in time. Northern Securities analyst Sameet Kanade relayed that Heins is betting that Android is vulnerable.
Mr. Heins reaffirmed what our checks have been indicating for a while, i.e. the Android platform is facing an uphill battle to maintain its handset vendor partnerships due to the Google-Motorola merger. RIM remains open to software partnerships with current Android partners. However, Mr. Heins noted that such potential partnerships (i.e. where other handset vendors utilize the QNX platform) are secondary to the task at hand – getting the BB-10 execution strategy right in 2012.
Whether Heins' bet pays off is 2012's biggest question mark.