Research In Motion's Waterloo

This Battle of Waterloo is being waged in Ontario, instead of Napoleon Bonaparte's epic final fray in Belgium almost 200 years ago.

Jaguar Financial, a small Canadian merchant bank that holds a relatively small stake in Research In Motion (NAS: RIMM) , has published an open letter to the company's board calling for a "value maximization process." Jaguar is speaking on behalf of itself and other unnamed RIM investors, who together own less than 5% of outstanding shares. Although their overall stake in the company is relatively light, the message being conveyed is clear: Do something.

This comes a few short months after another open letter to the company. That one was supposedly from a high-ranking company executive and provided a candid look at the beleaguered BlackBerry maker from the inside. Regardless of the perspective, the unifying theme is a lack of innovation.

Jaguar CEO Vic Alboini is recommending that the company's board appoint a special committee consisting of four or five of the existing seven independent directors to begin a shareholder value maximization process, adding that it believes a "transformational change" is necessary. Everything should be on the table, from monetization of the RIM's patent portfolio to an all-out sale of the entire company. Alboini cites four primary arguments as evidence:

  • Poor share-price performance. RIM reached an all-time high of $148.13 back in June 2008. Yesterday's close of $30.97 represents a loss of nearly 80% from those highs in just over three years, drastically underperforming the tech-heavy Nasdaq Composite Index's roughly 0% return and the broader S&P 500's approximate 13% decline over the same time period.

  • Lack of innovation resulting in a loss of market share. The company's inability to offer innovative products and its lackluster app ecosystem have contributed to declining market share, dropping in the U.S. from 39% to 22% from July 2010 to July 2011 according to comScore. Recently, Gartner's separately calculated figures peg RIM's smartphone share worldwide at 11.7%, compared with 18.7% a year ago. Meanwhile, Apple's iOS and Google's (NAS: GOOG) Android continue to accelerate consumer adoption.

  • Corporate-governance concerns. We've heard this story before. There's no justifiable reason to have both CEO and chairman positions shared by Jim Balsillie and Mike Lazaridis, even if they are BFFs. RIM was able to fend off the last institutional investor that questioned the arrangement by agreeing to form a committee and prepare a report by Jan. 31, 2012. Alboini calls for a single CEO and an independent chairman to quickly address this concern.

  • Recent consolidation in the mobile and patent spaces. Citing recent patent-related events such as Google's acquisition of Motorola Mobility (NYS: MMI) and Eastman Kodak's (NYS: EK) hawking of its own patent portfolio, Alboini believes current market conditions present an opportunity for RIM to benefit from its own trove of patents, if only the company would recognize the opportunity and take action.

The letter concludes by calling other shareholders to action to rally behind Jaguar in a call to arms, who responded as shares rose nearly 3% on a broadly down day yesterday. It's tough to counter Alboini's points, and RIM hasn't issued an official response yet, even though it was quick to respond to the aforementioned employee open letter. Management can't continue to brush aside these concerns indefinitely as shareholders and employees alike lose patience. The company needs to act quickly if it wants to reinstate any semblance of faith in its followers.

In an interview with Bloomberg, Alboini also questions the wisdom of how much RIM has riding on the QNX operating system that it recently acquired. He urges the board to acknowledge the possibility that QNX won't succeed instead of presuming its preordained triumph, and he even implied that RIM could end up suffering a similar fate to bankrupt Nortel Networks in a worst-case scenario.

Including Android support will probably help boost PlayBook sales, but it also counterproductively de-motivates developers from boarding the QNX ship. Why would any developer work on the QNX platform when it can still reach the same audience -- plus the whole Android community -- by developing for Android? Building an app ecosystem from the ground up while competing with more robust, mature, and growing offerings is certain to fail.

Call me crazy, but I think RIM has a better chance if it ditches QNX and transitioned to a full-fledged hardware OEM like Samsung or HTC while licensing Android and MicrosoftWindows Phone 7. The company already needs to step up its hardware game anyway. I know, it sounds crazy and won't happen, but it's so crazy it might just work.

At this point, investors are desperate for change. I don't care that the stock is cheap. The company's current course will only lead to more blood in the streets. RIM has shown that it doesn't prioritize investors' concerns, so why would you invest?

At the time thisarticle was published Fool contributorEvan Niuowns shares of Apple, but he holds no other position in any company mentioned. Check out hisholdings and a short bio. The Motley Fool owns shares of Microsoft, Apple, Research In Motion, and Google.Motley Fool newsletter serviceshave recommended buying shares of Google, Apple, and Microsoft and creating bull call spread positions in Microsoft and Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

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