Jaguar Financial Lying In Wait, Claws Kept Sharp


Research in Motion (NAS: RIMM) named Thorsten Heins as its new chief executive on Monday and split the role of chairman and CEO, but these changes alone aren't enough to scare away its shareholder activist Jaguar Financial, which has been salivating for a taste of change at the company.

Jaguar continues to lie in wait, says Vic Alboini, Jaguar CEO and chairman. And its claws remain sharp.

"We'll give Barbara [Stymiest, RIM's exisiting director appointed as new independent chairwoman], a chance to make changes on RIM's board but if she doesn't come out and say we'll have a strategic review of the company, we'll have to take a look at that," Alboini says.

RIM has been battered by Apple's iPhone and smartphones running on Google's Android mobile operating system, which have stolen sales and marketshare from the Canadian company.

Here kitty, kitty
Alboini noted RIM's annual shareholders' meeting is usually held in July and he expects the company's stock to show noticable improvement by May under Heins and Stymiest, or his firm and 15 other shareholders that own nearly 10% of RIM may consider taking action. Under Canadian securities laws, investors with a 5% stake or more can call a special meeting and run an opposition slate to replace some or all of a company's directors.

Back in October, Jaguar called for RIM to replace its co-CEOs and chairmen Mike Lazaridis and Jim Balsillie with a "transformational" CEO; separate the role of CEO and chairman by bringing in an independent chairman; and deliver a corporate strategy that could galvanize shareholder support, such as selling the company or parts of it.

As a result of Jaguar's October announcement and the 80-day timeline it would take for it to call a special meeting to try to unseat RIM's board, should it want to go that route, Motley Fool told investors that in the coming weeks and months: "Don't be surprised to see RIM's board suddenly separate the chairman-CEO role and assign an independent director to the chairman's role. And look for signs that an executive search firm has been hired to quietly test the waters for potential CEO replacements at the mobile-device maker."

Over the past several months, Alboini says he has spoken with several of RIM's directors about the need for change, but that their actions announced Monday surprised even him.

"They kept their cards close to the vest," Alboini says. The company noted that Lazaridis and Balsillie recommended Heins as CEO as part of a succession plan.

Out with the old, in with the old
Despite RIM's announcement that co-CEOs Lazaridis and Balsillie had resigned their executive posts and that the position of chairman-CEO had been split, Alboini is not optimistic the company will undergo transformational change under Heins.

The newly minted CEO joined RIM in late 2007 as senior vice-president of hardware engineering and gained the title of chief operating officer for product and sales in August. He will report to RIM's board of directors, on which Balsillie remains a member and Lazaridis is now vice-chair and will serve as chair of the board's newly formed Innovation Committee.

"The two former CEOs are still on the board and it will be hard for the new CEO to try to articulate change," Alboini observed. "He said he plans to stay the course and that's not a strategy change. The market voted with its feet and doesn't like the two CEOs sticking around."

Shares of RIM fell as much as 7.5%, to $15.72, during intraday trading following the announcement.

Perhaps the most disheartening news for investors was Heins' statement during the analyst call this morning that he does not plan to break up the company and sell its various businesses.

"We are strong because we have an integrated solution: We are vertical, we have our network, we have our services, we have our enterprise service out there ... we have fantastic devices and a fantastic ecosystem," Heins said during the conference call. "I want to build on that. I will not in any way split this up or separate this into different businesses."

Tweak here, tweak there
Although Heins wants to keep the company intact, as is, and not institute wholesale changes, he does plan to bring out a big wrench.

Two main focuses of his attention are to disband the previous corporate culture of operating like a start-up where a product undergoes development and innovation simultaneously.

"We would innovate while developing a product and that needs to stop. We still need to innovate, and don't get me wrong, but we will do this with much more emphasis on prototyping and concepting," Heins said. "But when we say a product is defined and a product is a product, execution has to be really, really precise."

Another area slated for change is beefing up RIM's longstanding efforts to reach consumers, a move designed to expand beyond its largely corporate customer base. RIM plans to hire a chief marketing officer tasked with getting onboard with consumer trends and needs and translating the information to the company's technologists so they can bake that into its handset designs and software.

Foolish Takeaway
Jaguar and other shareholder activists looking to take a bite out of RIM if it moves too slow in delivering change and shareholder value were likely licking their chops at one of Heins' comment during the conference call: "I don't think drastic change is needed."

Come this May, investors should break out the binoculars and see if Jaguar and others are beginning to circle their prey.

Research in Motion has largely missed out on the revolution taking place in the mobile arena. However, plenty of companies have their businesses firmly staked in the area of explosive growth. That's why the Motley Fool recently compiled a report detailing 3 Hidden Winners of the iPhone, iPad, and Android Revolution, and made it completely free, to boot! You don't want to miss out on this trend, so click here to access your copy today.

At the time thisarticle was published Fool contributorDawn Kawamotodoes not own stock in any of the companies mentioned. She has, however, played with RIM's BlackBerry smartphones and appreciates the feel of a real keyboard. The Motley Fool owns shares of Apple and Google.Motley Fool newsletter serviceshave recommended buying shares of Apple and Google, and creating a bull call spread position in Apple. Try any of our Foolish newsletter servicesfree for 30 days. We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.