Research in Motion Ltd continues to slump as Stephen Jarislowsky, one of RIM’s major investors, has sold more than half his stake in the company. This had come after the company’s share fell to $27.75 in pre-market trading at Nasdaq., its lowest level in 5 years. Despite achieving a profit of $625 million in the first quarter of this fiscal year, RIM’s stocks have fallen 52 per cent this year.
Jarislowsky Fraser Ltd, an investment agency based in Montreal, owned 10.2 million shares of RIM after the end of the first quarter, being the company’s sixth largest investor, before it sold more than half of its share. The growing dissent among the investors is fueled by the company’s profit forecast and its second-quarter sales missing the experts’ estimates.
RIM’s investors have come out quite vocally in the media, clarifying their perspective of this situation. Investors are unsatisfied with co-CEO’s Jim Balsillie and Mike Lazaridis’s performance. Balsillie and Lazaridis have been co-CEO and co-chairmen of the company since 1992, after Balsillie developed the first BlackBerry.
Billionaire Stephen Jarislowsky said in an interview that there shouldn’t be two people at the same position since having worked all their lives in the same post, they make the same decision from the policy point of view and basically function as the same person. Northwest & Ethical Investments LP, another major RIM investor, supports the general view that RIM should separate the roles of chairman and CEO. Robert Walker, President of Ethical Funds at Northwest remarked that two separate posts will put the board in a better position. Evidently, RIM’s proxy statement said that shareholders will be voting on separating the two posts at the company’s shareholder conference on July 12.
Experts have criticized Balsillie, with Jarislowsky commenting that the former has lost focus, and is too involved in things outside the business. Some investors are also calling for Lazaridis to be given the sole charge of the company. Many analysts also share the opinions of investors on the inefficiency of the co-CEO framework, since it slows product development with two people giving the same orders.
However, Lazaridis and Balsillie support the co-CEO structure and have assured that they are extremely committed to the welfare of RIM. The company, however, has announced that it will divert resources to increase production by cutting jobs. RIM has also suffered much from customers defecting devices running on Google Android platform and Apple’s iPhone.