RIM shareholder: Android and Apple are kids’ games

The press was expecting an angry, mutinous mob at RIM’s Annual Meeting of Shareholders 2011 held at the company’s headquarters in Waterloo, Ontario last week. Instead the existing board of directors were re-elected without any protest from the shareholders, and they listened peacefully as Mike Lazaridis and Jim Balsillie outlined their plan to release 7 BlackBerry OS 7 devices before the year’s end — the largest global launch in the history of the company.

Investors’ concerns were smoothed over as Lazaridis and Balsillie waxed lyrical about the Bold 9900 and the PlayBook while eschewing negativity with favourable facts and figures for international growth, despite RIM’s recent declining US smartphone market share, plummeting stock price and difficult last two consecutive quarters:

  • BBM drives international growth with 45 million active subscribers.
  • 75% of global mobile phone market is prepaid and prepaid BlackBerry plans boost international growth.
  • BlackBerrys are being sold on more than 650 global carriers in 175+ countries.
  • BlackBerry was named #1 selling smartphone for 2010 in the UK, Netherlands, Latin America and the Caribbean.
  • 1 million new BlackBerry subscribers were added in Europe, Middle East, and Africa in the last 3 weeks.

RIM also boasted some impressive numbers:

  • 18 petabytes of data is transferred on the BlackBerry network every month.
  • RIM has 67 million subscribers to date, and adding 5 million per quarter.
  • the PlayBook is undergoing trials in 1500 companies.

A strong balance sheet was presented to investors:

  • RIM saw $20 billion in revenue for fiscal 2011 (up $4 billion from 2010).
  • 52 million devices were shipped in fiscal 2011 (up 15 million from 2010).
  • RIM now owns $770 million worth of Nortel patents.
  • RIM had $4 billion in cash ending fiscal 2011, and US$3-billion of Q1 for fiscal 2012.
  • RIM repurchased US$2-billion shares in fiscal 2011, and it is authorised to repurchase a further 5%.

RIM also touted future sustainability through NFC, strong enterprise relationships with IBM, Cisco, Microsoft, Oracle, HP and SAP, their QNX operating system — coming to handsets in early 2012 — and BlackBerry Balance to separate users’ work and personal life. They also re-emphasised their 14 acquisitions, the most recent being that of Ubitexx, which allows for BES across multiple mobile platforms, The Astonishing Tribe for slick user interfaces, and Torch Mobile for better web browsers.

During the Q&A session, one investor took center stage by giving a heartfelt speech to the board which summarizes the overall sentiment of the shareholders who were present, succinctly. Although the Q&A session was not void of venom — some questions made reference to the infamous Open Letter — the shareholders displayed genuine concern for the future of the company, avoiding criticism of the co-CEO roles and not pushing for acquisition.

I have a couple of comments and I’d like to ask a question. I’m a small shareholder with big dreams for the future, for this company. I have an MBA degree from Queens University, I graduated in 2003 and we studied market strategy, growth, marketing, extensively, and if I might comment, I think your biggest weakness is marketing. Your products and technology are world class, you’re an innovator, but you’re not good at selling what you make.

I have a few more comments. One is, I learned that companies that have large war chests of cash or buy back their own stock, don’t have any productive alternative use for that money. I would suggest, you might want to invest in selling what you make already and positioning the new products for the future. Marketing again, needs work, your head marketing guy left to work for Samsung, bless him, he should have stayed, there’s a lot of stuff coming down the pike he could have profited from.

What I find ironic is that analysts who are sitting in this room, will criticise this company, while typing out that criticism on a BlackBerry [laughter]. And I think that that’s the most self-serving, most despicable activity on this planet, because then they buy the stock for a lower price and wait for a shareholder meeting, have the price go up and then sell it. That does not drive long-term sustainable business within an industry leader like RIM [applause].

The other issue I think that you’re missing the mark on is, the US military spends US$3.9 billion per year on computer hardware. You’re getting a very small percentage of that with, looking to the future, the PlayBook could become standard issue for all military personnel, but you’ve got to close the loop on that opportunity by continuing to innovate and sort all the weaknesses that product currently has in the market.

You also need to punch up the fact you have security encryption so powerful, the president of the United States himself carries two or more BlackBerries at any given time. Show me another world leader who has that much confidence in their products that they carry. I’d like to see that on a tabloid.

You’re letting Apple and Android eat your lunch, and those are not business devices, those are kids’ games. You need to position your product for what it is, a powerful, powerful, beyond words, usable device in this market place. But you’re not, you’re talking about new technology, share purchase buyback, and innovation, but innovation needs to be marketed and sold to the consumer, make them realise what they can buy and how much they’re paying for it.

That’s all I have to say.

For the audio of this speech, check out Crackberry.com.



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