Research In Motion asked its weary shareholders for patience today as the company implements its turnaround plan on the back of the delayed BlackBerry 10 line of smartphones.
CEO Thorsten Heins and his executive team hosted the company's annual general meeting in Waterloo, Ont.
RIM sold more than 49 million smartphones worldwide in the last year and one million PlayBook tablet computers, Heins told shareholders near the start of his prepared speech. The company currently has 77 million paying customers worldwide.
But while he stressed the company's strength in some market segments, Heins acknowledged the company's weaknesses in the key North American smartphone market.
"I want to assure you that I am not satisfied with the performance of the company over the past year," he said.
He said the company is looking to leverage its strength in the key enterprise space into increased revenue once the new line of devices comes out. But he acknowledged the company's margins will remain squeezed in the short term.
"The benefits will take time to have a meaningful impact on our performance," Heins noted. "As I've said we do expect the next several quarters to be challenging … as we go through the transition to BlackBerry10."
Strong cash reserve
Heins noted the company has the advantage of a strong cash reserve to help it ride out what it expects will be a lean few months. When it last reported results, RIM had $2.2 billion in cash or cash equivalents on hand.
Last month, RIM revealed it is planning 5,000 layoffs worldwide in a bid to cut costs. "This was an incredibly difficult decision to make but it is necessary," Heins said, noting the layoffs will be completed by the end of next year.
The CEO also noted the company's plans on streamlining their product portfolio. "We will focus on a smaller number of devices in the market at any given time," he said.
For many investors, it was their first time to grill Heins and his executive team since they took the reins of the embattled smartphone maker in January.
And grill him they did. The most pointed question came from a RIM shareholder who said he had no issue with Heins himself, but harshly blamed the long-standing RIM board for allowing the company's share price to crater.
"I am extremely critical of the board of directors, excluding the recent additions" the man said. "Why did they let it get out of hand so badly … before they did something about it?" he asked, which drew an ovation from the audience.
Another shareholder jokingly noted that he took the lack of refreshments at the meeting as a sign the company was taking its cost-cutting seriously.
A major RIM shareholder echoed that tone, telling CBC News that while he's confident the company still has valuable assets — not to mention $2.2 billion in cash in the till — he has little faith in the board's credibility to manage it well.
"The problem with management and the board is it is all about optimism ... as opposed to results," Jaguar Financial CEO Vic Alboini said. "What shareholders want is results and they want the stock price to refect the valuable assets that RIM has. But those valuable assets will wither and die if the right strategic moves are not taken."
The company's insistence on sticking with the current model, as opposed to breaking up the company, could be its downfall, Alboini said. Splitting the company into a hardware maker and a service provider could see the subscriber base grow exponentially, he suggested.
"If you open up the platform to all smartphone users, who knows where that can go to. It could go to 100 million, 200 million and 300 million. These are not wild and outrageous numbers," Alboini said.
The meeting began on a quieter note, with all 10 members of the company's board of directors being re-elected. Ernst & Young LLP was also retained to be the company's official auditor, and the board moved to approve its existing executive compensation model.
From a high of $148 in the summer of 2008, RIM shares have been on a steady descent ever since, as the company's share of the North American smartphone market was whittled down to roughly 10 per cent today.
This time last year, RIM shares were hovering in the $25 to $30 range, and then-CEO and founder Jim Balsillie was telling investors the BlackBerry 10 was the cure for what was ailing the stock at the time. A year later, there's a new man at the top, the shares are under $8 and BlackBerry 10 is still several quarters away.