This past Thursday, in the basement of a steakhouse in Toronto, new Research in Motion CEO Thorsten Heins met with more than a dozen Bay Street analysts.
Byron Capital’s Head of Research Tom Astle was there and shared his thoughts in a note to clients Friday.
Astle said that while he considered the meeting “refreshing”, he found himself tapping his experience with Nortel’s management changes midway through the last decade. Astle says there are similarities and important differences between Heins and Mike Zafirovski’s introduction as Nortel CEO in November of 2005.
In Nortel’s case, says Astle, Zafirovski was an highly regarded outsider. He had spent twenty-four years working for American business legend Jack Welch at General Electric before joining Motorola in 2000. Nortel’s stock rallied sharply after the announcement. Heins, on the other hand, is an insider who is being widely panned by the street. Shares of RIM lost more than 9% the Monday after he was appointed CEO.
What the two men do share, says Astle, is that both Canadian companies were losing market share, and management had lost credibility. The balance sheet and business model shut down Zafirovski’s chance of a turnaround at Nortel, but this is unlikely to be the case at RIM, says the Byron Capital analyst. Heins will need to execute strongly on his business plan this year, he says, but “at least he has a strong balance sheet and business model to build on.”
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Before joining RIM in 2007, Thorsten Heins held several positions at Siemens, during his more than two decade tenure there, including Chief Technology Officer of Siemens’ Communications Division and several general management positions in hardware and software businesses. Heins’ his appointment to CEO at RIM has been widely criticized as a too-cozy “inside” promotion, but the Globe and Mail recently noted that one RIM exec described Heins as “the only one in RIM’s senior management who could truly say no to the technologically knowledgeable founder Mr. Lazaridis and the forceful Mr. Balsillie on issues of significance…”
Shares of Research in Motion on the TSX closed Friday down 2.3% to $16.78.