Blackberry Maker RIM Says Turnaround Could Take Years

TORONTO -- The newest board member of BlackBerry maker Research in Motion Ltd. said Thursday that a turnaround could take three to five years.

Prem Watsa, RIM's third-largest investor, said he sees his investment in the company as a long-term one, adding that RIM's fortunes won't be reversed soon.

The once-iconic maker of the BlackBerry smartphone is facing its most difficult period in its history. Americans are abandoning their BlackBerrys for flashier touch-screen phones such as Apple's iPhone and models that run Google's Android software, including those made by Samsung Electronics Co.

"Is it going to turn around in three months, six months, nine months? No," Watsa said.

"Three years or five years is how I'm looking at it. But there's no guarantees. You've seen all the earnings from Apple. It's not easy to compete with Apple or Samsung or the Android group of companies."

Apple reported another strong quarter on Tuesday. The company sold 35 million iPhones in the January-to-March quarter, almost twice as many as it sold a year ago. Apple nearly doubled its quarterly profits.

By contrast RIM shipped 11.1 million BlackBerrys in the latest quarter and has written down the value of its product inventory in its past two quarters.

Watsa is one of Canada's best-known value investors and the billionaire founder of Fairfax Financial Holdings Ltd. He has been compared to Warren Buffett because of his investing approach.

RIM founder Mike Lazaridis recruited Watsa to join RIM's board when Lazaridis and Jim Balsillie stepped aside as RIM's co-CEOs in January. Watsa increased his stake in the Canadian company from 2.2 percent to more than 5 percent.

Lazaridis is RIM's largest investor with a 5.7 percent stake while U.S. money management firm Primecap Management owns 5.5 percent.

Balsillie once had a stake on par with Lazaridis but now owns just 0.4 percent. He sold off much of RIM's stock after leaving the company after more than 20 years there.

Speaking at Fairfax's annual meeting and later with reporters, Watsa called Lazaridis a "technical genius" and said he would not have joined the board if Lazaridis wasn't on it. Lazaridis became vice chairman of RIM's board and chairman of the board's new innovation committee in January.

Watsa said he believes in new CEO Thorsten Heins, who Watsa said had a solid track record at RIM and at Siemens before that.

Watsa dismissed suggestions that RIM could go bankrupt. When asked if RIM even has three to five years to turn itself around, Watsa noted that the company has $2.1 billion in cash and no debt.

"Very few companies go bankrupt," Watsa said. "My view is that a company goes through these hurdles."

He suggested that he'll remain a hands-off board member and investor. He said he trusts Heins and Lazaridis to run the company. He declined to comment on a possible strategic direction for RIM, which has been undergoing a strategic review.

Watsa and Lazaridis became friends after Lazaridis recruited Watsa to become the chancellor of the University of Waterloo, a top engineering school that's been a rich pool of engineering talent for RIM. The university adjoins RIM's headquarters in Waterloo, Ontario.

Watsa called the BlackBerry a Canadian success story.

"It really would be unfortunate if anything happened to RIM, and I'd like to do whatever I can to help," Watsa said.

RIM's stock increased 49 cents, or 3.6 percent, to close Thursday at $14.14.

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Comments

[ShesaidWhat]

11:58 AM on 04/27/2012

The RIM OS is not easy to use. It's clunky and antiquated, and the only reasons people stick with BB is because they are used to it, or they like BBM, or they want a physical keyboard. There are too many other options out there for people now. Android OS is on 50 different phones with a new phone pushed out each week and the iPhone is well, a great alternative.

[ShesaidWhat]

11:37 AM on 04/27/2012

Blackberry: You don't have 3-5 years. You've lost significant market share, you're losing major contracts and more are sure to follow. Bring it, or like no child, get left behind!

[ILoveGreatDanes]

08:37 PM on 04/26/2012

I don't think RIM can hang on for years. They've got to come up with something fast.

[bongstradamus]

06:30 PM on 04/26/2012

Don't buy unless its to short the stock.

[Flight]

06:01 PM on 04/26/2012

I don't think RIM can return to its glory.

[Brandon R Lucas]

05:17 PM on 04/26/2012

RIM needs to start getting more creative. The Blackberry needs a huge makeover and not to the point where it looks like they where trying way to hard but just a new sleek design that would catch the eye. The reason why I bought my IPhone is because I feel like it will last a life time due to the fact it is built with cassiterite, wolfarmite, coltan and also gold. They also need to update the software!. It will be pricey but it is better then going down the drain and I will make a promise that if I see the blackberry 3-4 years from now and it looks like a well built phone with up to date software then I will buy it right there and then.

[Bioxoxide]

05:06 PM on 04/26/2012

RIMs best option is to adopt Android OS into their phones. I know quite a few people that came from BB to Android and wished they could retain the hardware they were used to.

Or sell their assets and call it a day.

[bongstradamus]

06:32 PM on 04/26/2012

Android has issues. Manufacturers using the OS are getting shaken down by Microsoft over patents and being blocked from selling in entire markets. Not to mention, Google bought Motorola, the largest handset manufacturer in the world.

No, RIM needs to stay far away from Android, they have too many complications as it is, the last thing they need is Microsoft's patent lawyers after them and not being able to sell devices in parts of Europe and Asia.

[amajamus]

10:30 PM on 04/26/2012

It isn't necessarily RIM's OS that sucks . . . I have a 9900 and it is great. They just need to work on making a device that conforms with today's market. And as far as the Playbook . . . it needs to make the USB connect with more peripherals, such as a external HDD and get the popular apps such as Skype and Dropbox.