RIM Chiefs Lose Billionaire Status as Stock Drops by Half on Lower Sales

By Sarah Frier - Sep 17, 2011 11:01 AM GMT+0700
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RIM President and Co-Chief Executive Officer Mike Lazaridis delivers a keynote address at the BlackberryDevCon 2010 in San Francisco. Photographer: Justin Sullivan/Getty Images

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Sept. 16 (Bloomberg) -- Jennifer Fritzsche, an analyst at Wells Fargo Securities LLC, talks about Research In Motion Ltd.'s earnings and outlook. RIM, the maker of Blackberry smartphones, yesterday reported a fiscal second-quarter profit, excluding some costs, of 80 cents a share. Fritzsche speaks with Deirdre Bolton and Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

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RIM’s earnings reports have disappointed investors for three consecutive quarters as the company struggles to gain ground from Apple Inc.’s iPhone and iPad. Photographer: Indranil Mukherjee/AFP/Getty Images

Jim Balsillie and Mike Lazaridis, Research In Motion Ltd. (RIMM)’s largest shareholders and co-chief executive officers, have lost their status as billionaires from the stock this year as it has shed more than half its value.

The executives, who each own about 5 percent of the BlackBerry maker, had the value of their stakes drop to about $640 million yesterday from about $1.9 billion in February.

RIM’s earnings reports have disappointed investors for three consecutive quarters as the company struggles to gain ground from Apple Inc. (AAPL)’s iPhone and iPad. Waterloo, Ontario- based RIM missed analysts’ estimates Thursday for profit and shipments of the Blackberry and PlayBook tablet computer.

“These guys have misexecuted,” said Matthew Thornton, an analyst for Avian Securities LLC in Boston. “They have been very late with the new products. They’ve missed their own forecasts. They’ve done nothing to reassure Wall Street that they’re going to get more competitive against Apple and Google’s Android products.”

RIM fell 19 percent to $23.93 on the Nasdaq Stock Market at 4 p.m. New York time yesterday, down 66 percent from a 2011 peak and 84 percent from its record in June 2008.

The plunge in RIM’s stock price this year marks a reversal in the fortunes of a company that dominated the U.S. smartphone market after introducing the BlackBerry in 1999. The stock rose more than 70-fold between 1999, when it began trading on the Nasdaq, and its 2008 peak.

Wireless Pioneer

Lazaridis founded RIM in 1984 when he was a senior at the University of Waterloo in Canada. The company began working on wireless products three years later, developing a pager that evolved into what is known as the BlackBerry. Balsillie, a 1989 graduate of Harvard Business School, joined RIM in 1992.

The company’s smartphone market share started eroding after Apple introduced the iPhone in 2007 and phones running Google Inc. (GOOG)’s Android software gained popularity. In the second quarter, RIM’s share of the global smartphone market dropped to 12 percent from 19 percent a year earlier, according to Gartner Inc. In the same period, Apple climbed to 18 percent from 14 percent, and Google’s Android rose to 43 percent.

This month, investor Jaguar Financial Corp. asked RIM to consider selling itself or spinning off its patents to boost investor returns.

“Given today’s stock action, you’ll get more activists going in and seeing what’s the strategic direction, and does it make sense,”, Jeff Fidacaro, an analyst at Susquehanna International Group in New York, said yesterday in a telephone interview. “Everything is on the table.”

-- Editors: Ville Heiskanen, Peter Elstrom

To contact the reporter on this story: Sarah Frier in New York at sfrier1@bloomberg.net

To contact the editor responsible for this story: Peter Elstrom at pelstrom@bloomberg.net