Long-time readers of my site know that I purchased shares of Research in Motion before the sh*t hit the fan. I'm a satisfied Blackberry user, thanks in large part to BBM and the keyboard. While I thought it had enough competitive advantages (network, BBM, security, corporate integration) to hold its own until its software caught up to that of the competition, I was dead wrong about this. Though I am happy with the product, clearly others are not, leading to a miss on my part.
But that's an old story now, as Rim's failures have been clear for a while now. What irks me about the company now is how despite a management change, the company's culture of obfuscation when it comes to investor communications does not appear to have changed. Yesterday's conference call provided a number of examples.
It was pretty clear from the get-go that management wanted to limit the discussion. The company spent more than 30 minutes (i.e. the majority) of the call on prepared remarks, most of which were already disclosed in the firm's press release which all conference call participants already had access to.
Though RIM is not the only company that does this (a practice that I would like to see ended!), RIM goes even further. They had a guy on the call whose only job appeared to be to cut follow-up discussion off and get the operator to move to the next question.
If management were actually answering the questions asked of them, perhaps the above wouldn't be such an issue. But because they were dodging many of the initial questions, follow-ups were necessary!
For example, one analyst asked for margin info on the company's services business so that it could be valued separately. That question was completely ignored...no acknowledgement, not even a "We don't disclose that for competitive reasons."
Other times, management would answer a different question than what it was asked. For example, when asked about operating cash flow for the current quarter, management's bewildering answer seemed to focus on the company's line of credit and its impending extension.
Once, Heins even refused to answer a question that is already public: What are the factors upon which you are compensated? Heins stated that this is between him the board, but as a public company, this is public information! In addition to a base salary, Heins is entitled to a bonus that is based on targets the firm has set for revenue, diluted EPS, and net subscriber additions, according to the company's information circular. So management would like to make private that which is already public?
New CEO Thorsten Heins had an opportunity to change this culture when he took the helm. Clearly, the company's problems cannot be laid at his feet, as he took over a sinking ship. This should have allowed him to open the kimono by being more transparent with investors, relatively free from the desire to avoid associating with failure, something the previous leadership could not have done. Instead, the lack of discussion and the dodging of questions make it clear that he has no intention of being forthcoming with investors. How is one to value what's left of this company?
Disclosure: Author has a long position in shares of RIM