RIM Declines as UBS Adds to Criticism of Co-CEO Structure

June 04, 2011, 8:54 AM EDT By Hugo Miller

(Updates with closing share price in fourth paragraph.)

June 3 (Bloomberg) -- Research In Motion Ltd., maker of the BlackBerry smartphone, declined in Nasdaq trading as UBS AG analysts criticized the company’s dual chief executive officer structure, the second such critique in little over a month.

UBS’s Amitabh Passi and Phillip Huang lowered their price target on RIM to $45 from $60, citing a lack of clarity about when new phones would debut, inroads made by Apple Inc.’s iPhone and devices based on Google Inc.’s Android software in corporations, and an overconcentration of responsibility with co-CEOs Mike Lazaridis and Jim Balsillie.

“We are also not convinced the current management structure -- co-Chairmen, who are also co-CEOs, and one of whom is now CMO, is the optimal one either,” Passi and Huang said in a note today. They have a “neutral” rating on RIM.

RIM fell $1.45, or 3.6 percent, to $38.98 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has lost 33 percent this year to its lowest level in more than two years.

RIM’s share of North America’s smartphone sales has fallen as demand for iPhones and Android devices has grown. Revenue growth in markets such as Latin America and Europe may also be threatened as rival smartphones catch on outside the U.S., the analysts said.

BlackBerry Bold Delay?

“While international growth has been strong, we anticipate similar dynamics as in North America playing out,” the analysts said. There will be “no major product launches till probably late in RIM’s fiscal second quarter,” they said. That quarter ends in August.

RIM’s share of U.S. smartphone subscribers dropped 4.7 percentage points to 25.7 percent in April from three months earlier, according to ComScore Inc. Google’s jumped 5.2 percentage points to 36.4 percent and Apple gained 1.3 percentage points to 26 percent.

Sameet Kanade, an analyst at Northern Securities Inc. in Toronto, suggested in April that the company should scrap its dual-CEO structure and put Lazaridis in charge.

Lazaridis, who invented the BlackBerry as the first mobile e-mail device more than a decade ago, has shared the role of CEO with Balsillie since 1992. Balsillie also took over as chief marketing officer after RIM’s first marketing chief Keith Pardy left in March, less than two years after joining the company.

Shaw Wu, an analyst with Sterne Agee & Leach Inc. in San Francisco, also cut his price target on the stock, lowering it to $44 from $52. He reiterated his “neutral” rating on RIM.

Apple’s planned iCloud service, which will allow customers to listen to their iTunes music from multiple devices, will only make it more difficult for RIM to convince consumers to opt for a BlackBerry, Wu said.

--Editors: Ville Heiskanen, Peter Elstrom

To contact the reporter on this story: Hugo Miller in Toronto at hugomiller@bloomberg.net

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

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