RIM responds to anonymous 'open letter,' says it is addressing issues

Research In Motion (NASDAQ:RIMM) responded to an anonymous "open letter" from a person purported to be a high-level RIM employee. The letter was harsh and blunt in its criticism of the company's leadership and direction.

The BlackBerry maker broke with its standard policy of declining to comment on rumors and speculation, and issued a matter-of-fact reply to the letter--but the company did not directly address the specific points of criticism.

The letter was posted by the technology blog Boy Genius Report, and the blog said the letter came from a "high-level RIM employee," and that the person's identity had been verified. However, the blog did not provide any more information beyond that or indicate how the person's identity was verified.

In the letter, the purported anonymous RIM employee leveled a series of criticisms at RIM's senor management team, and RIM co-CEO's Jim Balsillie and Mike Lazaridis in particular. The letter comes as RIM struggles to regain momentum and market share as Android and iPhones cut into its business, both enterprise and consumer. Earlier this month, RIM reported weak BlackBerry shipments and revenues, and began a program to cut jobs and streamline operations.

"I have lost confidence," the letter began. "While I hide it at work, my passion has been sapped. I know I am not alone--the sentiment is widespread."

The letter writer urged RIM's management to focus on what the person said were several key deficiencies. The letter said RIM should focus more on the end-user experience; recruit better software talent and streamline software development; and focus on only a few core projects. "We can't afford any more initiatives based on carrier requests to squeeze out slightly more volume," the letter said. "Again, back to point No. 1, focus on the end users. They are the ones making both consumer and enterprise purchase decisions."

Additionally, the letter said RIM needs to make it easier for developers to write applications for BlackBerry; increase accountability within the company; avoid overreacting to criticism in the media; and to engage more directly with employees. The letter ends on a somewhat hopeful note.

"Now would be a great time to internally re-brand and re-energize the workplace," the letter said. "For example, rename the company to just 'BlackBerry' to signify our new focus on one QNX product line. We should also address issues surrounding making RIM an enjoyable workplace. Some of our offices feel like Soviet-era government workplaces. The timing is perfect to seriously evaluate at our position and make these major changes. We can do it!"

In its response, which was published on RIM's corporate blog, RIM said "it is obviously difficult to address anonymous commentary and it is particularly difficult to believe that a 'high level employee' in good standing with the company would choose to anonymously publish a letter on the web rather than engage their fellow executives in a constructive manner, but regardless of whether the letter is real, fake, exaggerated or written with ulterior motivations, it is fair to say that the senior management team at RIM is nonetheless fully aware of and aggressively addressing both the company's challenges and its opportunities."

RIM did not specifically address the list of criticisms the letter brought up, but acknowledged the company is undergoing a business transition, and that while the transition is taking longer than expected, "there is much excitement and optimism within the company about the new products that are lined up for the coming months." RIM pointed to strong fundamentals in its balance sheet, profitability and international growth to counteract weaker U.S. sales.

"There is a fundamental business reality however that following an extended period of hyper growth (during which RIM nearly quadrupled in size over the past five years alone), it has become necessary for the company to streamline its operations in order to allow it to grow its business profitably while pursuing newer strategic opportunities," RIM said. "Again, RIM's management team takes these challenges seriously and is actively addressing the situation."

Separately, RIM said it will set up a committee of independent directors to study whether Balsillie and Lazaridis should also lead the board as co-chairmen. In a statement, RIM said that part of the committee's mandate will be to "determine the business necessity for RIM's co-CEOS to have significant board level titles to assist their selling and other responsibilities with certain large customers in overseas markets."

The move is a concession by RIM to Northwest & Ethical Investments, an activist RIM investor, which proposed splitting the roles of co-CEO and co-chairman. A vote on the proposal was scheduled for RIM's annual general meeting on July 12, but RIM said that, as a result of the deal with NEI to set up the committee, the vote will be withdrawn.

For more:
- see this BGR post
- see RIM blog post
- see this BGR post with RIM's response
- see this Financial Post article
- see this WSJ article (sub. req.)
- see this Bloomberg article

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