Dear Mr. Lazaridis,
You are a frustrated guy. When you lost your patience with that BBC interviewer in April, pointed at his camera and ordered, "Turn that off," man, were you steamed. But even before that, it was obvious that you were feeling a little ticked off.
I hear you. You believe you're not getting your due. All you've done is lead the modern wireless revolution. The BlackBerry was the first game-changing smartphone and is still the most important wireless tool in most businesses. BlackBerry Messenger has dramatically increased the efficiency with which teenage girls can share: "OMG, Todd lookz sooooooo hot 2day! ttyl :p." Your ingenuity has paid off: Over the past five years, RIM has gone from $2 billion (all currency in U.S. dollars) in revenue to $20 billion.
But do you get proper credit for that? Noooooo.
The stock market is the ultimate arbiter, and the last time I looked, it valued your company-your fast-growing, debt-free company-at a measly seven times its forecast earnings for this year. That's seven, as in, seven. I haven't seen such an insult since the royals neglected to invite Tony Blair to Will and Kate's wedding.
You know what trades at seven times earnings? Cement companies. There's only one way to read the market's verdict on RIM: it believes your company's expiry date is the same as the one on that tub of cottage cheese in my fridge-the tub I bought in January.
"Why is it that people don't appreciate our profits? Why is it that people don't appreciate our growth?" you asked a New York Times reporter recently. You seem perplexed. Allow me to attempt to give you some answers, sir.
Because American financial analysts are myopic. Surprise! What Wall Street cares about is Wall Street, and if everyone down in the Hamptons is buying the iPhone, that colours the analysts' view. So when RIM struggles in the U.S., its problems are blown out of proportion.
RIM's U.S. sales actually shrank last year-from $8.6 billion to $7.8 billion. This is alarming for analysts or investors whose world view doesn't extend east of Maine. But I don't have to tell you that even if RIM sold no BlackBerrys at all in the U.S. this year, the company would still be larger than it was a few years ago, so fast is the demand rising in places like Indonesia.
I don't have an easy solution for you, except to try to pack the whole lot of those folks on a plane and send them to Jakarta for a week. Warning: You may first have to inform them that Indonesia is a growing nation of about 230 million people, and that it's pronounced In-doh-KNEE-zha, not In-dee-ANN-ah.
Because you don't make it easy for average investors to follow along. You might be the smartest man in Canada, and your co-CEO, Jim Balsillie, has a big brain, too. But it doesn't always pay to show it, you know what I mean?
I'll demonstrate. Here's a Balsillie answer on RIM's conference call for analysts in March, after your financial year-end: "I'll just be blunt. We have just really an outstanding set of new product introduction which is cutting over new architectures. And the capabilities of these, we haven't talked about, but it's a major, major step up. And it comes in Q2. So we're cutting over, we're really cutting over. It's a time of enormous investment and transition. The interest in the new devices and new platforms, for those of you that have been able to find it out, is extraordinarily high. And the interest in the PlayBook we all know, and we're cutting over to the new platform. So, quite frankly, it's a time of cutting over, and it's a heavy cutting over time."
As the kids say on BBM: WTF?
Do you know what words were not spoken on that call, Mr. Lazaridis? "Indonesia." Or "China." Or "India."
Dumb it down, please. Tell investors a story they can understand. That's what Apple does.
Because your communications strategy is indecipherable. Look, RIM doesn't need to suck up to the press like some two-bit operation on the Venture Exchange. But you're fighting a war of perception, and you're losing. It isn't helping that RIM's approach to the media is all over the map-by turns paranoid, friendly, angry, co-operative, controlling or aloof.
I'd like to see RIM succeed. Of the top 25 companies in Canada, it's one of the few that doesn't make money by digging things out of the ground, or by milking some government licence that protects it from foreign competition. It's a sparkling example of innovation, and we'd be poorer without it.
So whatever you do, even if you ignore all the advice above, please
Sincerely,
Derek DeCloet