Black Eye for BlackBerry
Research in Motion (RIM) has taken a hammering in the press lately. They had to re-adjust their earnings because they understated the expenses from stock options so now $250 Million expense is on the balance sheet.
If you are not familiar with RIM, they are an original Canadian success story. They stopped the astronomical growth of the Palm Pilot. They are the creators of the heavily used Blackberry. Yes, the very popular narcotic of the business world known by the street name of 'Crackberry'.
Crackberry addicts are pretty obvious. They use them in a car. They use them in a bar. They use them in the day. They use them when they have nothing to say. They use them in a meeting. They use them when greeting. Highly addictive things.
As a public service message, please look at the following quiz to determine if you are an addict. Acknowledging the problem is the first step. Be it crackberry addiction or DSMS for that matter.
(Full Disclosure: I do not have a Blackberry as having one in my hands would be akin to locking a child in a candy store.)
Getting back to RIM, I can't understate how disappointed I am. The co-CEO of RIM (Jim Balsillie) stepped down on his sword and resigned from his position as chairman of the company. That was the right thing to do. He and co-CEO, Mike Lazaridis, also agreed to pay $5 Milllion personally for the costs of an internal review and audit investigation. Another good move.
RIM has also stated that executives will repay all the benefit they received from the options that were incorrectly priced. It was further reported in the Globe&Mail that the SEC and OSC are also reviewing RIM.
If you recall the Westjet and Air Canada corporate espionage fiasco, the CEO of Westjet stayed in his position where some felt he should have resigned. (In fairness, CEO Clive Beddoe offerred his resignation but the Westjet Board of Directors did not accept it.) The espionage situation did hurt Westjet's brand. No longer were they the plucky underdog with the halo taking on big and obnoxious Air Canada.
Could the option ordeal negatively impact RIM's brand? It appears the benefit of this stock option faux-pas was limited to the ivory tower at RIM. So how do the developers, programmers, marketing folks, customer support and cleaning staff feel? You know the worker bees. I know some great people at RIM who work their tails off. And they are very unhappy about all this.
This situation potentially gives the Blackberry a black eye in terms of employee relations, investor relations, customer relations and brand equity.
Let's hope RIM recovers from this shiner quickly as there is enough cynicism out there for most successful large companies. This is the last thing a world-class Canadian firm such as RIM needs.
