- Since Balsillie's Oct. 5, 2006 bid for the Penguins, RIM's shares are down 16%.
- Over that same period, the Nasdaq is up 24%, and Apple -- riding the incredible success of its iPhone, which it turns out people did want -- has risen 358%.
NEW YORK ( TheStreet) -- When Apple ( AAPL - Get Report) introduced the iPhone to the world in January 2007, Research In Motion ( RIMM) dismissed the device as a competitive threat, or so we would learn later. Co-CEO Mike Lazaridis stated internally, according to reports, that no one would want the equivalent of a personal computer on a phone. People just wanted an email messaging device, he asserted -- a worldview shaped by the company he'd built. But the death knell for RIM probably came earlier, on Oct. 5, 2006. That was the day the other RIM co-CEO, Jim Balsillie, bid $185 million to buy the Pittsburgh Penguins. That bid began a childish, multiyear quest by Balsillie to buy a hockey team, which diverted his focus from the core RIM business. RIM's competitive position today is arguably unfixable because of Balsillie's quixotic quest. Balsillie's bid for the Penguins ran from October to December 2006, when he finally withdrew his bid in frustration. But five months later, he announced he was going to buy the Nashville Predators instead. Again, however, the bid was not to be. After the league fought it and the owner got cold feet, the deal was canceled a year later. But Balsillie wouldn't let go of his dream. With a net worth much greater then than it is now, he made a $212.5 million offer to buy the Phoenix Coyotes in May 2009. This deal also got derailed several months later. Did a hockey fantasy kill RIM? Wasn't Jim Balsillie working on his own time to spend his own money, which he has a right to do? Well, you can call it a coincidence, but here are the numbers:
On planet Earth, however, we know that Balsillie was obviously distracted by his hockey forays. In hindsight, it's obvious that the period from October 2006 to June 2009 was when RIM wasn't paying attention to Apple. Maybe if Jim Balsillie had had his nose to the grindstone at work, RIM could have reacted faster to Apple's competitive threat. Maybe it could have come up with a strategy for mainland China, which still eludes the company today. Most people agree that RIM didn't really get serious (or desperate) about competing with the iPhone until it bought QNX in April 2010. This is the next-generation operating system for RIM's devices that likely won't hit the market until late 2012. RIM bought QNX several months after Balsillie finally stopped messing around with hockey and turned his full attention back to the company that gave him the money he had used to try to buy a team. The final chapter has yet to be written for RIM. Maybe QNX will save it. But it'll have a lot less market share next year when it finally shows up to the party. By then, it may be way too late. If RIM does blow up, Balsillie will still have plenty of cash that he's pulled out of the company over the years through stock and stock options -- at least enough to keep buying tickets to hockey games. That will be ice-cold comfort to laid-off RIM employees, however. At the time of publication, Jackson had a bullish position in Apple.
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