Executive Response in Motion at RIM

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RIM named two new directors, Barbara Stymiest, chief operating officer of the Royal Bank of Canada, and John Wetmore, former CEO of IBM Canada (IBM), and said it would add two additional board seats. John Richardson, chairman of the Ontario Pension Board and a former insurance executive, was named Lead Director in the interim as a search for a chairman begins.

RIM stock finished down $1.45, or slightly more than 1%, on the news, but stocks were generally down on the day. Analyst James Faucette with Pacific Crest Securities in Portland, Ore., said that most stocks in the wireless device space were down, and RIM finished the day better than most.

Still Strong

Faucette said he doesn't think RIM is facing any significant trouble from regulators as a result of the probe. "The SEC and the [National Association of Securities Dealers] have not done a ton of investigating given the number of companies that have been caught up in the options problems, especially given the depth and breadth of response from companies," he said. "It seems like RIM is doing its best to give the appearance of making things right." Faucette has maintained an "outperform" rating on the stock with a price target of $160 per share.

The news takes place against the backdrop of a surging business environment for RIM, while competitors have sputtered. Balsillie said RIM added a million subscribers in the quarter just ended, the first time it has added that many in a single quarter, beating the prior guidance that called for 975,000 new subscribers. Previously, RIM had said that it expected to report sales of between $900 million and $940 million.

Meanwhile, rivals Palm (PALM), maker of the Treo line of smartphones that competes with RIM's BlackBerry, and Motorola (MOT), whose Q phone is also a BlackBerry-like rival, have been struggling. Palm, according to reports, is exploring its options, which may include shopping itself as a possible acquisition target. Motorola would be a likely candidate to acquire Palm, but the company has its own troubles, says Pacific Crest's Faucette. Motorola has struggled in recent months with declining sales and profit margins on its wireless phones, and is now engaged in what could be a battle with financier Carl Ichan for a board seat.

Hesseldahl is a reporter for BusinessWeek.com.