* Shares down 20 percent as results spook investors
* Co-CEOs under fire; analyst says management in denial
* PlayBook seen as key culprit in disappointing financials (Adds analyst comment, byline, board background)
By Paul Thomasch and Alastair Sharp
Sept 16 (Reuters) - Investors drove Research In Motion's RIM.TO RIMM.O stock down 20 percent on Friday as dismal quarterly results raised prospects that the BlackBerry maker will be sold, broken up, or at least placed under new leadership.
The sell-off, which wiped out $3 billion of RIM's market capitalization, underscored how bad times have become for the one-time smartphone leader, once a byword for corporate communication.
A day after the earnings report, analysts spoke of disappointment, challenges and a ticking clock. [ID:nS1E78E1MR].
The latest misstep increased pressure on senior executives, who have been urged to step aside by investors and analysts concerned about repeated failures to execute strategy, and criticism spread to the company's board.
"Investors are telling us that a change needs to happen very quickly. The market is saying that the management are not the right guys to lead the company going forward," said Barry Schwartz, portfolio manager at Baskin Financial Services.
Run by co-founder Mike Lazaridis and salesman sidekick Jim Balsillie, who joined Lazaridis as co-CEO well before RIM had ever shipped a BlackBerry, the company this year set it sights on bringing out a tablet computer to compete with Apple Inc's (AAPL.O) iPad.
But results of the effort -- a tablet called the PlayBook -- have so far been disappointing. In addition, the company's BlackBerry smartphone is rapidly losing market share, and RIM has issued a series of damaging profit warnings.
Lazaridis and Balsillie report to a board that includes, in addition to themselves, seven other directors, only two of whom have any obvious background in the telecommunications or technology industry: John Wetmore, who served as finance chief of IBM Canada, and Antonio Viana-Baptista, who before retiring in 2008 worked at Telefonica.
"The board is culpable. It's been a little absent in terms of strategy ... and in overseeing what management is doing," said Paul Hodgson, senior research associate for GMI, a governance ratings firm. "They are supposed to be the representatives of shareholders and they're not doing a very good job of representing shareholders' interests."
But Hodgson said RIM's directors were in an unusually difficult situation because so much power is concentrated in the hands of Lazaridis and Balsillie, who each own more than 5 percent of the company and share the roles of chief executive and chairman.
"It's not a Yahoo situation where an independent director can fire the CEO," Hodgson said. "All the independent directors would have to agree to a management change."
Balsillie gave up his role as chairman in 2007 and regulators later forced him off the board amid a scandal related to back-dated stock options. Balsillie returned to the board in 2010, and he and Lazaridis were appointed co-chairman later that year.
Calls for change are mounting in the wake of Thursday's earnings report, which was chock-full of bad news. RIM posted a sharp drop in quarterly profit, painted a dismal picture for the current quarter, and said it now expects to reach only the lower end of an already reduced full-year outlook.
(For a graphic on RIM's key metrics, click r.reuters.com/pan73s.)
Moreover, the report reinforced a growing sense that the company is in danger of falling too far behind Apple, with its iPhone and iPad, and a host of competitors making devices that run on Google Inc's (GOOG.O) Android software. [ID:nL3E7KG1DZ]
RIM's Nasdaq-listed shares were down 20 percent to $23.58 in afternoon trade on Friday, after touching a low of $22.52 earlier in the day.
That could make the company a more attractive acquisition target, sparking interest from private equity or companies who see a cheap but profitable target, analysts said.
That might sit well with investors. Just this month an activist investor said it was rallying other shareholders in a bid to empower the board to look at options including spinning off patents or selling the entire company. [ID:nN1E7850LG]
Absent a sale, Lazaridis and Balsillie will likely come under pressure to find another kind of big, dramatic step to turn around RIM.
"A dividend needs to be started immediately, share buyback needs to be increased dramatically, management needs to make a change and either an acquisition ... (or) some kind of merger, being taken over," said Baskin Financial's Schwartz. "That will stop the bleeding." (Reporting by Paul Thomasch in New York and Alastair Sharp in Toronto; additional reporting by Sinead Carew in New York; Editing by Steve Orlofsky and John Wallace)