The best decision Scott McNealy ever made
Sometimes the best decisions become clear only with the benefit of 20/20 hindsight. So I'm sure Scott McNealy, the most cocksure tech CEO I ever met, must know he made the right move getting out of the way at Sun Microsystems.
Since turning over the reins to Jonathan Schwartz in April 2006, Sun has picked itself off the floor, staging one of the more improbable corporate comebacks in recent Silicon Valley history. Come on now, fess up: how many of you believed Sun had a rendezvous with irrelevance? OK, I'll be first to raise my hand. After the dot-com bubble burst, Sun felt the pain more than most. In the years since, the company was in a neck-and-neck race to the bottom with Borland Software, another former high-flier that has since fizzled out.
Truth be told, I thought Schwartz talked a good game with the media, but I doubted he had the right stuff to revive the company. He reminded me more of one of those smug yuppy jerks who once populated the senior management ranks at Microsoft (pre-antitrust trial, before all the smack-down which later ensued.) Or as McNealy was wont to say on other occasions, Schwartz came across as "all hat and no cattle." Whenever he met with CNET editors, for example, Schwartz came across as obviously bright, but so obnoxiously in love with the sound of his own voice that I couldn't wait for the meeting to end. He was convinced you were flat wrong and that should be the end of the discussion. Couldn't we see he was right?
Well, four consecutive quarters of profit later, who am I to argue with the track record? No doubt, a fuller assessment must acknowledge that many of the seeds of Sun's recovery were planted during McNealy's time. Even as Sun's world appeared to be collapsing around him, McNealy kept investing in R&D projects. That later paid off in the coin of success with things like Sun's Galaxy and blade servers. Also, McNealy helped bring back one of the industry's legendary designers at a critical moment when Andy Bechtolsheim rejoined Sun in 2004.
Ever since, Schwartz has done a splendid job moving Sun along the right paths. He's been eloquent about the need to step beyond Sun's own hardware and software. And his vocal of open-source software has been especially timely.
I was impressed with today's announcement that Sun is buying MySQL. Here's what Schwartz says about the deal in his blog.
MarketWatch ran a story today quoting some dude from Global Equities Research claiming Sun overpaid.
Was it too much? Considering how MySQL commands nearly half of the open-source database market, that's a potentially juicy client list of new customers--even though it's going to cost Sun $1 billion.
Charles Cooper has covered technology and business for more than 25 years. Before joining CNET News, he worked at the Associated Press, Computer & Software News, Computer Shopper, PC Week, and ZDNet. E-mail Charlie. 
If it is about doing cool things, you might have a point. But as a business, they are heading down faster than ever.
This is a Fourtune 200 company with a $14B run rate. They have shown growth over the last few years (up 7% this Q compared to same Q last year).
More than that, Sun has vision and continues to fund the R&D and deliver the technologies that will enable the future of computing (think Web 3.0).
It is a slow slog out of the stock basement. I've worked for a company that did that. I also watched it eat its own young to push the stock price up for the fire sale.
No, the danger here is the locust investors who decide that the price is too low and begin to muscle the management to squeeze out a higher stock price by committing the company to risky projects that get high visibility and lucrative contracts but where the realized revenue is too far in the future. Big gaps open up, a company has to buy its way out, and all of the effort goes into paying the mortgage.
So far, Sun has avoided that fate which is all too common in the post-hype hedge fund fallout period. If JS keeps to the strategy he has been so open about so far, Sun will rise.
Patience and steely nerves are everything.
They need to really clean house, get some adults in to supervise the business portion, and then the technical excellence will have some relevance.
..or go private ...or get absorbed.
But this is just one opinion of a former stockholder.
- JAVA @ 16 now...
- by dmackdaddy January 19, 2008 6:40 PM PST
- JAVA @ 16 now...
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