McNealy steps down at Sun

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But McNealy's departure is tied to Sun's recent rocky years, Pund-IT analyst Charles King suggested. "Given the continuing lackluster performance of the company over the last few years, unless he'd really been able to pull a rabbit...out of a hat, it was a foregone conclusion," he said. "When you manage a company in a public way like McNealy did, you become more of a target."

When Ed Zander left his joint role as Sun's president and chief operating officer in 2002, some called for a more buttoned-down replacement. But Schwartz has followed the same maverick path as McNealy. "Jonathan and I are highly aligned," McNealy said in the conference call.

Jonathan Schwartz

McNealy led the server and software company through the dot-com bubble, but it hasn't returned to consistent growth or profitability.

In recent months, there has been an outflow of top executives at Sun. Last month saw Masters, the company's government sales chief, announce plans to retire in June. Also in March, Sun's top software executive, John Loiacono, resigned to take a position at Adobe Systems. The month was also marked with the retirement of Bob MacRitchie, head of Sun's global sales.

Last year, Sun's then-chief financial officer, Stephen McGowan, announced plans to retire in October 2005. However, he has since agreed to stay on as an executive vice president of finance.

Market response
Shareholders apparently favored the news, pushing Sun's stock up 39 cents, or 8 percent, to $5.37 in after-hours trading.

Last year, for example, investors waged a proxy battle with the company, seeking to realign compensation for Sun executives. Some investors, complaining about an underperforming stock, sought an executive compensation plan that would rely on a stock option plan more closely tied to the company's performance, according to Sun's proxy filing last year.

For the past several years, Sun's stock has traded in the range of $3 to $4 a share and has underperformed competitors such as Dell and key indexes like the S&P 500.

Investors were particularly angered when Sun's board awarded McNealy a special bonus of $1.1 million, even though he had failed to qualify for a bonus under the regular compensation plan.

The company on Monday reported a third-quarter loss of $217 million amid a climb in revenue.

CNET News.com's Dawn Kawamoto and Tom Krazit contributed to this report.

[corporate radical]

Job Well Done

Scott has done a great job as the leader at Sun. He has created a multi-billion dollar company that serves the computing needs of almost every industry in every corner of the world. He's a hard act to follow, but Jonathan is also a great leader. Thanks Scott for all of the energy, enthusiasm and candid leadership.

[eric.meyerson]

Really?

Sun's new CEO has a ponytail?

[mike.gw]

Ponytail

It's what's IN his head that counts, and not what's on it.

[rtwaters]

Please copy edit this story

<EOM>

[bobby_brady]

Sun was suppose to be the Dot in DotCom

But all Scott did was trash Microsoft, endlessly. They lost focus.

[Mister Winky]

Good Riddance!

Scott should have been gone years ago. He may have been the right guy for a different time and age, but it's clear he was the wrong guy for post dot com Sun.

Didn't Sun post "negative earnings" (cough, cough) for something like 17 straight quarters? How many years has Sun's stock been hovering at $3-$6?

Under Scott, Sun believed it was IBM, a company capable of competing in almost all markets and shooting in all directions -- this was and is unsustainable for Sun. Their inability to monetize or profit substantially from Java is just sad. At least IBM is clear about how they intend to get returns on their ample open source / Linux investments and it's working to soem degree.

It was also clear that Sun lacked any clear strategy for several years (I still think it's cloudy). Examples: Solaris for x86? Killed. Linux? It'll never compete with Solaris. A couple years later: Solaris for x86 is reborn and it's better than Linux...of, but we love Linux too. You can even run Windows on our servers! ***?!!? Shooting in all directions desparately is not a strategy.

Sometimes it's the CEO's responsibility to face facts, define core assets and dump everything else in an effort to focus and re-grow. Scott never had the humility to do this, and that's why the latter half of his tenure was a total failure.

-Mister Winky

[Hernys]

Clear strategy?

Sun DID have a clear strategy. It was attacking Microsoft.
Almost everything Sun did in the last ten years was just to hurt Microsoft (Java, Staroffice, the Javastation, etc.). And it is OK to do things that negatively affect the competition as long as it is to benefit your bottom line. But investing money in attacking another company without any direct benefit to your finances is simply irresponsible.
It was a clear strategy. it just wasn't any good.

[Hernys]

Message has been deleted.

[R. U. Sirius]

Software is Scott's Achilles Heel

He just doesn't get software. Sun is the company who pioneered the idea of network computing, drove the development of Java and XML, called attention to the value of software standards, and yet has failed to really monetize these key areas. Scott has done great at making Sun a hardware success, but their software strategy is a mess (which also makes me question Schwartz).

[Joe Blow]

When You're the Dot in Dot Bomb ...

sooner or later (and usually sooner), you're gonna wind up lookin' like Wiley Coyote when an Acme bomb goes off in his face (except it looks and hurts a whole lot more than in the cartoon). Sun's problems (along with a lot of other companies, dot-bombs and stalwarts alike) were masked by the unsustainable run-up to the inevitable Bubble That Went Blah, and the precipitous drop just made things worse in these, The Dreaded Out-Years. Overcapacity making Things No One Wants or Needs Anymore is not a strategy, and the More of the Same that we're hearing from Mr. Ponytail makes me glad I don't own any Sun stock.

All the Best,
Joe Blow