McNeally gives way to Schwartz

Filed in archive Companies and Markets on April 24, 2006

Today's biggest story in the technology sector is the appointment of Jonathan Schwartz as Sun Microsystem's new CEO. Founder and Chairman Scott McNealy remains Chairman of the hardware giant, but, consistent with recent analysis and speculation from Sun expert Mark Stahlman of Carris & Company, it seems McNealy is downsizing his role in day-to-day operations of the organisation and yielding to younger, fresher talent.

"Sun has been a labor of love for me since 1982, and it has been an honor and privilege to serve as its CEO for the past 22 years," McNealy said in a statement reported by the LA Times. "We've helped shape the industry as it is today and the opportunities before us are immense. I look forward to a smooth transition and to working with Jonathan on company strategy in my continued role as chairman."

All eyes from now on will be on the Carris Managing Director for where the organisation is headed next: it seems his powers of prediction are verified after all. When Stahlman, who has largely been billed as the one responsible for introducing Schwartz to Wall Street during the early days in his appointment to Sun, last spoke with McNealy about his plans, he indicated that he was staying on "until the job is done" and concurred that finishing the job meant at least three things - reestablishing product superiority, regaining control over costs and igniting demand in a broad and balanced customer base.

"In our opinion, these three criteria have largely been met," wrote the analyst in a report earlier this year. "Accordingly, we will not be surprised if McNealy does indeed decide to step down."

I spoke with Stahlman two months ago and he remained enthusiastic about the prospects of Sun Microsystems. "I think Google will continue to do more business with Sun and the company is fundamentally a long-term play," he told me over a lengthy conference call.

The departure of McNealy looks largely like a positive thing, as the former CEO was accused largely of holding the organisation back from sustainable innovation.

Trading in shares of Sun ended the day at $4.98, up 1%.