Scott’s exit could help Sun shine on

There seems to be two very distinct reactions to the news that Sun Microsystems’ boss Scott McNealy has decided to step down as CEO of the company he co-founded 24 years ago. The first is regret at the departure of such a colourful and controversial character (expressed mainly by journalists who like good copy).

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By  Peter Branton Published  April 30, 2006

|~|Scottcommbody.jpg|~|Sun has a reputation as one of the most innovative firms in the industry. |~|There seems to be two very distinct reactions to the news that Sun Microsystems’ boss Scott McNealy has decided to step down as CEO of the company he co-founded 24 years ago. The first is regret at the departure of such a colourful and controversial character (expressed mainly by journalists who like good copy). The second is the belief that it was a decision that probably had to be made at some point (expressed by pretty much everybody). While the technology industry is certainly going to be that bit less interesting with McNealy not playing such an active role in it, Sun Microsystems’ fortunes may well rise as a result — shares in Sun rose more than 6% in after-hours trading on Wall Street when his departure was announced. As other captains of industry have discovered, the qualities that help to found a successful company aren’t always the same qualities that keep it successful in the long-term — at least as far as the investors are concerned. McNealy had made himself unpopular with Wall Street analysts by his reluctance to cut jobs, especially the engineering jobs he thought vital to the long-term success of the company. Although McNealy was an economics major and MBA at Harvard University he — perhaps more than any other tech CEO — identified with the engineers at Sun, regularly appearing at company events in jeans and trainers. Sun of course has built a formidable reputation as one of the most innovative companies in the industry, having created the Java software development platform, amongst other achievements. During the dot-com boom that reputation was to help make it one of the most powerful companies in the industry: alongside Oracle, EMC and Cisco, it was one of the “four horsemen of the internet”, the companies considered the key suppliers for internet operations. However, the dot.com bust left the market flooded with second-hand Sun servers and the company has not been the same since. McNealy’s strong-willed leadership style has also been criticised as stifling the firm. His second-in-command Ed Zander left in 2002, believing he lacked the opportunity to develop his career (he is now CEO at Motorola, where he is highly-regarded). McNealy is certainly not done yet at Sun, he is staying on as chairman and will work closely with major customers. But new CEO Jonathan Schwartz has stressed he is definitely going to be in charge — he has phased out the COO role, for instance. So what will Schwartz do with Sun? He has said he is not planning to make any major strategy changes, but will focus on “growth and financial performance”, which some commentators have suggested could mean the job cuts that Wall Street has called for. We wait on that, but for Scott McNealy the wait is over. ||**||

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