Experimental feature

Listen to this article

00:00
00:00
Experimental feature
or

Scott McNealy, one of the computer industry’s longest-serving and most outspoken leaders, stepped down as chief executive officer of Sun Microsystems on Monday.

His departure from the company he helped found on the Stanford University campus 24 years ago - and named after the Stanford University Network - cuts a prominent tie to Silicon Valley’s roots.

Mr McNealy will stay on as full-time chairman, but has been succeeded immediately by Jonathan Schwartz, 40, a former McKinsey partner who has acted as the company’s number two since 2004, Sun said.

The loss-making company continues to struggle to reinvent itself after the tech collapse of 2000. While other big computer makers such as IBM, Hewlett-Packard and Dell rushed to adopt low-cost, standardised technologies, Sun stuck to its guns.

It insisted its expensive investments in research and development would set it apart and resisted the wave of cost cuts that swept the Valley.

Mr McNealy’s attempt to buck the tech world’s post-bubble consensus was backed by a group of long-time board members who include some of Silicon Valley’s most notable names, among them John Doerr, the venture capitalist, and Jim Barksdale, former boss of Netscape.

Mr McNealy, 51, said on Monday that the management shake-up was “my decision that was supported by the board”. He added: “I wasn’t going to hand it over post-bubble, when it was deteriorating,” but said the company was now growing again.

Both he and Mr Schwartz insisted that Sun was not about to change course. “Jonathan and I are highly aligned on that, it’s crystal clear,” he said.

Mr McNealy reacted belatedly to the tech collapse, announcing plans to cut 9 per cent of Sun’s then-35,000 strong workforce in 2004, when he also reached a truce with long-time rival Microsoft. But since then the workforce has grown to 38,000, and Sun once again reported a loss for its latest quarter on Monday.

“There’s no plan whatsoever” for sweeping job cuts along the lines of the 20 per cent reduction that some on Wall Street have called for, Mr Schwartz said.

However, he added that he would carry out a detailed examination of Sun’s $2bn R&D budget over the next 90 days to make sure the company was “aligned for growth”. There would also be a full review of all corporate resources, he added. “We’re going to be looking at growing value,” he said.

The son of a Detroit auto worker, Mr McNealy, an avid ice hockey player, drew on his roots to establish a blue-collar credibility for his leadership of Sun, often comparing the components the company makes to piston rings and other car parts.

He said on Monday that he had been grooming Mr Schwartz, who joined Sun 10 years ago, for some time to replace him.

Notable in the Valley as one of the few senior executives with a ponytail, the fast-talking Mr Schwartz first won attention as head of Sun’s software business.

Shares in Sun Microsystems gained 5 per cent in early trading in New York on Tuesday to $5.22.

Copyright The Financial Times Limited 2017. All rights reserved.
myFT

Follow the topics mentioned in this article

Comments have not been enabled for this article.