Will Suns McNealy Stay or Go?

By Peter Galli  |  Posted 2006-04-18 Print this article Print

Opinion: Rumors abound that Sun CEO Scott McNealy will soon leave the company he co-founded. But are those predictions actually right this time?

Will he stay or will he go? Thats the million-dollar question about the future of Sun Microsystems CEO and co-founder Scott McNealy. Well, at least thats what the rumor machine would like us to believe. Speculation about McNealys future at Sun is not new: Weve been there so many times before, and well most certainly be there again. It would be interesting to know how he was described in his class yearbook—"the most likely to be fired" would be the tag line detractors would now most like to see.
It must be tough for McNealy having the dubious honor of being the CEO most predicted to leave or be forced out of any modern-day high-tech firm, not just because of how it affects his ability to effectively run the company, but also because of the enormous impact the endless rumors must have on the thousands of Sun staff.
So why has the rumor mill reached fever pitch on this issue yet again? There are a few primary reasons for it. Firstly, a number of Sun executives have left the company in recent months, including John Loiacono, Suns former executive vice president of software, who moved to a position as senior vice president of creative solutions at Adobe Systems after 20 years with Sun; Marge Breya, formerly Suns senior vice president of marketing in global sales operations, who went to BEA Systems; and Chief Competitive Officer Shahin Khan, who joined Azul Systems. But, on the flip side, a number of former executives have also returned to Sun, including former Chief Financial Officer Michael Lehman, who came back from retirement as Suns CFO in February, and co-founder Andy Bechtolsheim, who now leads the design team for its Galaxy line of x86 servers. Also back in the Sun fold are Tom Goguen, back from Apple, as vice president of operating system products; Karen Tagan-Padir, who moved back from Red Hat to lead the development of Suns Java server software; and Peder Ulander, who left Sun in 2004 for embedded Linux specialist MontaVista, but recently rejoined the firm as vice president of software marketing. So that essentially undermines one of the theories being floated that Sun executives are fleeing a sinking ship. To read more about Suns recent executive appointments, click here. But one of the biggest questions fueling the speculation fervor is why someone like Lehman, who could become the CEO or CFO of just about any company, would come back out of retirement and off the Sun board to take exactly the same job he held before. A former Sun executive who still has close links to the company told me that that question is what is driving most of the speculation within Sun. No one can understand why Lehman would come back unless it were to transition to a more senior position like CEO. He also cited as an example former Sun Chief Operating Officer Ed Zander, who left Sun and became CEO of Motorola the next month. So, while Sun management has said Lehman is tasked with looking at how to further cut costs and make the company a leaner, nimbler and more competitive one, few are buying it. Instead many are speculating that he is actually looking at how to restructure top management and that he could potentially be McNealys replacement. Adding to the speculation was the prediction made in March by Mark Stahlman, a research analyst for Caris & Company, that McNealy would step down. Stahlman was widely reported as saying that when he last spoke with McNealy, he said would stay on until "the job was done," which entailed three things: re-establishing 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," Stahlman said. "Accordingly, we will not be surprised if McNealy does indeed decide to step down." Next Page: McNealy speaks for himself.

Peter Galli has been a financial/technology reporter for 12 years at leading publications in South Africa, the UK and the US. He has been Investment Editor of South Africa's Business Day Newspaper, the sister publication of the Financial Times of London.

He was also Group Financial Communications Manager for First National Bank, the second largest banking group in South Africa before moving on to become Executive News Editor of Business Report, the largest daily financial newspaper in South Africa, owned by the global Independent Newspapers group.

He was responsible for a national reporting team of 20 based in four bureaus. He also edited and contributed to its weekly technology page, and launched a financial and technology radio service supplying daily news bulletins to the national broadcaster, the South African Broadcasting Corporation, which were then distributed to some 50 radio stations across the country.

He was then transferred to San Francisco as Business Report's U.S. Correspondent to cover Silicon Valley, trade and finance between the US, Europe and emerging markets like South Africa. After serving that role for more than two years, he joined eWeek as a Senior Editor, covering software platforms in August 2000.

He has comprehensively covered Microsoft and its Windows and .Net platforms, as well as the many legal challenges it has faced. He has also focused on Sun Microsystems and its Solaris operating environment, Java and Unix offerings. He covers developments in the open source community, particularly around the Linux kernel and the effects it will have on the enterprise.

He has written extensively about new products for the Linux and Unix platforms, the development of open standards and critically looked at the potential Linux has to offer an alternative operating system and platform to Windows, .Net and Unix-based solutions like Solaris.

His interviews with senior industry executives include Microsoft CEO Steve Ballmer, Linus Torvalds, the original developer of the Linux operating system, Sun CEO Scot McNealy, and Bill Zeitler, a senior vice president at IBM.

For numerous examples of his writing you can search under his name at the eWEEK Website at www.eweek.com.


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