John Brady's Weblog

So,
Scott McNealy has stepped down from the CEO position of Sun.
About time too.
This has been some time coming, but is clearly the right thing for Sun.

As I have mentioned in previous blogs, it was getting so that all anyone else was talking about was how McNealy had mismanaged Sun after the dot-com bubble burst.
There were many ex-Sun executives who had said that it was McNealy that had made the wrong decisions, and not taken the right actions when the company revenues were slashed by a third overnight. And that was the primary reason they left Sun to go work somewhere else, where they stood a better chance of success than at Sun. Again, see my past blog entries for comments from past executives who have left Sun for greener pastures.

And with every other senior executive having left Sun, the only person Scott has left to hand over the reins to is Jonathan Schwartz.
Someone who I don't consider has proved himself to be a top class executive.
Literally, he just looks like the guy left over after everyone else had left Sun.

I'm glad I'm not working for Sun anymore.
This must be an incredibly nervous time for the people there.
They all know that Sun is still shrinking and losing money (see the latest quarterly results).
The general opinion is that Sun's revenues continue to underperform from where they should be.
And the expectation is that they will have to lay yet more people off to reduce costs in order to ever get back to a profit.
The question then becomes one of when, not if.

So will Jonathan Schwartz strike quickly and announce massive layoffs to reduce costs, and take the penalty of the cost of the layoffs in Sun's fourth quarter? That way he can start a new financial year on 1 July 2006 in a new position, having put his stamp on the company. And the next financial year's performance will all be his responsibility.
He might even make a profit for Sun, at last.
But to do that, he would have to layoff a lot of people at Sun. Well over 10%, maybe 15% or 20%. Who knows.

Or will he hedge his bets, and delay it until the first or second quarter of Sun's next financial year? That way he can blame the situation he inherited for any bad results, before he has to deliver a fully profitable year at Sun in 2007/2008.

Either way, the consensus among the analysts is that there will be more cost cutting at Sun. So all the employees at Sun can do is continue to wait for the day when the 'big announcement' happens.

The news from Sun continues in the same vein of more layoffs and more executives stating their view that McNealy is making the wrong decisions and is a liability to the success of Sun.

Sun has laid off 200 engineers, continuing the trend of slowly shrinking the company and the size and effect of the R&D budget. This is also reported at the Register.
Given that this is in a central SPARC group related to the high end systems, it makes me question just what Sun's strategy is with regard to R&D. Why do R&D in the first place, to only kill the whole project and layoff the development staff? Something similar happened with the UltraSPARC-V development, which was suddenly killed off. Nevertheless, the main message is still one of death by a thousand cuts, as Sun continues to cut costs on an ongoing basis, by laying off people in various groups, as its revenues continue to trail its costs and expenses.

The most amazing news for me, is that the ex-head of the whole of Sun's server developments has gone public with his views on McNealy and Shwartz, and it is not good for them. In a personal article John Shoemaker states that it was McNealy who refused to make significant cuts when the dot-com bubble burst, and as a result Sun is still weak and struggling. Now he sees McNealy as a liability, and that he should go for someone better able to run Sun. And that person is not Jonathan Schwartz, who is just too inexperienced (junior was the word he used). This reiterates points I have made earlier about Sun's lack of response to the downturn, and their total ignorance of the Intel and Linux marketplaces.