On the day he took the reins of legendary computer company Sun Microsystems, Jonathan Schwartz was asked how he's different from his mentor, Scott McNealy. "Haircut, sports preferences, he drinks Budweiser, I don't," quipped the 40-year-old, pony-tailed Schwartz, who was named Sun's new CEO last week. "We're different people, but we have the same values."
Whether a different person with the same values can put some of the magic back into Sun is the key question. The combative McNealy co-founded Sun in 1982 when he was 27, became CEO two years later, and has run the place ever since, participating in the decline of the mainframe, the shift to client-server computing, and the rise and fall of the dot-coms.
Schwartz: same values, different look
But Schwartz must deal with a new era in which computing power flows over the Web. Customers want Sun to deliver more performance for their dollars, and investors are clamoring for job cuts to help return the company to profitability. Will Schwartz chart a different path than McNealy, a man he called "a hero to us all" in his widely read blog? Based on his comments last week, he's looking a lot like McNealy II.
Yet, the challenges for Sun haven't changed. The company last week reported a loss of $217 million during its third quarter ended March 26, its third consecutive quarter in the red. However, revenue is growing again, up 21%, to $3.2 billion, thanks to growth from the acquisition of StorageTek and sales of x86 servers.
Few Changes Expected
But Sun's projected sales of $12.8 billion this year are well short of its 2001 apex of $18.25 billion. Sun's share of the $51.7 billion server market was down to 9.6% last year, as the company lost ground to IBM, Hewlett-Packard, and Dell, Gartner says. Wall Street analysts are calling for Sun to ax as much as a fifth of its 37,900-person workforce to give some buoyancy to its $5 stock price.