Sun Names Schwartz New CEO

Sooner or later it had to be true.

Scott McNealy is no longer CEO of Sun Microsystems.

Sun's board named Jonathan Schwartz as the company's new CEO, replacing McNealy who has been in that position since 1984.

A subdued-sounding McNealy broke the news himself on the company's third-quarter earnings call Monday evening.

"The Sun board appointed Jonathan Schwartz as the next CEO, effective immediately," he told those on the call.

He said the company has been working "very aggressively" on this succession.

"I will continue as chairman of the board, working full time and will also be chairman of Sun Fed, but it's not really about me, it's about Sun and I'm proud to share [the news] with you," McNealy said.

Schwartz "joined the company a little over a decade ago and has done an awesome job, working on a world-class product line. I spotted this a long time ago when we bought his company. He's had seven different jobs in the last 10 years, most recently running all of software," McNealy told analysts and reporters.

McNealy has been a colorful and trash-talking leader, for better or worse, since Sun's inception, which he co-founded twenty-five years ago.

Schwartz has also been COO and president since 2004 and was viewed by many as an heir apparent.

The news came after company execs, including McNealy and Schwartz, summarized the company's fiscal third quarter ended March 26. The earnings news was sobering. Santa Clara, Calif.-based Sun logged a loss of $217 million on sales of $3.18 billion. For the year-ago period, the company lost $28 million.

Dave Condensa, president and CEO of Santa Clara, Calif.-based Helio Solutions and a co-president of Sun's partner council, said that he is surprised McNealy is stepping down at this time. "I thought it might be another year or so," he said.

However, said Condensa, Schwartz should have no difficulty in his new role. "I think Jonathan has some pretty big shoes to fill, but he's quite capable of doing it," he said.

Rob Wolfe, president and CEO of AvcomEast, a Silver Spring, Md.-based solution provider, said it is too early to tell how the move will affect Sun's channel.

"With all the buzz in the marketplace, it's something that was anticipated in the channel," Wolfe said. "But it's way too early to digest and evaluate the impact on my business."

ADDITIONAL REPORTING BY JOSEPH KOVAR.

Updated at 6:05 PM EDT

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