Sun management changes continue; Zander to leave

Following disclosures by Sun Microsystems Inc. that four top executives plan to give up their jobs, including president and chief operating officer Ed Zander, users and analysts are looking for explanations that go beyond the company’s initial statements.

Sun said Zander will retire from full-time duties on July 1 after having worked at the computer and software vendor for 15 years, the last four as its president. Joining him in leaving their jobs on that date the start of Sun’s next fiscal year will be the company’s chief financial officer and the vice-presidents who head its systems and services units.

Sun CEO Scott McNealy will assume Zander’s responsibilities. But during a teleconference, McNealy described the management overhaul more as a routine changing of the guard than as a wholesale housecleaning.

“This is all part of a planned succession strategy that Ed and I and everyone in the management team have worked on for a year now,” McNealy said. “I know it looks like a flurry here, but we are on goal and on plan in executing just about everything we wanted to do.”

Not everyone was ready yet to accept that as the final word on the upcoming changes, however.

“My question is, Why are all these senior people leaving now?” said Pete Lillo, manager of data center operations at NCCI Holdings Inc. in Boca Raton, Fla. “Do they know something we don’t?”

NCCI, which collects and processes data for insurers and other firms in the workers’ compensation industry, uses Sun’s E10000 Unix servers to run several large applications.

“The fact is that a lot of people are leaving at the top levels of the company,” said Jean Bozman, an analyst at Framingham, Mass.-based IDC. “It’s incumbent upon Sun to explain to customers what this is about and make sure they understand what is going on.”

The planned departures of the finance, systems and services chiefs were announced in serial fashion starting in mid-April. Like Zander, they will take on mentoring roles at Sun.

Sun last week confirmed that a fifth executive already left late last month: Stephen DeWitt, who was vice-president of the company’s content delivery operations. In addition, Sun said it’s combining its software operations into a single group and setting up a new marketing unit two moves that also will take effect July 1.

The changes come at a critical juncture for Sun. The company has lost money in three straight quarters, and IDC said Sun’s market-leading share of worldwide Unix server revenue dropped from 39 per cent in 2000 to 33 per cent last year. Sun also faces increasing threats from Windows and Linux servers.

While Sun is unifying its software operations, responsibility for its high-end servers, midrange and desktop systems, and microprocessors will be split among three executives who will all report directly to McNealy after July 1.

Brad Day, an analyst at Cambridge, Mass.-based Giga Information Group Inc., said the new structure should give the hardware units more freedom to pursue strategies that make sense for their own parts of the market. That’s especially important in the midrange and low-end sectors where Sun needs to compete against Windows and Linux, Day said.

But much of the new strategy that will result from all the upcoming changes remains to be seen.

“I think we’re in the middle of some sea change at Sun in terms of where they want to go and where they are today,” said Joyce Becknell, an analyst at The Sageza Group Inc. in Mountain View, Calif.

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