/>
X
Business

The IBM-Sun saga: Can McNealy let go? Should he?

IBM's acquisition of Sun Microsystems was shot down as its board split into two camps---one for the deal led by CEO Jonathan Schwartz and one against led by Chairman Scott McNealy---and the consensus appears to be that McNealy has a bad case of Yahoo-itis. Meanwhile, McNealy is also bordering on delusional by thinking Sun can get a better deal.
Written by Larry Dignan, Contributor on

IBM's acquisition of Sun Microsystems was shot down as its board split into two camps---one for the deal led by CEO Jonathan Schwartz and one against led by Chairman Scott McNealy---and the consensus appears to be that McNealy has a bad case of Yahoo-itis. Meanwhile, McNealy is also bordering on delusional by thinking Sun can get a better deal. 

Here's a sampling of the feedback I've been getting about Sun's decision to turn down IBM's acquisition overtures (Techmeme):

  • McNealy has Jerry Yang-itis.
  • McNealy has always thought more highly about Sun than anyone else has.
  • McNealy can't let go of the company he founded.
  • McNealy should stay on the golf course.
  • McNealy has torpedoed the company and is becoming this year's Yahoo in the stupid corporate move department.

And I thought it was just me. McNealy's act got tired for me back in the last downturn. The quips got old. His keynotes got old. And the numbers stunk quarter after quarter from 2001 until Schwartz took over in April 2006. 

Thus far, Schwartz has proven to be a better operator of Sun than McNealy was at the end of his tenure.

Here's a look at the annual figures (click to enlarge):

And.

Now let's get the caveats out of the way. McNealy was whacked by a terrible technology downturn and Schwartz is just getting his. Nevertheless, Schwartz was named CEO for a reason---McNealy had lost the confidence of Wall Street after five years of losses.

This IBM-Sun saga does raise one glaring question: What does it mean when the guy operating Sun day-to-day thinks the IBM deal is a good one but the founder/visionary type who is usually doing customer meet-and-greets doesn't?

It means that there's a disconnect going on that should be pretty worrisome to anyone in Sun's circle. It also means that there's a founder who has too much pride and can't let go of his baby. And it means that Sun may have torpedoed a lot of shareholder value over that pride.

Also see: Sun following the IBM deal collapse: Customer confusion en route

A few McNealy comments I've received:

  • You can never overestimate the role perceptions play even in the face of stark reality. JAVA has floundered for an entire IT cycle and yet I'm sure many influencers within the company are SURE it's a $20 stock in waiting.
  • You've probably seen it a million times in start ups (founders not being able to let go). From the outside, it looks so ridiculous, arrogant and selfish. However, I sometimes wonder how I would handle a similar situation.
  • Scott thinks more of Scott McNealy than he does of his company. Scott puffs up like the GoodYear Blimp, when he's really the Hindenburg.

What's truly galling to folks flooding my inbox is that McNealy has enjoyed being out of the CEO chair. After all, he had a top 10 list about how he liked being out of the CEO role. 

Top 10 Best Things About Not Being CEO
10. I don't have to apologize for the stuff I say to Wall Street
9. I'm no longer on the most overpaid CEO list
8. I just say, "see Jonathan on that"
7. I read Hockey News without guilt
6. I shave even less often
5. No more Sarbanes Oxley certification
4. I have someone to blame
3. I can sell my last business suit
2. Jonathan doesn't golf, so I guess I gotta do it
1. My office is very close to the men's room 

And then there's this McNealy quote:

"The best decision is the right decision. The next best is the wrong decision. The worst decision is no decision."

It's unclear how this deal gets resolved, but if IBM doesn't acquire Sun it's clear that the company is on the path to being this year's Yahoo. And that would clearly be the wrong decision. 

Editorial standards

Related

These are my 5 must-have devices for work travel now
ipad-mini-firewalla-purple-macbook-air

These are my 5 must-have devices for work travel now

This 1980s programming language sparked a revolution. Now you can check out the source code
developers-security

This 1980s programming language sparked a revolution. Now you can check out the source code

Twitter turns its back on open-source development
elon-musk-twitter

Twitter turns its back on open-source development