Sun CFO retires, McNealy sits firm

Peter Henderson

SAN FRANCISCO: Sun Microsystems Inc. chief financial officer on Thursday
became the second senior executive in nine days to announce his retirement, but
chief executive Scott McNealy said he had no plans to leave and had groomed
successors to senior management.

Mike Lehman, chief financial officer respected for his conservative stance
and a 15-year veteran of the company whose computers manage corporate networks
and the Internet, said he would retire on July 1, the beginning of Sun's next
fiscal year and the same day that Executive Vice President John Shoemaker will
leave.

Both will be replaced by Sun executives and will continue part-time work for
Sun as consultants. Sun is 20 years old this year, and analysts on a conference
call were clearly worried about more retirements, asking McNealy if this was the
tip of an iceberg.

He declined to go into details, or comment on behalf of chief operating
officer Ed Zander, but said he had worked hard on succession planning.
"This is all part of something I've been working very hard on for the last
three years as I've walked what Jack Welch did at G.E. on succession
planning," McNealy said, referring to the General Electric Co former chief.

"You shouldn't be nervous at all," he told analysts. McNealy also
confirmed Sun's forecast that it would return to profit in the June-ending
fiscal fourth quarter. "We believe we are on target to meet our goal of
getting profitable this quarter," he said.

Sun has finished the introduction of a new set of products based on its
UltraSPARC III microchip and had done well against competitors in the March
quarter, McNealy said. "I don't think we've had a quarter when we've gained
more market share, ever," he said. Shares of Sun were off 3.46 percent, or
30 cents at $8.36 in afternoon trade on the Nasdaq.

McNealy's not done yet

Lehman and Shoemaker had stayed on a year or so longer than they would have
preferred to set up transitions and get Sun through the technology downturn
which erupted a little more than a year ago, he said.

"I'm having a blast, enjoying what I'm doing and don't at all feel like
I'm done," McNealy added, saying he had worked until 3 a.m., risen at 5.45
a.m. and was energized.

Steve McGowan, vice president of finance, planning and administration for
Global Sales Operations, will take over as CFO, and he said in a telephone
interview that he had shadowed Lehman over the last few months and did not plan
to change the company's well-respected, conservative financial policies.

"We've been more predictable. The forecasting has been very clear, open,
transparent, conservative," he said. McGowan, 53, is two years older than
Lehman, but Lehman referred to his own family in a separate telephone interview,
explaining his reasons for leaving. "I have young children still in the
house and Steve doesn't," he said.