Sun's McNealy Steps Down

For the current quarter, Sun projected that the gross margin would be flat to slightly down. Management did not provide any revenue guidance, but noted that historically, sales in the fourth quarter increase 10% to 15% sequentially.

"It is fair to expect solid sequential revenue growth," said CFO Mike Lehman.

The average analyst expectation calls for Sun to lose 2 cents a share on revenue of $3.6 billion in the second quarter.

Schwartz said the company was undertaking a comprehensive review during the next 90 days that will examine various aspects of the company's operations, although he noted that this was in keeping with Sun's typical annual review process.

And while he didn't rule out a reduction to Sun's 38,000-employee workforce, he portrayed the review as an opportunity to find new avenues of growth.

"We're looking at: How do we grow for the next 10 years? This is not about trying to figure out how we go about taking a whack at head count," said Schwartz.

Still, he said that the company's cost structure will be addressed during the review process. He noted that he will be sharing an office with CFO Lehman.

"The point is really clear we're driving after efficiency and driving after teamwork," said Schwartz, who added that the company was determined to boost both the top line as well as the share price.

One of the first tangible changes of the new regime was the appointment of Chief Technology Officer Greg Papadopoulos to executive vice president of research and development, where he will oversee all R&D at Sun along with Schwartz.

McNealy said he will take on the role of evangelist in his new role, meeting with customers and government officials across the globe. "All the indicators are showing that we have a huge market opportunity ahead of us," he said.

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