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Sun names new software chief

An executive shuffle accelerates as the company's fiscal year draws to a close. One analyst says the changes bode well, but could they hurt Sun's stock?

The executive shuffle at Sun Microsystems is accelerating as the end of the company's fiscal year approaches, with the server seller announcing a new software chief and a third major retirement.

Jonathan Schwartz, currently chief strategy officer, will become executive vice president of software and leader of an expanded software division on July 1, Sun said Monday. His predecessor, Patricia Sueltz, led Sun's work with its Java software and its Solaris operating system, but Schwartz's domain also will include the Sun Open Network Environment (Sun ONE) products that formerly carried the iPlanet brand.

Schwartz will have the challenge of balancing Java in one hand as a Sun product and on the other hand as the center of competing products from BEA Systems, Oracle and IBM.

Software is important at Sun because it typically comes with higher profit margins than hardware alone. And Sun is looking for ways to pump up revenue, especially because many Sun customers already are glutted with equipment from the heady Internet spending spree.

Sun also created a new marketing and business development organization and named Mark Tolliver, 50, the executive vice president in charge. Tolliver had led the iPlanet work nearly since its inception as the Sun-Netscape Alliance.

It's the season for executive turnover at Sun. "Historically this is the time of the year we make organization changes in preparation for the new fiscal year," spokeswoman Penny Bruce said.

The changes bode well, said Goldman Sachs analyst Laura Conigliaro, but they could hurt the company's stock, which rose 18 cents, or 2 percent, to $8.23 in trading Monday.

"Sun's recently announced management retirements probably represent a mildly positive statement on Sun's business having already made the turn, with some members of senior management content to make way for Sun's next generation of leaders," Conigliaro said in a report. "At the same time, these and potentially other management changes may stall some of the recent interest in the stock."

Gartner analysts Yefim Natis and Daryl Plummer say Sun's latest management shuffle positions it for new competitiveness in the critical software market--but some challenges remain.

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Schwartz, 36, joined Sun in 1996 when Sun acquired his company, Lighthouse Software, and has moved up the ranks from there. In his work at Sun, he has led Sun's investment efforts; added a software focus as head of strategic planning; and led the Liberty Alliance Project to counter Microsoft's Passport authentication service.

Sueltz, meanwhile, will replace retiring longtime Sun employee Larry Hambly, 55, as executive vice president of enterprise services.

Hambly, one of Sun's first 100 employees, will retire July 1, the Santa Clara, Calif.-based company said. Sueltz, 49, joined Sun from IBM in 1999.

Hambly is the third top-level retirement Sun announced so far this month. Chief Financial Officer Mike Lehman, 51, will be replaced by Steve McGowan, 53. Also retiring is John Shoemaker, 59-year-old executive vice president of computer systems, who won't have a replacement.

Tolliver also ran Sun's push to spread its technology into consumer gadgets and "embedded" computing systems such as assembly line robots or soda vending machines. He also spent 16 years at Sun rival Hewlett-Packard.

Tolliver's new group will handle marketing the company to industry partners, develop Sun's strategy, align its products with new trends, and seal partnerships with other companies.

Chief Marketing Officer John Loiacono will report to Tolliver instead of directly to Chief Operating Officer Ed Zander, Bruce said.