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Last Updated: Tuesday, 25 April 2006, 04:40 GMT 05:40 UK
McNealy quits post as head of Sun
Sun Microsystems chief executive Scott McNealy
Mr McNealy says he will still play a big part at the firm
Sun Microsystems says co-founder and chief Scott McNealy, who has been a critic of Microsoft, is to step down.

The 51-year-old will quit the post with immediate effect, but will stay on at the company in the role of chairman.

Sun's current president and chief operating officer Jonathan Schwartz will take over at the helm of the firm.

The news came as the US firm revealed third quarter losses had widened to $217m (121.4m) from $28m at the same time a year ago.

Sun blamed a number of mainly merger-related charges for the fall - excluding the one-off costs losses fell to just 1 cent per share.

Meanwhile, revenues for the three months to 26 March rose 21% to $3.18bn.

Share woes

Shares in the company are currently languishing around 90% lower than the highs hit during the dotcom boom of 2000.

The fall came despite the firm's transformation into a major force in high-end computing, and recently offering smaller machines for simpler tasks.

"I don't think [Mr McNealy] was reading the tea leaves accurately enough to allow his business to grow in this new decade. ... The first 18 years were stellar," said retired Wall Street analyst John Jones, who used to follow Sun.

But, Mr McNealy has vowed to continue to play a big part at the company, focusing on developing its governmental and academic ties around the world.

"This isn't about me. It's about a big moment in Sun's history and I'm proud to share that with you," he said.

"There's lots more work to do and I'm certainly going to stay around and support that."

Shares in the firm jumped following the announcement, rising 6% to $5.29 in after-hours trade. The stock closed on Nasdaq at $4.98.

Microsoft tussles

Mr McNealy, who co-founded Sun in 1982, helped grow it into one of the dominant providers of large computer servers.

However after the dotcom bubble crash in 2000 he saw revenues fall and frequently came under pressure for not cutting costs enough.

He had a number of run-ins with Microsoft, calling its Windows operating system a "hairball" and its Outlook e-mail program "Look out" after it was hit by a number of viruses.

The two companies also clashed in court, with Sun filing an anti-trust suit against Microsoft. The firms settled the case in 2004 for $1.6bn.

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