VideoMike Lehman isn't known as a high-profile deal maker. Nor is the 49-year-old CFO of Sun Microsystems Inc. a certified black belt in balance-sheet legerdemain. After all, Sun has engaged in relatively little financial engineering or deal making during its 18-year rise from a four-person start-up to a high- tech giant. Nevertheless, analysts say Lehman's leadership and salesmanship are a big reason why Sun shines so brightly today.
A 13-year veteran of the Palo Alto, California-based company, Lehman is known as a consummate detail man. And at Sun, few roles are more important. Scott McNealy and Ed Zander--the company's CEO and COO, respectively--are press-the- flesh extroverts who spend more time out of the office than within. Someone has to mind the store, and that someone tends to be Lehman.
Vision, of course, has never been in short supply at Sun. Its motto, "The network is the computer," was coined in the late 1980s, before many dot-com zillionaires could legally take a BMW's wheel. But when Sun take a BMW's wheel. But when Sun first laid claim to the strategy, investors had serious doubts about its ability to execute. True, the company was big in high- margin workstations, but soon found itself the monkey in the middle between IBM and Hewlett-Packard in lower- priced workstations, on the one hand, and Compaq and Dell in high-powered PCs on the other. Sun responded by seizing new opportunities in servers, as more computer users began shifting applications from mainframes to the desktop.
Today, no serious investor doubts Sun's ability to compete with the likes of Microsoft or IBM. At virtually every stage of the industry's evolution to a network computing model, Sun has come up with the hardware, software, and services needed to stay one step ahead of the competition. Analysts now say that no other computer company is better positioned to exploit the growth of the Internet. Some of the credit goes to Java, Sun's Internet programming language, although Java reportedly still accounts for less than 10 percent of total sales. More important, say analysts, Sun has mustered a much higher level of technical dependability and customer support than it had before, which is crucial to corporate networks.
To strengthen its hold on those networks, Sun has beefed up its spending on R&D, investments, and acquisitions. Its new data storage product is aimed at grabbing a share of a lucrative market now dominated by EMC Corp. And though Lehman says Sun isn't worried about its market share in servers, the company recently began a systematic effort to market its products in a more integrated fashion, binding customers more tightly to the company. At the same time, Sun has become more aggressive in providing vendor financing.
Finally, Sun is dot-comming itself (project code name: eSun) as quickly as possible to cut costs and get closer to customers. All this reflects Lehman's handiwork, as he, McNealy, and Zander meet every two weeks to plan strategy and tactics. Indeed, these days Lehman, who in 1998 added the title of vice president of corporate resources to reflect his operating responsibilities, is out of the office almost as frequently as his two compatriots. But you won't find him speaking at computer conventions or testifying before Congress on the evils of Microsoft's monopoly. As senior editor Ronald Fink learned during a recent interview in the CFO's Palo Alto office, Lehman is far more likely to be holding a major customer's hand--as he tries to help sell it more of Sun's offerings.
Analysts say Sun's strategy has always been visionary. But early on, there was some question about whether the company could execute. How did you prove the doubters wrong?
We have very clear goals and objectives at the top, and the way we're organized allows Ed Zander and myself to focus on operations. All the finance people in the company work for me and for the business. And we have common goals and objectives. Our bonus plans are the same. We're incented to do the same things. We track those, and we meet every couple of weeks and talk about where we are.
At the same time, Ed is doing the same things with his business managers, focusing with the same regularity on the same things. We then get two views of the world. If there are any disconnects, we just work the issues from there.
Analysts point to you as the more cautious or realistic member of the management team. Some talk as if you were the skunk at the garden party.
I haven't heard that one! [Laughs] But we really have a great, fun team. Scott is the visionary, the leader of the place. He's got a great personality, and his personality and energy are a lot of what's been driving this company. And he's very irreverent and outspoken. He's a character, and that's part of what the market expects from him.
Ed mitigates that a bit by talking more about customers and markets and direct opportunities. Where Scott is sometimes at the visionary level, Ed's more along the lines of, "Here's the competitive front, here's how we're dealing with it."
I'm sort of the guardian of disclosure and of expectations. But the reality is, Scott and Ed and I agree ahead of time about the messages that we want to send. We just deliver them in three different ways. And I get to be the voice of reason--the one who's going to temper some of the hyperbole and excitement that the other two generate.
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