Sun Microsystems (NASDAQ:JAVA) has not done much right in the last few years. The company replaced founder Scott McNealy as CEO with Jonathan Schwartz who wears a ponytail and writes a blog.

The promised turnaround at Sun fell apart as the company announced lower sales and a loss. At the server firm, revenue for the third quarter of fiscal 2008 was $3.266 billion, a decrease of 0.5% as compared with $3.283 billion in the same quarter a year ago. Sun posted a net loss for the quarter of $34 million, or 4 cents per share, as compared with net income of $67 million, or 7 cents per share, last year.

Sun's plans to compete with the likes of IBM (NYSE:IBM) and other larger rivals have fallen apart. According to the company, the economy has not helped.

Sun may blame the economy, but it has run out of excuses. It will fire another 2,000 or so employees. Schwartz should be among them. The company's board should have difficulty viewing him as a viable leader, but it has made the great mistake of doing nothing.

Sun's shares traded below $14 after hours yesterday, which would put them under their 52-week low. The company's performance is humiliating and it is a sad fact that so many people have to pay for the inability of Schwartz to keep his promise of making the company a viable competitor.

Douglas A. McIntyre is an editor at 247wallst.com and author of the Ten Stocks Under $10 letter.

Although Sun Microsystems, Inc. (NASDAQ: JAVA) is a leading global supplier of networked computing products, its recent history of profitability has seen its share of ups and downs. CEO Jonathan Schwartz, who is famous in the business world for his corporate blog, continues to bet the company's future on open-source software support and storage hardware.

It's working in some form, as the company reported $89 million in net income in its first fiscal quarter, starting its first string of four consecutive profitable quarters in more than 5 years.

Much of that is due to corporate belt-tightening more than gobbling up tons of sales and seeing results of strategy shifts after company co-founder Scott McNealy left the CEO position a few years ago. Still, sales have slowly gained steam as the company has ramped up its share of the computer server and storage business. It's been fast enough for most investors -- just not all.

To prop itself up in the markets, Sun performed a 1-for-4 reverse split back in December after a 16% price decline in 2007 alone. It's unclear if Sun can make enough money moving forward with the open-source strategy it now has with its Solaris software and Java software, and whether support on that software combined with hardware sales can make for future profit growth once cost cutting sees a slowdown.

The shorts appear to have gotten a big "W" on Sun Microsystems (NASDAQ: SUNW). Shares short in the company were just above 42 million in April, little changed from the month before.

Someone probably made good money. After a crazy run of 70% over that last two years, the stock has been beaten down 10% today after reporting earnings. It now trades at $5.32.

To say that Wall Street was let down by Sun's last quarter is an understatement. Now that founder Scott McNealy has stepped down as CEO and the company has cut costs, there was a hope that earnings would improve. Although the company posted a profit, revenue only rose 3% to just over $3 billion. Investors were hoping for a more robust recovery on the top line. Guidance also wasn't exciting.

Sun had picked up some share in the enterprise server market, but it still faces larger companies like Dell (NASDAQ: DELL) which have a greater piece of the market and cannot afford to give that up.

After years of disappointing earnings, Wall Street had hoped the recovery was real. It was not.

Douglas A. McIntyre is a partner at 24/7 Wall St.

Just when it seems like the dot-com bubble is building again, comes new proof that we really are in a different phase of Internet growth entirely -- while some of the old-era Internet bubble stocks continue to fade into the background.

Today it was news that Scott McNealy, co-founder of Sun Microsystems, is stepping down as CEO while his company's losses deepen, that drove home that point. Once the king of Internet servers, selling pricey equipment to all those dot-com start-ups flush with venture capital backing, Sun's fall has been dramatic and lasting. From $65 in 2000, the stock has basically traded near $5 or lower for the past three years and apparently investors are ready for change. 

The stock climbed 8% after the close on news old Scott was stepping down. But if you check out its 10-year chart, you'll see Sun is basically the definition of an Internet bubble stock.

So what does this news mean for Microsoft? It is a symbolic victory, since McNealy was Microsoft's arch rival and chief critic for years. And, if a new CEO can bring change at the company, there's the chance for more competitive pressure to come.