Today, it’s Sun co-founder Scott McNealy who is bidding farewell. Sources close to the company tell me that he too will leave Sun following the close of Oracle’s $7.4 billion buyout.

Word of McNealy’s fate comes a day before Oracle is to unveil its strategy for Oracle (ORCL) and Sun (JAVA) at an event tomorrow.

McNealy’s farewell memo to employees, below.

Gang,

When I interviewed many of you for employment at Sun over the years, one commitment often made was that things will change above, below, and around you faster than any place you have ever been. Looks like this was one area we exceeded plan for 28 years. While it was never the primary vision to be acquired by Oracle, it was always an interesting option. And this huge event is upon us now. Let’s all embrace it with all of the enthusiasm and class and talent that we have to offer.

This combination has the potential to put Sun, its people, and its technology at the center of yet another industry and game changing inflection point. The opportunity is well documented and articulated by Larry and the Oracle folks. Not much I can add on this score. This is a very powerful merger. And way better than some of the alternatives we were facing.

So what do I say to all of you now this is happening?

It turns out that one simple message to the large and diverse Sun community is actually quite hard to craft. Even for a big mouth who is always ready with a clever quip. The community includes our resellers and customers, our current and former employees, their friends and families who supported our employees on their mission to change the industry, our investors, our supply and service partners, students and educators, and even our competitors with whom we often collaborated.

But let me try. Though nothing I could write comes close to matching the unbelievably strong and positive emotions I have for you all. See, I never was able to master dispassion. I truly loved starting, running, and living Sun. And the last four years have not been without serious withdrawal. And the EU approval rocked me more than it should have.

So, to be honest, this is not a note this founder wants to write. Sun in my mind should have been the great and surviving consolidator. But I love the market economy and capitalism more than I love my company.

And I sure “hope” America regains its love affair with capitalism. And except for the auto industry, financial industry, health care, and some other places (I digress), the invisible hand is doing its thing quite efficiently. So I am more than willing to accept this outcome.

And my hat is off to one of the greatest capitalists I have ever met, Larry Ellison. He will do well with the assets that Sun brings to Oracle.

What we did right and wrong at Sun over the years might make for interesting reading. However, I am not a book writer. I am a husband, father of four, and a builder and leader of people who want to make a difference.

But spare me a bit of nostalgia. Not of the mistakes we made, and lord knows I made a ton. But of the things we did right and well.

First and foremost, Sun innovated like crazy. We took it to the limit (see Eagles). And though we did not monetize our inventions as well as we could have, few companies have the track record in R&D that we had over the last 28 years. This made working at Sun really cool. Thanks to all of you inventors and risk takers who changed how we live.

Sun cared about its customers. Even more than we cared about our own company at times. We looked at our customer’s mission as more important than ours. Maybe we should have asked for more revenue in return, but our employees were always ready to help first. I love this about Sun which I guess makes me a good capitalist if not a great capitalist.

Sun did not cheat, lie, or break the rule of law or decency. While we enjoyed breaking the rules of conventional wisdom and archaic business practice and for sure loved to win in the market, we did so with a solid reputation for integrity. Nearly three decades of competing without a notable incident of our folks going off course morally or legally. Not all executives and big companies are bad. Really. There are good companies out there. Special thanks to all of my employees for this. I never had to hide the newspaper in shame from my children.

Sun was a financial success. We paid billions in taxes, salaries, purchases, leases, training, and even lawyers and accountants for devastatingly cumbersome SOX and legal compliance (oops, more classic digression). Long term and smart investors made billions in SUNW. And our customers generated revenue and savings using our equipment in countless ways. Many employees started families, bought homes and put them through school while working at Sun. Our revenues over 28 years exceeded $200B. Few companies make it to the F200. We did. Nice.

Sun employees had way more fun than any other company. By far. From our dress code (“You must!”) to beer busts to our April Fools pranks to SunRise to our quiet enjoyment at night of a long hard well done day of work, no company enjoyed “work” more than Sun. Thanks to all of our employees past and present for making Sun such a blast.

I could go on for a long time reminiscing about the good and great stuff we did at Sun, but just allow me one last one. We shared. Not the greatest attribute for a capitalist. But one I could not change and was not willing to change about Sun while I was in charge. We shared in the success of Sun with our resellers. With our employees through stock options, SunShare, beer busts, and the like (for as long as Congress would allow) and through our efforts to keep as many of them on board for as long as possible during the inevitable down cycles. With our partners through the Java Community Process, through our open source collaborations, and licensing strategies. With our customers through our commitments to low barriers to exit. Sun was never just about us. It was about we. And that may be a bit of the reason we are where we are today.

But I have few regrets (see Sinatra’s “My Way”) and will always look back at Sun and its gang with only pride. Enormous pride. You are the best this industry ever had though few outside of Sun recognized it.

And what we are about will live on in Sparc, Solaris, Java, our products, and our spirit. Well past everyone’s recollections of what we did together. I will never forget though.

Oracle is getting a crown jewel of the technology industry. They will do great things with Sun. Do your best to support them and keep the Sun spirit alive and well in the industry. Our children will be better for it.

Thanks for the off the charts support to everyone who ever carried a Sun badge, used our products, or helped our company through the years.

And thanks to my wonderful wife, Susan, who gave this desperado (see Eagles) a chance to choose the Queen of Hearts before it was too late.

Someday, hopefully, you will all get to see or meet her and my other life’s works named Maverick, Dakota, Colt, and Scout. If you do, perhaps you will understand why I stepped back from the CEO role four years ago. And why I feel like the luckiest guy in the whole world.

My best to all of you, and remember: Kick butt and have fun!

Scott

FURTHER READING:

• Sun CEO Set to Resign
• Sun CEO: Go Oracle, Beat IBM [Internal Memo]
• EU Approves Oracle-Sun Deal
• EU Poised to Approve Oracle-Sun Deal
• Oracle Sack Half of Sun’s Workforce? Ridiculous, Says Sun.
• Q: What’s the Difference Between Neelie Kroes and Larry Ellison?
• Ellison: Oracle Is the New IBM
• Oracle: IBM, Come Out to Play-ee-ay
• Mr. Ellison Asks That His Burgers Be Served With Freedom Fries Until Further Notice

An inevitability, I suppose. But one that’s evidently approaching quite rapidly. Word of Schwartz’s impending departure comes as Oracle gears up for a Wednesday event at which it plans to reveal its strategy for Sun.

When he was appointed CEO in April 2006, Schwartz was charged with restoring Sun to its glory days. Sadly, he was unable to do it. And while he came up with some some inventive strategies–buying MySQL, open-sourcing Java, and Solaris–none were of much benefit to Sun financially. So now, with the former Silicon Valley icon about to become another acquisition notch in Oracle’s belt, Schwartz is leaving.

But he’s leaving with his pockets full. According to Sun’s definitive proxy statement, Schwartz stands to earn about $12 million from the severance package he negotiated, plus another $5.1 million or so for the shares he still holds in the company.

“Go, Oracle,” indeed.

Sun declined a request for comment.

FURTHER READING:

• Departing Sun Co-Founder to Employees: Kick Butt and Have Fun!
• Sun CEO: Go Oracle, Beat IBM [Internal Memo]
• EU Approves Oracle-Sun Deal
• EU Poised to Approve Oracle-Sun Deal
• Oracle Sack Half of Sun’s Workforce? Ridiculous, Says Sun.
• Q: What’s the Difference Between Neelie Kroes and Larry Ellison?
• Ellison: Oracle Is the New IBM
• Oracle: IBM, Come Out to Play-ee-ay
• Mr. Ellison Asks That His Burgers Be Served With Freedom Fries Until Further Notice

On November 9, 2009, the European Commission issued a statement of objections relating to the acquisition of Sun by Oracle Corporation. The Statement of Objections sets out the Commission’s preliminary assessment regarding, and is limited to, the combination of Sun’s open source MySQL database product with Oracle’s enterprise database products and its potential negative effects on competition in the market for database products. The issuing of a Statement of Objections allows addressees to present arguments in response to the Commission’s preliminary assessment of the competitive effects of a notified transaction. A Statement of Objections is a preparatory document that does not prejudge the European Commission’s final decision. Any final decision by the European Commission is subject to appeal to the European Court of First Instance.

Indignant that the EC would dare to bring the $7 billion deal into question, Oracle vowed to take it to the mat in a harshly worded rebuttal:

Oracle’s acquisition of Sun is essential for competition in the high end server market, for revitalizing Sparc and Solaris and for strengthening the Java development platform. The transaction does not threaten to reduce competition in the slightest, including in the database market. The Commission’s Statement of Objections reveals a profound misunderstanding of both database competition and open source dynamics. It is well understood by those knowledgeable about open source software that because MySQL is open source, it cannot be controlled by anyone. That is the whole point of open source.

The database market is intensely competitive with at least eight strong players, including IBM, Microsoft, Sybase and three distinct open source vendors. Oracle and MySQL are very different database products. There is no basis in European law for objecting to a merger of two among eight firms selling differentiated products. Mergers like this occur regularly and have not been prohibited by United States or European regulators in decades.

The U.S. Department of Justice carefully reviewed the proposed acquisition during the normal Hart-Scott-Rodino review and considered it again when the European Commission initiated a second phase review. On both occasions the Justice Department came to the conclusion that there is nothing anticompetitive about the deal, including specifically Oracle’s acquisition of the MySQL database product. The U.S. Department of Justice approved the acquisition without conditions and terminated the waiting period under the Hart-Scott-Rodino Act on August 20, 2009.

Sun’s customers universally support this merger and do not benefit from the continued uncertainty and delay. Oracle plans to vigorously oppose the Commission’s Statement of Objections as the evidence against the Commission’s position is overwhelming. Given the lack of any credible theory or evidence of competitive harm, we are confident we will ultimately obtain unconditional clearance of the transaction.

And Oracle will evidently pursue its case with help from the U.S. Department of Justice’s Antitrust Division, which also issued a statement on the EC’s move today:

After conducting a careful investigation of the proposed transaction between Oracle and Sun, the Department’s Antitrust Division concluded that the merger is unlikely to be anticompetitive. This conclusion was based on the particular facts of the transaction and the Division’s prior investigations in the relevant industries. The investigation included gathering statements from a variety of industry participants and a review of the parties’ internal business documents. At this point in its process, it appears that the EC holds a different view. We remain hopeful that the parties and the EC will reach a speedy resolution that benefits consumers in the Commission’s jurisdiction.

Several factors led the Division to conclude that the proposed transaction is unlikely to be anticompetitive. There are many open-source and proprietary database competitors. The Division concluded, based on the specific facts at issue in the transaction, that consumer harm is unlikely because customers would continue to have choices from a variety of well established and widely accepted database products. The Department also concluded that there is a large community of developers and users of Sun’s open source database with significant expertise in maintaining and improving the software, and who could support a derivative version of it.

The Department and the European Commission have a strong and positive relationship on competition policy matters. The two competition authorities have enjoyed close and cooperative relations. The Antitrust Division will continue to work constructively with the EC and competition authorities in other jurisdictions to preserve sound antitrust enforcement policies that benefit consumers around the world.

“No, we’re not going to spin [MySQL] off,” Oracle CEO Larry Ellison told attendees of a Churchill Club event in Silicon Valley Monday evening. “We are keeping everything. We’re keeping tape. We’re keeping storage. We’re keeping x86 and SPARC. And we’re going to increase investment in all of them.”

In other words, technologists worried about Oracle’s (ORCL) intentions for MySQL and other Sun (JAVA) systems need to relax.

“Sun has fantastic technology. We think it’s got great microprocessor technology–it needs a little more investment, but we think it can be extremely competitive. It’s got the leading tape archival systems. We think the Open Storage on their new disk system is absolutely fantastic. Java speaks for itself. Solaris is overwhelmingly the best open-systems operating system on the planet….Sun has been a national treasure for the last couple of decades.”