“MySpace CEO Chris DeWolfe and News Corporation’s Chief Digital Officer Jonathan Miller, announced today that, by mutual agreement, Mr. DeWolfe will not be renewing his contract and will be stepping down in the near future. Mr. DeWolfe will continue to serve on the board of MySpace China and will be a strategic advisor to the Company. Additionally, Mr. Miller announced that he was in discussions with Tom Anderson, MySpace’s president, about Mr. Anderson assuming a new role in the organization. “

“The company did not immediately name a replacement, and a company spokesperson declined to comment, but some speculate that former Facebook COO Owen Van Natta is a leading candidate.”

According to traffic statistics, mySpace is still the largest social network in the US, but was down in membership overall 4% on the year, while US membership for Facebook rose 78% in March alone. Typically, founders leaving a site after a sell out to a corporate conglomerate means that the site is surely losing its original message, community, spirit, and philosophy. Huge changes have come to the site with the relaunch of mySpace Music; for underground pop and hip hop networking, promotion, clubs, concerts, and the like, mySpace is still the undisputed champion. Yet as it becomes a platform for mass, mainstream, commercialized music and video distribution, maybe Anderson and DeWolfe weren’t the best point men for the job.

The Wall St. Journal reports a long history of conflict between the pair and News Corp over the management of the company since the takeover:

“DeWolfe and Anderson still chafed at the fact that MySpace ad sales were taken over by executives at Fox Interactive Media, according to people familiar with the situation. The rank and file of MySpace was also angry that their stock options were canceled after the acquisition and that they were forced to move from Santa Monica to Beverly Hills, the people said.”

“Relations fell apart further. Mr. DeWolfe ignored suggestions from Fox Interactive Media President Ross Levinsohn about ways to improve the site. Mr. DeWolfe also sought to amend a $900 million advertising deal that News Corp. cut with Google Inc. — delaying its implementation, the people said.”

“Mr. Levinsohn also clashed with Mr. Anderson, who is president of the site. Mr. Anderson controlled the product development and was criticized for not moving fast. In April 2006, MySpace bought the online karaoke service kSolo. MySpace launched the karaoke feature on its site in April 2008 — two years later.”

“The tension between the MySpace founders and News Corp. eventually led to Mr. Levinsohn’s dismissal in November 2006. He was succeeded by his distant cousin, Peter Levinsohn, who eventually gave Mr. DeWolfe control of the advertising sales at MySpace that he had sought.”

…Three top MySpace executives, including Amit Kapur, former chief operating officer, left the company in March to work on a start-up. MySpace has yet to name successors for those positions.”

TechCrunch has also released the email from News Corp Digital Media CEO Jonathon Miller to employees announcing the dismissals:

“I am writing to share the news that MySpace CEO Chris DeWolfe will be stepping down from his executive role in the near future. He has agreed to serve as a strategic advisor to the Company and will remain on the board of MySpace China. In addition, I am currently in discussions with MySpace President Tom Anderson regarding his role within the organization.”

“I want to take this opportunity to thank them both for their incredible contributions to the Company, and for pioneering one of the greatest social media revolutions of our time. I wish Chris nothing but the best in any new endeavors and, like many in this industry, am eager to witness his next innovations. I understand the importance of having a dynamic, inspiring and innovative management team, and am dedicated to ensuring that MySpace continues to benefit from the highest levels of passion and enthusiasm.”

For the most part, I tend to agree with J Miller on this one… I look forward to hearing about the next project that Tom Anderson & Chris DeWolfe begin to work on.

Background:

http://kara.allthingsd.com/20080219/owen-van-natta-to-leave-facebook/

http://www.thestreet.com/story/10490683/1/new-myspace-ceo-may-be-ex-facebook-exec.html?cm_ven=GOOGLEN

http://twitter.com/amitk

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mySpace Founders Forced Out on Executive Pay & Culture Clash

What will happen to shareholders of SGI stock is unknown – it looks to be a wipeout with total loss of value there. Trading of SGIC stock was suspended by NASDAQ around March 12^th, 2009 – the company was appealing the decision, but (even though no official announcement has been made yet) it looks like it will probably stay de-listed and the assets / trademarks of SGI will be absorbed in Rackable. When it comes down to business plan, SGI seems to have been making some great process in building high-end, custom servers with Intel’s new Xeon chips.

According to a press release:

Coinciding with today’s worldwide launch of the Intel(R) Xeon(R) processor 5500 series (code-named Nehalem), Silicon Graphics announced it will feature the next-generation processor in it’s award-winning SGI(R) Altix(R) ICE integrated blade platform.

By integrating the scalable, I/O-intensive SGI Altix ICE platform with the high-bandwidth memory design of the Intel(R) Xeon(R) processor 5500 series, Silicon Graphics is delivering a unique solution that helps organizations avoid the costly performance inefficiencies that can occur when large data sets and intense processing overwhelm the comparatively slow memory, I/O and interconnect infrastructures of other commodity Linux(R) clusters.

To remain competitive, users today require their IT platforms to deliver results much sooner, even as their applications increase in complexity and data sets grow exponentially,’ said Silicon Graphics CEO Bo Ewald. ‘The SGI Altix ICE platform is unique in its rich I/O infrastructure and high-bandwidth interconnect design, which makes it an ideal platform for solving big data problems with the new Intel(R) Xeon(R) processor 5500 series.

A lot of talk was revolving as to whether SGI could build a new market share by producing high-end servers for the emerging cloud, in addition to its academic, research, graphic workstation, and existing corporate accounts. For Rackable to acquire all of the talent, physical resources, trademarks, and intellectual property of SGI is just an incredible deal, and it brings a respected client list with possibility for expansion of sales for the company in many directions. Clearly, Rackable is an aggressive and moving company, and looks to emerge from the economic downturn in a very strong position.

According to Business Journal:

The combined company will be positioned to solve the most demanding business and technology challenges our customers confront today,” said Mark J. Barrenechea, Rackable CEO. “In addition, this combination gives us the potential for significant operational synergies, a strong balance sheet, and positions the combined company for long-term growth and profitability.

We have been working very hard to strengthen our company, and today, we’ve taken another big step in that direction,” stated Robert Ewald, CEO of Silicon Graphics. “This transaction represents a compelling opportunity for Silicon Graphics’ customers, partners and employees, who can all benefit from the emerging stronger company with better technologies, products and markets reach.

That companies like Sun and SGI can see billions of dollars in market cap evaporate so quickly is amazing, and a warning to current Valley companies like Google. Imagine Google, 10-15 years later, sold for $25 million, delisted from NASDAQ, and in Chapter 11… SGI once had the same magic aura and sense of awe that Google has now, albeit search and hardware are very different businesses. SGI is still a powerful trademark and with the exception of the stigma of two bankruptcies and epic collapse (which would probably dissuade Rackable from operating under that name totally), but it is easy to see Rackable rebranding and expanding a powerful line of servers and workstations under the SGI name.

Congratulations to both companies, and best of luck in the future… I hope SGI can continue and that Rackable can allow the company & its research to grow to become as innovative in the future as it was in the past. More information on the details of both the Bankruptcy and Acquisition should become clear in the next few days.

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Rackable Acquires Silicon Graphics after Second Bankruptcy