Microsoft Memo Looks to Ease Staff Concerns on Yahoo Bid
by admin on Feb.23, 2008, under General News
A top Microsoft Corp. executive addressed key points on the company’s bid to buy Yahoo Inc. in an internal memo that appears to be both a message to Yahoo and an attempt to address concerns among Microsoft staff over any deal.
Kevin Johnson, president of Microsoft’s Platforms and Services Division, reiterated the Redmond, Wash., software maker’s reasons behind its unsolicited offer, writing that a combination would provide a “compelling alternative in search and online advertising,” according to a version of the memo posted on Microsoft’s Web site. Mr. Johnson didn’t specifically name Google Inc., the leader in both of those areas and the central target of the proposed Microsoft-Yahoo combination.
The memo comes at a lull in public comments over the bid. On Jan. 31, Microsoft made a $31-a-share offer to buy Yahoo. Yahoo’s board rejected the offer days later, and the two companies have yet to enter formal negotiations. Microsoft, meanwhile, said it is mulling whether to try to force Yahoo into a deal by launching a proxy fight to replace Yahoo’s board with people supportive of the combination.
The memo provided few details on questions surrounding the proposed acquisition, including whether Microsoft would reduce staff and how Microsoft would handle so many brands at each company.
Still, the memo appears to be an attempt to assuage concerns within both Microsoft and Yahoo. While it is unclear how the majority of rank-and-file engineers and staff at each company views the deal, some Microsoft staff see the bid as a rebuke of their own work in online advertising and search, according to people at the company.
One perspective on the deal is provided by “Mini-Microsoft,” a Web log written by an anonymous Microsoft employee that is widely read within the company. On Feb. 10, the author of the blog, who believes the deal would lead to layoffs at Microsoft, summed up his thoughts with a post titled “Microsoft’s Yahoo! Acquisition is Bold. And Dumb.”
In his memo, Mr. Johnson didn’t say that the deal wouldn’t lead to layoffs, writing that “some overlap is expected in any combination of this size.”
Mr. Johnson reiterated that Microsoft expects to work closely with Yahoo executives on integrating the two companies. The memo said he expects the deal to close in the second half.
Mr. Johnson wrote that Yahoo’s brand is “one of the reasons the combination of the two companies would create so much value.” Still, “it is premature to say which aspects of the brands and technologies we would use in our combined offerings,” he wrote.
He also addressed a gap in technology between the two companies’ online services, writing that while Microsoft uses its own products, the company would “work closely with Yahoo engineers” to resolve differences in the technical underpinnings of their services.
Mr. Johnson was unequivocal about maintaining teams in both Microsoft’s Redmond headquarters and in Silicon Valley, where Yahoo is based.
Separately, a group of Yahoo shareholders has sued the Internet company for saying “no” to the proposed marriage.
Two Detroit public pension funds have accused Yahoo’s board of acting against shareholder interests by allegedly failing to negotiate in good faith with Microsoft over the software company’s merger proposal.
The suit was filed by public pension funds for Detroit firefighters and police officers, and another for Detroit public employees. A spokeswoman for Yahoo said the company had no comment.
Earlier this month, another shareholder, the Wayne County Employees’ Retirement System, also sued the Yahoo board.
By ROBERT A. GUTH
WJS
Write to Robert A. Guth at rob.guth@wsj.com