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Welcome to Microsoft Pri0: That's Microspeak for top priority, and that's the news and observations you'll find here from Seattle Times reporter Sharon Chan.

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February 22, 2008 1:34 PM

Microsoft employee e-mail reiterates reasons for Yahoo acquisition

Posted by Benjamin J. Romano

Microsoft just posted an e-mail Kevin Johnson sent to the company's Platforms and Services division earlier this afternoon restating the rationale for the company's $44.6 billion bid for Yahoo and answering questions about what it will mean to employees.

The company posted it on its Web site, so it's essentially an e-mail to Yahoo's employees, too.

The whole e-mail is here. I'll be picking out some key passages to highlight below.

Update, 2:30: The e-mail comes at the end of a week significant developments in the merger story. Microsoft has hired a firm to advise it on replacing Yahoo's board of directors, a signal that, as it stated, the company is pursuing all possible options to have its will be done including a costly and potentially acrimonious proxy fight.

Yahoo, meanwhile, instituted a beefed-up severance package for employees and top executives that would kick in if the company were acquired. It's a move that both encourages key personnel to stick around despite the looming acquisition and could make integrating the companies more costly and complicated. The developments were summarized in this AP story. Microsoft Chairman Bill Gates also told the AP earlier this week that the Yahoo acquisition is about the people.

Large portions of Johnson's e-mail are essentially a copy-and-paste job, covering the same ground Microsoft executives have been over in various forms since the proposal was announced Feb. 1.

He again addressed a source of concern at both companies -- that the combination would create redundancies in staffing and result in layoffs.

"Q: What impact would this combination have on staffing? Would there be any reductions?

"A: People are the single most important asset in this combination. We want the very best talent at the combined company, and we will demonstrate this to Yahoo! and Microsoft employees at each step of the deal. There's no question we will dedicate significant rewards and compensation to Yahoo! and Microsoft employees.

"While some overlap is expected in any combination of this size, we should remember that Microsoft is a growth company that has hired over 20,000 people since 2005, and we would look to place talented employees throughout the company as a whole. We have no shortage of business and technical opportunities, and we need great people to focus on them."

In describing the two companies' cultures, Johnson shed light on just how important advertising has become in the minds of Microsoft executives.

"Respect for both the creative and analytical aspects of advertising is core to both companies, along with recognition that advertising is an industry that represents opportunity and growth." (Emphasis added.)

Also, he noted that it's tough to define a Microsoft culture vs. a Yahoo culture because Microsoft with its 83,000 employees spread across businesses and markets around the world, has many cultures.

"At Microsoft today, we have a corporate culture, but individual teams develop, nurture, and retain a culture of their own as well. The culture of the combined entity will be shaped by individuals and teams from both Yahoo! and Microsoft."

One somewhat novel message is Johnson's instruction that Microsoft keep mum on what a combined company would look like. Particularly verboten are discussions with Yahoo employees.

"Prior to close of the transaction, no Microsoft employee should reach out to Yahoo! employees for the purpose of integration planning unless specifically instructed to do so by the integration team and its LCA advisors."

Do you see anything new in Johnson's e-mail? What questions remain unanswered?

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