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Microsoft Pri0

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 1, 2008 9:15 AM

What would MSFT + YHOO = for employees?

Posted by Benjamin J. Romano

Microsoft has close to 80,000 employees. Yahoo has plans to cut its staff of 14,300 by about 1,000 jobs, or 7 percent, later this month. So, combined, we're looking at a company with close perhaps 93,300 full-time workers.

Already, we're seeing some signs of anxiety over job cuts -- mainly in the divisions where Microsoft and Yahoo overlap. Mini-Microsoft gives voice to those concerns in this post:

"Internally, a number of us had heard reasons from Steve Ballmer why a Yahoo! acquisition didn't make sense. One that sticks in my mind right now is how if we acquired Yahoo! -- such a big company -- we'd have to naturally have layoffs within Microsoft to accommodate it.

"Maybe there are HR people wandering around Microsoft this morning asking, 'What color slip did you say? Pink?'

"Man, if I was in the Online Services Division I would be worried. Especially if Yahoo! did something my team did and did it well."

Earlier this morning, I asked Kevin Johnson, president of the Microsoft Platforms and Services Division, who has responsibility for online services, point blank about layoffs at either company. Not surprisingly, I did not get a straight yes or no answer.

He said the expanded ability to do research and development is a key benefit for the deal. "This is an opportunity to get that expanded R&D capability and really prioritize what they're working on so that we can expand the range of innovation that's taking place."

"Now, certainly, in combination with that, there are operational efficiencies that we will gain from this combination. And on the people front, much of the operational efficiencies certainly relate to the integration work where we've got to do a great job of getting the right people in the right jobs and making sure that we have the right amount of head count and resources, focused in the right areas."

In Microsoft's press release announcing the deal, it intends to "offer significant retention packages to Yahoo engineers, key leaders and employees across all disciplines."

I just got my hands on the internal e-mail Microsoft CEO Steve Ballmer sent to employees this morning. It is silent on the question of job cuts.

"As we move forward, we'll look carefully at how to bring our assets together to create the greatest value for customers, employees, and shareholders.

"During this transition period, I urge you to stay focused on your commitments and team goals. We are committed to communicating with you frequently as our leadership team works on bringing the two companies together."

The rest of the e-mail reads very much like Microsoft's press release and statements from Johnson and other executives. Not surprisingly, they're staying tightly on message. The whole e-mail is after the jump.

From: Steve Ballmer
Sent: Friday, February 01, 2008 3:39 AM
To: Microsoft - All Employees (QBDG)
Subject: Proposed Acquisition of Yahoo!

Today, I am very excited to announce that Microsoft has made a proposal to acquire Yahoo!. This announcement represents a big opportunity for Microsoft, and is the next major milestone in our companywide transformation to embrace online services, search, and advertising.

By combining the strengths of our companies, we can deliver an efficient and highly competitive offering for our customers. Our complementary assets will give us increased talent and scale to compete in the markets of search and online advertising, and pioneer new innovations in the areas of video, mobile services, online commerce, and social media.

This year, online advertising is a $40 billion business. It will grow to $80 billion by 2010 and will continue to increase in the years beyond. This market provides a significant growth opportunity for Microsoft—our ability to provide the best search and online experiences for consumers, and the best ad platform for publishers and advertisers, is the key to unlocking this opportunity.

We are on a good path with our existing search and advertising product roadmaps. To date, we have made progress in our organic online services and advertising efforts, and by joining with Yahoo!, we will take the next step toward becoming a major search destination and social platform for consumers. The combined reach of our content properties and combined breadth of our tools for advertisers will enable us to provide an online advertising platform at scale. Together, we'll create a company that is in a much better position to compete against an increasingly dominant player in this market.

Through our recent acquisitions of aQuantive and Tellme, we understand what it takes to successfully integrate new talent, assets, and infrastructure into our company. Leaders from both Microsoft and Yahoo! will work together closely on the integration process to ensure that we are thoughtful about the questions we ask and the decisions we make. As we move forward, we'll look carefully at how to bring our assets together to create the greatest value for customers, employees, and shareholders.

During this transition period, I urge you to stay focused on your commitments and team goals. We are committed to communicating with you frequently as our leadership team works on bringing the two companies together.

As I outlined in my quarterly strategy email last week, we grow by anticipating new areas where software has the greatest potential to create opportunities. The proposed acquisition of Yahoo! will transform our ability to compete as new opportunities in online services, search, and advertising emerge.

I am very excited about today's announcement and about the collective talent and energy we will bring to the industry. A great opportunity is in front of us to evolve how people and businesses create, find, and use information. Through today's proposed acquisition, we can take our business to new levels of success and growth.

Kevin Johnson, Chris Liddell, Ray Ozzie and I will host an employee web cast that can be viewed live beginning at 10:00am PST and will also be available on-demand. You can link to the web cast at http://msw/NewsEvents/StudioCasts/Pages/conferences.aspx [ed. note: this is an internal Microsoft link].

Steve

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