Saturday, February 23, 2008

Get Ready For Micro-Hoo, Ya!

SAN FRANCISCO (AFP) — A Microsoft executive on Friday sent workers an upbeat email outlining a vision of how the software giant expects to take over Yahoo and merge the companies' cultures and resources.

Yahoo spurned Microsoft's 44.6-billion-dollar bid for the veteran Internet firm on February 11. Microsoft is reportedly planning a hostile takeover bid if Yahoo's board of directors doesn't change its mind.

In a message to employees, Microsoft platform and services division president Kevin Johnson shared "a perspective of the process going forward."

"We look forward to a constructive dialogue with Yahoo's board, management, shareholders, and employees on the value of this combination and its strategic and financial merits," Johnson wrote.

"Once Yahoo and Microsoft agree on a transaction, we can begin the integration planning process in parallel with the regulatory review."

If Yahoo capitulates, the transaction would likely close in the second half of this year, according to Johnson.

The email is a tactic from the playbook of Yahoo chief executive Jerry Yang, whose messages urging employees and stock holders to have faith in the company and its board have gone public after being filed with US regulators.

Johnson's missive comes on the same day that pension funds for Detroit city workers filed a civil suit charging Yahoo with betraying its duty to stockholders by resisting Microsoft's advances.

In an effort to avoid being gobbled up by Microsoft, the struggling Internet firm has reportedly explored alliances with Google, Time Warner-owned America On Line, and social networking website MySpace owned by News Corp.

Some Yahoo stock holders in California are suing the firm for not accepting an offer Microsoft made to buy Yahoo early last year, when the stock price was higher.

Microsoft is currently offering a combination cash and stock deal initially valued at 31 dollars per share but which fluctuates with the price of Microsoft shares.

Yahoo's board is said to believe the company is worth at least 40 dollars per share, a price that would drive up Microsoft's cost by more than 10 billion dollars.

Microsoft is adamant its offer is "full and fair" and argues that the merger would create a needed and "compelling" alternative in an online search and advertising market ruled by Google.

"I have personally met with top executives of the major media companies, and I know there is a desire for more competition in search and online advertising," Johnson wrote.

Google has condemned Microsoft's takeover bid as an attack on the freedom of the Internet.

While not promising that a merger would not result in the elimination of redundant jobs, Johnson said Microsoft wants to hold on to top talent and is so large it can absorb people in other parts of its operation.

In an effort to keep Yahoo employees from bailing out in the face of a Microsoft takeover, Johnson promised "significant rewards and compensation" will be given to workers at a combined company.

Johnson brushed aside speculation that Microsoft's historically stuffy corporate culture would clash with Yahoo's relaxed, playful California style.

"We would have an opportunity to bring together the best of both companies," Johnson wrote.

"Some aspects of the two cultures will naturally merge quickly and some will remain unique in the near-term and merge more slowly over time."

Yahoo would remain in Silicon Valley, where Microsoft has a campus, according to Johnson. Microsoft's headquarters is in Redmond, Washington.

Until a deal is cut, Microsoft employees should treat Yahoo workers as rivals, not budding workmates, the email urged.

"It's important that Microsoft employees not speculate with Yahoo employees about the proposal or about what a deal would mean for the combined company," Johnson wrote.

"Prior to the close of the transaction, we must continue to compete with Yahoo as before."

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