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Microsoft tries to reassure staff over Yahoo bid

As talks of a potential acquisition of Yahoo continue, one executive at the Windows maker publishes a message to employees of both companies concerned about their fate following a successful takeover.

By Elizabeth Wolfe, 25 Feb 2008 at 16:13

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Yahoo and Microsoft employees (hopefully) had their fears of massive layoffs quelled after an internal memo from a senior executive explained the likely implications for staff following a takeover.

Kevin Johnson, president of Microsoft's platforms and Services division, assured employees that there will still be plenty of jobs to go around.

"We have no shortage of business and technical opportunities," Johnson said in the memo. He did, however, admit that some layoffs would be necessary because "some overlap is expected in any combination of this size."

The memo explained that the acquisition would improve competition in the online search and advertising markets. Johnson described the increased need for "a more compelling alternative" in these markets, but stopped short of mentioning the current frontrunner in both, Google, by name,

Johnson's memo also addresses concerns about combining two already well-established companies. "The culture of the combined entity will be shaped by individuals and teams from both Yahoo and Microsoft," Johnson said.

Johnson also dismissed fears of a relocation of Yahoo's 10,000 employees currently housed in Silicon Valley up to Microsoft's headquarters in Redmond, Washington. "In bringing the companies together, we would be committed to maintaining Yahoo's significant presence in Silicon Valley," he said. Microsoft has around 1,800 employees in Silicon Valley, making it one of the company's largest operations outside of Redmond.

Yahoo has rejected Microsoft's initial unsolicited $44.6 billion (£22.3 billion) offer to buy the company. Despite rejecting the original offer, which was made on 1 February, Yahoo implied that another, higher, offer might be more successful.

Since Yahoo has a stronger online brand than Microsoft's MSN business, the acquisition would prove extremely valuable to Microsoft. "The Yahoo brand is one of the reasons the combination of the two companies would create so much value," Johnson said.

As talks progress, Microsoft and Yahoo will continue to be competitors. Johnson urged Microsoft and Yahoo employees to refrain from discussing the potential combination and speculating its outcome.