Microsoft addresses Yahoo worries

A top Microsoft executive sent e-mail Friday to the company's Platforms and Services Division, trying to address employee concerns and curiosity about the proposed $44.6 billion acquisition of Yahoo.

Division President Kevin Johnson's message largely covered the same ground Microsoft executives have been over in various forms since the proposal was announced Feb. 1.

The company posted the e-mail on its Web site shortly after it was sent, so it was essentially a message to Yahoo's employees, investors in both companies, regulators and anyone else following the proposed merger, too.

Johnson urged employees to stay focused as the proposal, which the Yahoo board turned down last week, plays itself out.

"While it's hard to predict the future," he wrote, "I want to convey my sense of where things are by responding to a set of common questions that have come up from employees."

Among other things, he again addressed a source of concern at both companies — that the combination would create redundancies in staffing and result in layoffs.

"While some overlap is expected in any combination of this size," he wrote, "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."

Jarrad Harford, a finance professor at the University of Washington's Michael G. Foster School of Business, viewed the missive as a calculated part of Microsoft's strategy to win support for its proposed takeover.

"This appears to be a continued part of Microsoft's concerted effort to breach fortress Yahoo by reaching out to its biggest shareholders and now, indirectly, its employees.

"The e-mail also serves the practical purpose of mitigating anxiety (in both companies) about jobs post-integration," Harford wrote in an e-mail.

In describing the two companies' cultures, Johnson shed light on just how important advertising — a primary reason for the acquisition — 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."

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

The e-mail came at the end of a week of 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 has stated, the company is pursuing all possible options, 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.

Benjamin J. Romano: 206-464-2149 or bromano@seattletimes.com