Microsoft to Troops: Deal Likely, Don't Talk to Yahoos

A top Microsoft executive sent an internal memo Friday afternoon preparing his troops for the company's proposed takeover of Yahoo — and the tone suggests that the Microsoft brass is confident the deal will happen.

The memo was from Kevin Johnson, president of Microsoft's platforms and services division, and appeared on the blog Techcrunch soon after it was sent. Blogger Michael Arrington said the memo appeared designed to be leaked.

The message, which the company later posted to its website, hits the boilerplate Microsoft talking points in favor of the deal.

"The industry needs a more compelling alternative in search and online advertising," Johnson wrote. "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. Without this, there's less innovation, less competition, and less value being generated for consumers, advertisers, and publishers."

"Together, Microsoft and Yahoo would have an opportunity to change and evolve the experiences and value we deliver to all of these groups," he added.

Johnson appeared to be setting his employees up for a difficult merger process, and urged them to proceed with "business as usual."

"Please stay focused on your key priorities, whether it's a technical product roadmap, serving our advertiser or publisher customers, or connecting with users of our services," he wrote. "It's important that we stay focused on our business commitments and let the process for the transaction take its course."

To ward off employees from leaving the combined company, Johnson strongly hinted that they would be well rewarded for staying.

"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," he said. "There's no question we will dedicate significant rewards and compensation to Yahoo and Microsoft employees."

Johnson downplayed the difficulty of integrating the two companies, portraying them as complementary.

"We would have an opportunity to bring together the best of both companies," he said. "Microsoft's culture of innovation, and long-term commitment to tough R&D problems, with Yahoo's blend of Web-centric DNA and innovative engineering, 21st century media expertise, and advertising talent."

In a nod to Yahoo employees, Johnson said the merged company "would be committed to maintaining Yahoo's significant presence in Silicon Valley." Yahoo is based in Sunnyvale, California. Microsoft is headquartered in Redmond, Washington. He also said that it's "premature to say which aspects of [Yahoo's] brands and technologies we would use in our combined offerings."

Finally, Johnson warned Microsoft employees not to "speculate with Yahoo employees about the proposal or about what a deal would mean for the combined company."

"Prior to close of the transaction," he wrote, "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."

by Sam Gustin