msnbc.com news services
updated 2/22/2008 7:46:24 PM ET 2008-02-23T00:46:24

Microsoft Corp. said Friday it won’t totally uproot Yahoo Inc. from its Sunnyvale, Calif. headquarters if it succeeds in its bid to buy the Web portal company.

(MSNBC is a joint Microsoft - NBC Universal venture.)

“In bringing the companies together, we would be committed to maintaining Yahoo’s significant presence in Silicon Valley,” wrote Kevin Johnson, president of Microsoft’s platforms and services division, in an e-mail to employees. Johnson noted that Microsoft employs 1,800 people in nearby Mountain View.

The e-mail was written in question-and-answer format to address recent issues raised by employees. But Johnson did not directly answer questions about staffing and layoffs.

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

“We have no shortage of business and technical opportunities, and we need great people to focus on them.”

The e-mail sought to ease some of the concerns expressed by Microsoft and Yahoo employees about a potential merger.

Johnson’s comments seem aimed at responding to Yahoo’s decision to adopt new severance plans earlier in the week. All the company’s full-time workers who lose their jobs without “cause” or quit “for good reason” after a Microsoft takeover would continue to receive salary and health insurance for four to 24 months, plus other benefits.

The company did not give details about its definition of “good reason,” but observers noted that it could include relocation to Microsoft’s Redmond headquarters.

Johnson, whose division would ultimately absorb most of Yahoo, said the company would be “pragmatic” in how to address Yahoo’s computer systems since they are not Windows-based.

In some acquisitions, Microsoft has prioritized continuity, according to Johnson, and the company has worked to make sure the acquired company’s existing systems worked with Microsoft’s own technology infrastructure.

He also downplayed the cultural differences between the two companies, seen as a hurdle to a smooth integration, saying some aspects of the two cultures will merge quickly, while others will remain unique.

Yahoo would bring a Web-centric view, media expertise and advertising talent to Microsoft, according to Johnson, who said Microsoft plans to maintain Yahoo’s presence in Silicon Valley if a deal goes through.

RBC Capital Markets analyst Jordan Rohan wrote in a note to investors that that Yahoo’s new plans could cost Microsoft as much as $500 million, on top of the $40 billion or so its offer to buy the Web portal business is now worth.

In the e-mail, Johnson also told Microsoft’s employees that they must “not speculate with Yahoo employees about the proposal or about what a deal would mean for the combined company.”

“No Microsoft employee should reach out to Yahoo employees for the purpose of integration planning unless specifically instructed to do so,” he wrote.

The software maker’s shares dropped 42 cents to close at $27.68 Friday, while Yahoo’s stock ended the session unchanged at $28.42.

The Associated Press and Reuters contributed to this story.

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