Another reason Microsoft should give up on Yahoo: Morale

Another reason Microsoft should give up on Yahoo: Morale

Summary: Companies (at least publicly traded ones) are beholden to shareholders. But they also are beholden to their employees. And while most Softies are afraid to state for the record that they think Microsoft should abandon its takeover of Yahoo, that opinion is a real and prevailing sentiment among many in the Microsoft ranks.

SHARE:

Companies (at least publicly traded ones) are beholden to shareholders. But they also are beholden to their employees. And while most Softies are afraid to state for the record that they think Microsoft should abandon its takeover of Yahoo, that opinion is a real and prevailing sentiment among many in the Microsoft ranks.

These aren't folks who are saying Microsoft should walk away from Yahoo so that Yahoo's stock price will tank and Microsoft can swoop in and buy them later. They are folks who are opposed to a Microsoft takeover of Yahoo at any price. And while it's tough to take over successfully a company where many of the employees don't want to work for you, it's potentially far worse to alienate your own employees by spending billions to buy technology and people with whom your rank and file have no interest in working.

The Wall Street Journal is hearing dissent among the Microsoft management ranks about the Yahoo merger:

"Still, Mr. Ballmer faces opposition to the deal in his own ranks: Executives at several Microsoft divisions oppose the bid on grounds it will divert needed resources and attention from other challenges the company faces, said people familiar with the company. That sentiment is heightened as Microsoft heads into its annual budgeting season, said people familiar with the company."

I'm hearing it, too, among some of the Microsoft rank and file. Of course, no one wants to be on the record opposing a deal championed by Microsoft CEO Steve Ballmer, Platforms & Services Chief Kevin Johnson and Chief Financial Officer Chris Liddell; that would be career suicide. But here's one take from an insider who asked to remain anonymous:

"'Yahoo is a great thing for the search team'" is the BS line that upper management apparently continues to send. Generally, people just accept it as likely coming, but a lot don't expect it to impact anything materially for at least a year. Think the EU is going to let this go easily, if at all? It will take forever in regulatory approvals."

Another anonymous vote of no confidence:

"No one wants it (the Microsoft-Yahoo merger) to happen. The only reason it's being considered is that the management of Windows Live has been so ineffective that they can't ship anything worth using. They are consistently behind what consumers want, and unlike the old Microsoft, they are so poorly managed that they can't even copy everyone else. "

Are Softies fighting the Yahoo merger because they fear they might lose their jobs? Doubtful, as there are many open slots in Microsoft's online services business right now. If anyone is at risk of being cut, it's more likely the Yahoos.

That said, not everyone at Microsoft is anti-MicroHoo. Some Microsoft folks are counting on moving to Yahoo if the deal is consumated. As one commentor (who may or may not actually work for Microsoft) noted in a recent post to the Mini-Microsoft blog:

"To the question on why Microsoft employees in the valley like the Yahoo deal:

Most of us work either in the TV division or MSN -- both of which are complete f-ing disasters. Microsoft should have lit off a neutron bomb here a long time ago -- but that would require management skills.

"I work in the TV division (completely f--ked up with evil and corrupt management and 11 YEARS of red ink), and I for one will be shifting to a Yahoo group on day 1 after the acquisition.

"I know that at least 10 of my work friends have the same plan. It is our escape plan if something in the valley doesn't look more interesting first.

"Therefore, we like the deal."

There's been lots of back and forth about Microsoft and Ballmer being at risk of "losing face" if Microsoft gives up on its Yahoo acquisition plan. I feel as though there's nothing embarrassing about admitting your original idea was ill-advised, and after three months, you've realized you could better spend your billions elsewhere.

In fact, if I were Microsoft, I'd be using a good part of that $40-odd billion to hire a SWAT team to help Windows Vista. I'm not talking about hiring more developers; I'm talking about finding folks who could creatively find a way to market downgrades to XP as a selling point. Microsoft should be far more worried about its Vista image problem than about outsmarting Yahoo, at this point.

Remember: Windows still generates one-third of Microsoft's sales and two-thirds of its profits. Online Services is still a black hole. If Microsoft's cash cows dry up prematurely, there won't be any services future for the company to worry about.

Topics: Software, Banking, Microsoft, Operating Systems, Windows, Social Enterprise

About

Mary Jo has covered the tech industry for 30 years for a variety of publications and Web sites, and is a frequent guest on radio, TV and podcasts, speaking about all things Microsoft-related. She is the author of Microsoft 2.0: How Microsoft plans to stay relevant in the post-Gates era (John Wiley & Sons, 2008).

Kick off your day with ZDNet's daily email newsletter. It's the freshest tech news and opinion, served hot. Get it.

Talkback

67 comments
Log in or register to join the discussion
  • Ubuntu man speaks...

    ...[url=http://www.theregister.co.uk/2008/04/27/shuttleworth_microsoft_yahoo/]"Microsoft about to swallow a hand-grenade."[/url]
    D T Schmitz
    • RE

      Ubuntu is ok, but it is not going anywhere fast. People want their old programs to work with it. Government and companies need software that is easily implemented. Neither one is possible easily. And most companies do not have the programmers and IT staff to make it happen. They want an out-of-the-box experience. And Salesforce.com is not the answer. It can be easily replicated by MS allowing them to keep their stronghold.
      kadic
    • RE: Ubuntu

      Ubuntu is ok, but it is not going anywhere fast. People want their old programs to work with it. Government and companies need software that is easily implemented. Neither one is possible easily. And most companies do not have the programmers and IT staff to make it happen. They want an out-of-the-box experience. And Salesforce.com is not the answer. It can be easily replicated by MS allowing them to keep their stronghold.
      kadic
    • Yup, they're determined to trash all of technology

      or at least bring it all down to the WOW starts now marketing bullsiht level.

      You're supposed to love this short term greed, you're supposed to believe that Windows is all that computing could possibly be. Hell, some of the posters here even do.
      fr0thy2
  • Agreed

    I most definately agree with this post. Microsoft has spent billions on stock buybacks (dumb for a software company) and its internet division. They need to refocus and make sure Windows stays legit for decades to come. As far I can see, this Windows model is going to be good until Windows 8. At that point, people will probably demand something similar to Mesh. The company is sooo split. It delivers AWESOME products like the Mesh and complete stupidity (too many example. Don't get it. And I am a MSFT shareholder.
    kadic
  • RE: Another reason Microsoft should give up on Yahoo: Morale

    Ubuntu is ok, but it is not going anywhere fast. People want their old programs to work with it. Government and companies need software that is easily implemented. Neither one is possible easily. And most companies do not have the programmers and IT staff to make it happen. They want an out-of-the-box experience. And Salesforce.com is not the answer. It can be easily replicated by MS allowing them to keep their stronghold.
    kadic
  • Mixed feelings

    Honestly, Yahoo is bleeding red ink and has been for several quarters and nothing Jerry Yang has proposed shows me (or wall street) that this will change in any reasonable abmount of time.

    This will be a nightmare for Yahoo management if indeed MS walks away because the stockholder law suits will kill them. (Hey its fine to play hard to get to raise the bid but leaving money on the table is unforgivable to any investor.)

    Employees? Well, most employees find something they don't like about thier company, they get over it, at least the ones that like their pay check.

    Now with all that said, I too believe this is not the investment MS should be making at this time. They simply have too many other things that need attention and even cash investments.
    No_Ax_to_Grind
    • Can you please point to the time(s)

      That Yahoo has made a loss in the past few years?

      And what makes you think any lawsuits against Yahoo is going to succeed? In the spirit of your cloud cuckoo land, I'd say it's more likely that Microsoft will be sued up and down for this takeover silliness.
      zkiwi
      • Zkiwi : Did you notice this line

        "I too believe this is not the investment MS should be making at this time"

        Now I _seem_ to remember him saying things completely to the contrary ... What's changed No_Ax? Or are you just easily led? LOL.
        fr0thy2
        • No, He's Just Backpedaling As Usual

          Just like last week, Vonage is now out of the woods and operating well again...although Bitty boldly predicted they would tank as well...

          Any more bright predictions from that crystal ball made of cow dung?
          itanalyst2@...
          • Microsoft share price tank party, London

            Everybody's welcome. We've got the location with a private bar.

            Time (as yet) unknown. Tick, tock, tick, tock ....
            fr0thy2
        • Not Fair

          It's been three months and a lot of voices have weighed in and by
          now a diversity of voices. There are folks who think this is a bad
          idea who don't have any stake in proprietary and free/open
          development models. Microsoft's stock has been down since the
          announcement and it had a bad quarter, which amounts to more
          cash to make the deals value and more borrowing. Going out and
          finding a big loan is not as simple as it was 3 months ago.
          DannyO_0x98
    • Wow - NoAxe you amaze us!

      Realism? Not the usual MS=Best propaganda? Wow!
      nizuse
  • Has the Vista marketing position been filled?

    That should be a priority. The software is a spectacular commercial success, no major problems with security or other embarrassments, so it should be receiving the praise earned.

    Instead, as our author shows, some people complain as if they were Mac buyers having to justify the amount they spent by denigrating Windows.

    If questions about Vista keep occurring in analysts' conference calls, the fact there are no justified questions about Vista is going to get lost. Vista may be or continue to be the most profitable new product launch in history and the least problematic software launch, but the questions can make a false perception respectable.

    The person who has the job of telling the truth about Vista will have an amazing success to discuss, but an audience reluctant to accept the permanent absence of a story.

    He should be started soon.
    Anton Philidor
    • Spectacular successes...

      ...don't need a lot of marketing and certainly don't need a lot of public relations help. As for me, I'm still waiting for my friends, neighbors, and colleagues to start gushing to me about how wonderful Vista (aka Longhorn) is.
      John L. Ries
    • So, the market blaming Vista, and Microsoft's share drop

      Is purely a fault of Microsoft not paying someone to market Vista well enough?

      So, care to now explain why "7" seems to be coming soon, and why Microsoft are talking that up already, with a corresponding lack of "pimping" of Vista from them?
      zkiwi
  • RE: Another reason Microsoft should give up on Yahoo: Morale

    I don't think Microsoft Live has been mismanaged. Rather, I think it's been micro-managed by the top, and to ill effect: http://dataland.wordpress.com/2008/02/15/microsoft-live/
    jaredm
  • This is typical in any acquisition.

    These employees are concerned about [i]their[/i] jobs. That's why they don't want the merger to go through. Yes Microsoft is the acquiring company but I've seen all too many times when the acquiring companies staff has been reduced along with the acquired companies staff. Nothing new to see here...move along.
    ye
    • MS will only destroy Yahoo

      they won't add any real value to it. For the sake of a bit of short term money raking for Penelope and Rupert the Internet should be dragged back a few years and competition reduced?
      fr0thy2
      • Irrelevent to my point (nt)

        .
        ye