A hidden Yahoo acquisition cost for Microsoft

A New York Times report sheds a little light on how expensive bonuses can be to retain employees at an acquired company.

Microsoft's attempt to acquire Yahoo is expensive, but there could be a significant other expense for the software maker: retention bonuses.

Microsoft Chief Executive Steve Ballmer publicly discussed these payments to keep Yahoo employees from leaving, saying that "we intend to offer significant retention packages to your engineers, key leaders, and employees across all disciplines." But The New York Times on Wednesday dug out a number that puts the retention bonus factor into perspective.

Specifically, the paper said Microsoft's acquisition of Tellme Networks, a deal valued at about $800 million, was supplemented by a further $100 million to retain employees.

There are major cultural and technology differences between Yahoo and Microsoft that would complicate integration and make retention bonuses more necessary. But Tellme Networks Chief Executive Mike McCue said Ballmer had become sensitive to at least one technology aspect of integration.

When McCue asked whether Tellme would have to move its software from Sun Microsystems' Solaris version of Unix to Windows, Ballmer replied, "No, no, we've learned our lesson," McCue recounted to the Times. That could be a reference to the long and arduous transition of Hotmail from FreeBSD Unix to Windows after Microsoft acquired the e-mail service.

That could be music to Yahoo ears, since the company uses open-source software extensively rather than Microsoft's products.

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About the author

Stephen Shankland has been a reporter at CNET since 1998 and covers browsers, Web development, digital photography and new technology. In the past he has been CNET's beat reporter for Google, Yahoo, Linux, open-source software, servers and supercomputers. He has a soft spot in his heart for standards groups and I/O interfaces.

 

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