Microsoft bid is better than stagnating, say Yahoo insiders

Microsoft bid may be catalyst for needed change at Yahoo, but Yang and company are expected to fight it, insiders say.

Sometimes change--any change--is good.

For a company hobbled by cultural and management problems, a $44.6 billion hostile takeover bid from Microsoft may be just the kick in the pants Yahoo needs to rejoin the fight against Google--and potentially Microsoft.

That's at least some of the sentiment inside Yahoo in the days following Microsoft's unsolicited buyout offer. Many Yahoo employees don't want to join Microsoft's workforce, but they see the bid as a catalyst for change, one way or another. As a result, the mood is surprisingly buoyant and business as usual among some Yahoo executives, according to one source familiar with the company.

"Most people want to win and something bold needs to happen, so this could be the catalyst to make that happen sooner one way or another," said a source inside the company. "Either Yahoo steps up and does something bold, or Microsoft takes over. If Jerry's smart he could use this as a rallying cry."

Still, you could say the mood at Yahoo is mixed. For some who fear that they will be laid off in the coming 7 percent cutbacks (or about 1,000 employees), Microsoft's proposed takeover bid just gums up the works even more. Engineers and product managers who would like to see the company rally on new products say the thought of a drawn-out acquisition that raises more cultural and management questions than answers them is distracting.

"With the pending layoff...plus this acquisition stuff, it's hard to focus on anything," said one Yahoo employee who asked to remain anonymous.

The concern, specifically for some employees, is that if Yahoo management can't pose enough of a challenge to Google--and neither can Microsoft management--how can a combined entity with the same management mix best the search leader? "There's a need for a powerful rival to Google, but which management is finally going to do the job?" asked one Yahoo employee.

Some within Yahoo are just frustrated that the company has found itself in the situation.

"Everybody I work with is pretty disillusioned with Yahoo," said a Yahoo engineer, who asked not to be identified.

He predicted Yahoo will do anything it can to fight a Microsoft takeover, even if it means turning to Google for help. "I would assume having Microsoft take over would be Jerry's worst nightmare."

(CNET News.com's Elinor Mills contributed to this report.)

 

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