Microsoft earnings off target; unveils job cuts

Microsoft announced disappointing second-quarter results that missed Wall Street estimates and refrained from providing guidance for the coming quarter, citing uncertain economic environment. The software major also said that it will cut up to 5,000 jobs, or 5.5% of its global workforce, over the next one and a half years. Microsoft will slash 1,400 jobs immediately, with the rest of the cuts coming by June 2010. The company also said it will freeze employees' pay in 2009. Microsoft said it will save about US$1.5bn in operating expenses and US$700mn in 2009 capital expenditure from the twin measures. The job reduction is the first such announcement in Microsoft's 34-year history.

Microsoft - first ever layoff ..

The rumor that Microsoft was set to lay off people on January 15th, 2009 is no longer a rumor but a fact. Staff at Microsoft have been informed that the company is readying major layoffs to its worldwide operations and it's not a small cut, either.

Currently Microsoft employs about 90,000 people across the world and from what we're hearing, some 15,000 of those are expected to be giving marching orders come January 15th. That's almost 17 percent of Microsoft's total work force, not exactly a small number.

So far, we haven't managed to confirm what departments or regions will be hit the worst, but we're hearing that MSN might be carrying the brunt of the layoffs. We're also hearing rumors about the possibility of somewhat larger staff cuts at Microsoft EMEA (Europe, Middle East and Africa).

It's unlikely that Microsoft will be laying off a lot of people in departments and regions that are doing well, and considering the recent upturn in console sales, we have a feeling that at least most of the people working in the Xbox 360 departments will be pretty safe.

The layoffs will take place a week before Microsoft's Q2 earnings report, which takes place on the 22nd of January 2009, and it doesn't seem like the date set for the layoffs is coincidental. We'll bring you more on this subject as it unfolds.

via Fudzilla

Massive NEWS >> Microsoft to BUY Yahoo!

anuary 31, 2008

Board of Directors
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089
Attention: Roy Bostock, Chairman
Attention: Jerry Yang, Chief Executive Officer

Dear Members of the Board:

I am writing on behalf of the Board of Directors of Microsoft to make a proposal for a business combination of Microsoft and Yahoo!. Under our proposal, Microsoft would acquire all of the outstanding shares of Yahoo! common stock for per share consideration of $31 based on Microsoft’s closing share price on January 31, 2008, payable in the form of $31 in cash or 0.9509 of a share of Microsoft common stock. Microsoft would provide each Yahoo! shareholder with the ability to choose whether to receive the consideration in cash or Microsoft common stock, subject to pro-ration so that in the aggregate one-half of the Yahoo! common shares will be exchanged for shares of Microsoft common stock and one-half of the Yahoo! common shares will be converted into the right to receive cash. Our proposal is not subject to any financing condition.

Our proposal represents a 62% premium above the closing price of Yahoo! common stock of $19.18 on January 31, 2008. The implied premium for the operating assets of the company clearly is considerably greater when adjusted for the minority, non-controlled assets and cash. By whatever financial measure you use - EBITDA, free cash flow, operating cash flow, net income, or analyst target prices - this proposal represents a compelling value realization event for your shareholders.

We believe that Microsoft common stock represents a very attractive investment opportunity for Yahoo!’s shareholders. Microsoft has generated revenue growth of 15%, earnings growth of 26%, and a return on equity of 35% on average for the last three years. Microsoft’s share price has generated shareholder returns of 8% during the last one year period and 28% during the last three year period, significantly outperforming the S&P 500. It is our view that Microsoft has significant potential upside given the continued solid growth in our core businesses, the recent launch of Windows Vista, and other strategic initiatives.

Microsoft’s consistent belief has been that the combination of Microsoft and Yahoo! clearly represents the best way to deliver maximum value to our respective shareholders, as well as create a more efficient and competitive company that would provide greater value and service to our customers. In late 2006 and early 2007, we jointly explored a broad range of ways in which our two companies might work together. These discussions were based on a vision that the online businesses of Microsoft and Yahoo! should be aligned in some way to create a more effective competitor in the online marketplace. We discussed a number of alternatives ranging from commercial partnerships to a merger proposal, which you rejected. While a commercial partnership may have made sense at one time, Microsoft believes that the only alternative now is the combination of Microsoft and Yahoo! that we are proposing.

In February 2007, I received a letter from your Chairman indicating the view of the Yahoo! Board that “now is not the right time from the perspective of our shareholders to enter into discussions regarding an acquisition transaction.” According to that letter, the principal reason for this view was the Yahoo! Board’s confidence in the “potential upside” if management successfully executed on a reformulated strategy based on certain operational initiatives, such as Project Panama, and a significant organizational realignment. A year has gone by, and the competitive situation has not improved.

While online advertising growth continues, there are significant benefits of scale in advertising platform economics, in capital costs for search index build-out, and in research and development, making this a time of industry consolidation and convergence. Today, the market is increasingly dominated by one player who is consolidating its dominance through acquisition. Together, Microsoft and Yahoo! can offer a credible alternative for consumers, advertisers, and publishers. Synergies of this combination fall into four areas:

Scale economics: This combination enables synergies related to scale economics of the advertising platform where today there is only one competitor at scale. This includes synergies across both search and non-search related advertising that will strengthen the value proposition to both advertisers and publishers. Additionally, the combination allows us to consolidate capital spending.

Expanded R&D capacity: The combined talent of our engineering resources can be focused on R&D priorities such as a single search index and single advertising platform. Together we can unleash new levels of innovation, delivering enhanced user experiences, breakthroughs in search, and new advertising platform capabilities. Many of these breakthroughs are a function of an engineering scale that today neither of our companies has on its own.

Operational efficiencies: Eliminating redundant infrastructure and duplicative operating costs will improve the financial performance of the combined entity.

Emerging user experiences: Our combined ability to focus engineering resources that drive innovation in emerging scenarios such as video, mobile services, online commerce, social media, and social platforms is greatly enhanced.

We would value the opportunity to further discuss with you how to optimize the integration of our respective businesses to create a leading global technology company with exceptional display and search advertising capabilities. You should also be aware that we intend to offer significant retention packages to your engineers, key leaders and employees across all disciplines.

We have dedicated considerable time and resources to an analysis of a potential transaction and are confident that the combination will receive all necessary regulatory approvals. We look forward to discussing this with you, and both our internal legal team and outside counsel are available to meet with your counsel at their earliest convenience.

Our proposal is subject to the negotiation of a definitive merger agreement and our having the opportunity to conduct certain limited and confirmatory due diligence. In addition, because a portion of the aggregate merger consideration would consist of Microsoft common stock, we would provide Yahoo! the opportunity to conduct appropriate limited due diligence with respect to Microsoft. We are prepared to deliver a draft merger agreement to you and begin discussions immediately.

In light of the significance of this proposal to your shareholders and ours, as well as the potential for selective disclosures, our intention is to publicly release the text of this letter tomorrow morning.

Due to the importance of these discussions and the value represented by our proposal, we expect the Yahoo! Board to engage in a full review of our proposal. My leadership team and I would be happy to make ourselves available to meet with you and your Board at your earliest convenience. Depending on the nature of your response, Microsoft reserves the right to pursue all necessary steps to ensure that Yahoo!’s shareholders are provided with the opportunity to realize the value inherent in our proposal.

We believe this proposal represents a unique opportunity to create significant value for Yahoo!’s shareholders and employees, and the combined company will be better positioned to provide an enhanced value proposition to users and advertisers. We hope that you and your Board share our enthusiasm, and we look forward to a prompt and favorable reply.

Sincerely yours,

/s/ Steven A. Ballmer

Steven A. Ballmer

Chief Executive Officer

Microsoft Corporation

Infosys, Microsoft planning on Sage group

India's tech poster boy Infosys may face off global software behemoth Microsoft in a rumoured e4.6-billion bid for UK-headquartered IT major Sage Group with annualised billings of around e1.4 billion.

While blazing stock market rumours placed Infosys along with Microsoft, Intuit and Goldman Sachs as possible suitors for the accounting software company Sage, a section of industry experts said India’s best-known tech brand could be gunning for a bigger French player Atos Origin in the consulting and IT services space, with revenues touching euro 5.5 billion and 50,000 employees on board.

Infosys has been hunting for global acquisitions, especially in the European market, with its name being linked to the likes of Capgemini and LogicaCMG in the recent past. However, Capgemini has vehemently denied any talks while Infosys has maintained a standard comment — “We do not comment on market rumours” — on all the recent speculations.

Infosys chairman Nandan Nilekani, who recently moved out of operational charge, is seen leading the M&A activity, which is increasingly coming on the company’s radar in recent months.

As the bid talk galvanised, Sage remained volatile on London Stock Exchange surging over 2.77% to 250 pence before declining 1.25% at the time of going to the press. Sage was yet to react to the developments, and it is not yet clear whether the company would entertain any bids at all.

Sectoral experts said Infy’s bid for Sage was highly unlikely as the Indian company usually chases large clients with service offerings while Sage provides software product to the over five million SMBs globally.

Sage, which has around 13,000 people across the world, gets major part of its revenues from the North American market and is expected to issue a trading statement by the month-end showing strong future business growth.

In context, some analysts are betting on Infy chasing a bigger target like Atos Origin, paving way for a transformational deal, especially with consulting expertise that the latter has. Industry sources have been constantly saying that Infosys is actively scouting for acquisitions, especially in Western Europe to get a significant presence in the region. British media reports quoting BG Srinivas, head of Infosys operations in EMEA (Europe, Middle East and Africa): “We are looking for opportunities that will transform our business in Europe.... That could be in the UK, France or Germany.”

Despite the conservative outlook by Infosys towards acquisitions, analysts felt that software services giant will have to go in for buyout to keep up with its growth momentum and get into newer market. The recent takeover of the Philips BPO business was also an inkling of what was in store, as for the first time it took over a contingent of around 700 people.