Impact of the possible Microsoft/Yahoo deal on local RE

[EastSider]

With the ongoing news about a possible merger of Microsoft & Yahoo -- what do you think will be its impact on the local RE market?

[sniglet]

I doubt that the merger itself will have much of an impact to our local economy. Of far greater concern is whether a global recession would result in signficant declines in both corporate and consumer IT spending. If this were to happen (i.e. that global tech spending were to decline substantially), then we should brace ourselves for serious fallout in the Puget Sound. There are a number of significant tech employers who would stop hiring (and even start lay-offs) if tech-spending were to take a major hit.

[barista]

If it results into any lay offs then it sure will affect significantly to the puget sound market. It will be an interesting event to watch for.

[rose-colored-coolaid]

A merger would almost certainly reduce jobs in Seattle (as well as CA). MSN and Yahoo essentially do the same thing. Mergers are always a justification to reduce employment, when you're talking about internet portals I don't see how they don't slash jobs. Additionally, Microsoft will probably see this as an opportunity to poach California employees and diversify their location. In my mind it's not very different from when Boeing buys a MD and within a few years there are less jobs in the Puget Sound and in LA.

The one caveat on all this is if Microsoft has some 'Manhattan Project' planned for the excess workforce. Something like, "now we've got an extra 1000 employees, let's throw them at the new version of Windows which will cover up for the fact that Vista is a mild failure."

[Notabull]

"A merger would almost certainly reduce jobs in Seattle (as well as CA). MSN and Yahoo essentially do the same thing."

I think that this is true if the combined entity needs to save money, or increase profit and there is significant overlap. If MS instead wants to use some of its free cash, gain some of the Yahoo talent and revenue in Sunnyvale, and *then* reallocate its own staff back to its core businesses (OS/applications) then it doesn't necessarily mean a loss of jobs in WA. If you look at how many jobs MS are currently trying to fill, and think about how much they suck at delivering OS versions on time, I bet they're dying to reallocate internal staff back to the next version of Windows.

Microsoft is not strong in Internet, search or ads. I would argue that MS and Yahoo don't do the same thing at all, in terms of their core business, and that MS will be glad to get out of doing the stuff that Yahoo does. They were never very good at it in the first place.

[rose-colored-coolaid]

[Notabull]

"3) Microsoft keeps an internet team, moves some employees to other work, and lets some employees go.

My money is on #3, and I think it's foolish to assume that none of the lost jobs will be in the Puget Sound."

I do agree with this. I just think that the majority of the laid off employees (or contractors as most of them seem to be these days) will just move to another position at Microsoft. Right now they seem to have tons of positions open and are struggling to hire good people. If they can hire them from within, then overall the number of "positions" declines but the number of employees can remain fairly steady.

In my experience, large companies with tons of cash in the bank tend to look upon freed up employees as an opportunity to do something new or boost existing struggling areas, rather than save money and lay people off. Of course, this doesn't describe too many companies these days, but it should be noted that the number of companies with cash in the bank vs debt is MUCH higher than back in the dot bomb days. The company I work for has no debt and $370,000 of cash in the bank, per employee. We're not a small company either. When things go badly (and we're making less and less money per quarter these days) we put money into new areas. Given the size of our pockets, it will take a lot of losses and time before we lay off useful and smart people.

Just did a search on this on the Internet.
http://www.latimes.com/business/la-fi-y ... 2012.story

---snip---
"Software giant Microsoft Corp. suggested Friday that it had no plans for major layoffs if it succeeded in buying popular website operator Yahoo Inc., saying there were plenty of employee opportunities throughout the company.

Kevin Johnson, president of Microsoft's platforms and services division, said in an e-mail to employees in his unit that the company would dedicate "significant rewards and compensation" to retain Yahoo and Microsoft employees.

"While some overlap is expected in any combination of this size, we should remember that Microsoft . . . has hired over 20,000 people since 2005, and we would look to place talented employees throughout the company as a whole," Johnson wrote in the e-mail."
---snip---

While I never believe crap from executives, it does tally with my general feeling that if you're busy trying to hire talented people in area A, then you're not likely to let talented people leave from area B.

I think the layoffs will be very minor.

[Notabull]

"Besides, future Windows releases may very well be smaller releases. I hear that the next OS is going to cut some backwards compatibility and move towards a sandbox system (where each app runs in it's own OS controlled sandbox, which reduces security risks). It's likely that some of these moves will create a more module OS, which could actually make it easier to develop than Vista was."

I'm not so sure the next release will be as major as this. I think it's going to be Vista, with a slightly spruced up UI, and some new features that got cut from Vista. Plus, I think they'll drop some of their numerous and excessive sub-versions of the OS. Hopefully, at least.

[faster]

Microsoft will use it as an excuse to trim the dead wood. So all the old timers who sit around doing not much but collecting a big paycheck, and all the newbies who aren't quite working out get told they have x months to find a job somewhere else in the company. Generally these aren't the type of employees other groups are fighting to get at, and when x months are up these employees are no longer employees. Restructuring, for whatever reason, is a great excuse to "fire" the people you'd like to fire, without actually having to fire them.

As for the good employees, sure, they'll have no problems finding a position somewhere else in the company. If you're good at what you do, and what you do is in demand you'll always have a job.

The middle of the road employees...are stuck in the middle...maybe they'll find a position, maybe not. Just depends if they have the skills another team is looking for. Not everybody at Microsoft is a genius at writing code, people tend to forget that.

[aldreth]

Impact? None.

Yahoo is going with AOL.

[Notabull]

[rose-colored-coolaid]