Microsoft to Make Room for 400 Yahoos

Microsoft will hire at least 400 Yahoo staffers under the terms of the companies’ search and advertising agreement last month, according to a regulatory filing made public yesterday.

The 8-K filing, submitted to the U.S. Securities and Exchange Commission, contained several other previously unknown details about the landmark deal.

Yahoo is entitled to three $50 million annual payments from Microsoft, in addition to the 88 percent revenue share it will earn for search ads served on Yahoo and its partner sites. Those payments are intended to cover transition and implementation costs associated with the agreement.

Microsoft may terminate Yahoo’s exclusive control of premium search advertising sales after five years. If it does, Yahoo’s revenue share will increase to 93 percent for the remainder of the 10-year deal. At that point Yahoo could veto Microsoft’s termination in which case it would retain its hold on premium sales, but its revenue share will remain 83 percent. If Microsoft does not exercise the option, the revenue share will be 90 percent for the remainder of the term.

In addition to the 400 Yahoo search staff to be transferred to Microsoft’s employee rolls, the companies agreed Microsoft would pay for a retention plan designed to hang onto those employees. It will also pay incentives to retain approximately 150 additional staffers who will assist with the transition, according to the filing.

Many have interpreted the additional details as favorable to Yahoo, and have wondered why they weren’t published when the deal was first announced. Yahoo’s share price opened sharply higher this morning.

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