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Microsoft Corp. has issued the following statement:

In light of developments since the withdrawal of the Microsoft proposal to acquire Yahoo! Inc., Microsoft announced that it is continuing to explore and pursue its alternatives to improve and expand its online services and advertising business.  Microsoft is considering and has raised with Yahoo! an alternative that would involve a transaction with Yahoo! but not an acquisition of all of Yahoo!  Microsoft is not proposing to make a new bid to acquire all of Yahoo! at this time, but reserves the right to reconsider that alternative depending on future developments and discussions that may take place with Yahoo! or discussions with shareholders of Yahoo! or Microsoft or with other third parties. There of course can be no assurance that any transaction will result from these discussions.

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Carl Icahn today announced that the following letter was delivered today to Yahoo! with the attached biographies of his ten nominees for the Yahoo! board.

Carl C. IcahnSECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT AND OTHER DOCUMENTS RELATED TO THE SOLICITATION OF PROXIES BY Carl C. Icahn AND HIS AFFILIATES FROM THE STOCKHOLDERS OF YAHOO! INC. FOR USE AT ITS ANNUAL MEETING, WHEN AND IF THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION, INCLUDING INFORMATION RELATING TO THE PARTICIPANTS IN ANY SUCH PROXY SOLICITATION. WHEN AND IF COMPLETED, A DEFINITIVE PROXY STATEMENT AND A FORM OF PROXY WILL BE MAILED TO STOCKHOLDERS OF YAHOO! INC. AND WILL ALSO BE AVAILABLE AT NO CHARGE AT THE SECURITIES AND EXCHANGE COMMISSION’S WEBSITE AT HTTP://WWW.SEC.GOV. INFORMATION RELATING TO THE POTENTIAL PARTICIPANTS IN A POTENTIAL PROXY SOLICITATION IS CONTAINED IN EXHIBIT 1 TO THE SCHEDULE 14A BEING FILED TODAY WITH THE SECURITIES AND EXCHANGE COMMISSION.

Carl C. Icahn
ICAHN CAPITAL LP
767 Fifth Avenue, 47th Floor
New York, NY 10153

May 15, 2008
Roy Bostock
Chairman
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Mr. Bostock:

It is clear to me that the board of directors of Yahoo has acted irrationally and lost the faith of shareholders and Microsoft. It is quite obvious that Microsoft’s bid of $33 per share is a superior alternative to Yahoo’s prospects on a standalone basis. I am perplexed by the board’s actions. It is irresponsible to hide behind management’s more than overly optimistic financial forecasts. It is unconscionable that you have not allowed your shareholders to choose to accept an offer that represented a 72% premium over Yahoo’s closing price of $19.18 on the day before the initial Microsoft offer. I and many of your shareholders strongly believe that a combination between Yahoo and Microsoft would form a dynamic company and more importantly would be a force strong enough to compete with Google on the Internet.

During the past week, a number of shareholders have asked me to lead a proxy fight to attempt to remove the current board and to establish a new board which would attempt to negotiate a successful merger with Microsoft, something that in my opinion the current board has completely botched. I believe that a combination between Microsoft and Yahoo is by far the most sensible path for both companies. I have therefore taken the following actions: (1) during the last 10 days, I have purchased approximately 59 million shares and share-equivalents of Yahoo; (2) I have formed a 10-person slate which will stand for election against the current board; and (3) I have sought antitrust clearance from the Federal Trade Commission to acquire up to approximately $2.5 billion worth of Yahoo stock. The biographies of the members of our slate are attached to this letter. A more formal notification is being delivered today to Yahoo under separate cover.

While it is my understanding that you do not intend to enter into any transaction that would impede a Microsoft-Yahoo merger, I am concerned that in several recent press releases you stated that you intend to pursue certain “strategic alternatives”. I therefore hope and trust that if there is any question that these “strategic alternatives” might in any way impede a future Microsoft merger you will at the very least allow shareholders to opine on them before embarking on such a transaction.

I sincerely hope you heed the wishes of your shareholders and move expeditiously to negotiate a merger with Microsoft, thereby making a proxy fight unnecessary.

Sincerely yours,
CARL C. ICAHN

SLATE BIOGRAPHIES

  • Lucian A. Bebchuk

Lucian A. BebchukLucian Bebchuk is the William J. Friedman and Alicia Townsend Friedman Professor of Law, Economics, and Finance and Director of the Program on Corporate Governance at Harvard Law School. Bebchuk is also a Research Associate of the National Bureau of Economic Research and Inaugural Fellow of the European Corporate Governance Network. Trained in both law and economics, Bebchuk holds an LL.M. and S.J.D. from Harvard Law School and an M.A. and Ph.D in Economics from the Harvard Economics Department. He joined the Harvard Law School faculty in 1986 as an assistant professor, becoming a full professor in 1988, and the Friedman Professor of Law, Economics and Finance in 1998. Bebchuk has written extensively on corporate governance, corporate control, and corporate transactions. He has published more than seventy research articles in academic journals in law, economics, and finance. Upon electing him to membership in 2000, the American Academy of Arts and Sciences cited him as “[o]ne of the nation’s leading scholars of law and economics,” who “has made major contribution to the study of corporate control, governance, and insolvency.” He is the 2007-2008 President of the American Law and Economics Association, and a former chair of the Business Association Section of the American Association of Law Teachers. Bebchuk’s recent writings include Pay without Performance: the Unfulfilled Promise of Executive Compensation (Harvard University Press, 2004, co-authored with Jesse Fried), “The Case for Increasing Shareholder Power” (Harvard Law Review, 2005), “The Costs of Entrenched Boards” (Journal of Financial Economics, 2005, co-authored with Alma Cohen), and “The Myth of the Shareholder Franchise” (Virginia Law Review, 2007). Bebchuk has been a frequent contributor to policy making and public discourse in the corporate governance area. He has appeared before the Senate Finance Committee, the House Committee of Financial Services, and the SEC. He has published many op-ed pieces, including in the Wall Street Journal, the New York Times, and the Financial Times. He was included in the list of “100 most influential people in finance” of Treasury & Risk Management and the list of “100 most influential players in corporate governance” of Directorship magazine.

  • Frank J. Biondi, Jr.

Frank J. Biondi, Jr.Since March 1999, Mr. Biondi has served as Senior Managing Director of WaterView Advisors LLC, an investment advisor organization. From April 1996 to November 1998, Mr. Biondi served as Chairman and Chief Executive Officer of Universal Studios, Inc. From July 1987 to January 1996, Mr. Biondi served as President and Chief Executive Officer of Viacom, Inc. Mr. Biondi is a director of Amgen Inc., Cablevision Systems Corp., Hasbro, Inc., The Bank of New York Mellon Corporation and Seagate Technology. Mr. Biondi is a graduate of Princeton University and earned a Masters of Business Administration from Harvard University.

  • John H. Chapple

John Chapple is President of Hawkeye Investments LLC, a privately-owned equity firm investing primarily in telecommunications and real estate ventures frequently working in conjunction with Rally Capital LLC. Prior to forming Hawkeye, John Chapple worked to organize Nextel Partners, a provider of digital wireless services in mid-size and smaller markets throughout the U.S. He became the President, Chief Executive Officer and Chairman of the Board of Nextel Partners and its subsidiaries in August of 1998. Nextel Partners went public in February 2000 and was traded on the NASDAQ Exchange. In June 2006, the company was purchased by Sprint Communications. From 1995 to 1997, Mr. Chapple was the President and Chief Operating Officer for Orca Bay Sports and Entertainment in Vancouver, B.C. During Mr. Chapple’s tenure, Orca Bay owned and operated Vancouver’s National Basketball Association and National Hockey League sports franchises in addition to the General Motors Place sports arena and retail interests. From 1988 to 1995, he served as Executive Vice President of Operations for McCaw Cellular Communications and subsequently AT&T Wireless Services following the merger of those companies. From 1978 to 1983, he served on the senior management team of Rogers Cablesystems before moving to American Cablesystems as Senior Vice President of Operations from 1983 to 1988. Mr. Chapple, a graduate of Syracuse University and Harvard University’s Advanced Management Program, has 26 years of experience in the cable television and wireless communications industries. Mr. Chapple is the past Chairman of Cellular One Group and CTIA-The Wireless Association, past Vice-Chairman of the Cellular Telecommunications Industry Association and has been on the Board of Governors of the NHL and NBA. Mr. Chapple serves on the Syracuse University Board of Trustees currently as Chairman and the Advisory Board for the Maxwell School of Syracuse University. He is also on the Board of Directors of Cbeyond, Inc., a publicly traded Atlanta-based integrated service telephony company; Seamobile Enterprises, a privately held company providing integrated wireless services at sea; Telesphere, a privately held VOIP (voice over internet protocol) company based in Phoenix, Arizona; and on the advisory boards of Diamond Castle Holdings, LLC, a private equity firm based in New York City and the Daniel J. Evans School of Public Affairs at University of Washington.

  • Mark Cuban

Since early 2000, Mr. Cuban has been the majority and controlling owner of the National Basketball Association franchise, the Dallas Mavericks. In 2001, Mr. Cuban co-founded HDNet, an all high-definition television network on DIRECTV that broadcasts high-definition sports, movies and other entertainment. Prior to his purchase of the Dallas Mavericks, Mr. Cuban co-founded Broadcast.com in 1995 and served as its Chairman of the Board until it was sold to Yahoo! in July of 1999. Before Broadcast.com, Mr. Cuban co-founded MicroSolutions, a national systems integrator, in 1983, which was later sold to CompuServe Corporation in 1990. Mr. Cuban is an active investor in cutting- edge technologies and various industries, including the entertainment industry.

  • Adam Dell

Since January 2000, Mr. Dell has served as the Managing General Partner of Impact Venture Partners, a venture capital firm focused on information technology investments. He also serves as Managing Director at Steelpoint Capital Partners, a private equity firm with offices in New York and California. From October 1998 to January 2000, Mr. Dell was a Senior Associate and subsequently a Partner with Crosspoint Venture Partners in Northern California. From July 1997 to August 1998, he was a Senior Associate with Enterprise Partners in Southern California. From January 1996 to June 1997 Mr. Dell was associated with the law firm of Winstead Sechrest & Minick, in Austin, Texas, where he practiced corporate law. Mr. Dell’s investments include: Buzzsaw (which was acquired by Autodesk), HotJobs (which was acquired by Yahoo!) and Connectify (which was acquired by Kana Software). Mr. Dell has been a director of XO Holdings, Inc., a telecommunications services provider, since February 2006, and of its predecessor from January 2003 to February 2006. In addition, Mr. Dell currently serves on the boards of directors of the Santa Fe Institute, MessageOne and OpenTable. He also teaches a course at the Columbia Business School on business, technology and innovation and is a contributing columnist to the technology publication, Business 2.0. Mr. Dell received a J.D. from University of Texas and a B.A. from Tulane University.

  • Carl C. Icahn

Mr. Icahn has served as chairman of the board and a director of Starfire Holding Corporation, a privately-held holding company, and chairman of the board and a director of various subsidiaries of Starfire, since 1984. Since August 2007, through his position as Chief Executive Officer of Icahn Capital LP, a wholly owned subsidiary of Icahn Enterprises L.P., and certain related entities, Mr. Icahn’s principal occupation is managing private investment funds, including Icahn Partners LP, Icahn Partners Master Fund LP, Icahn Partners Master Fund II L.P. and Icahn Partners Master Fund III L.P. Prior to August 2007, Mr. Icahn conducted this occupation through his entities CCI Onshore Corp. and CCI Offshore Corp since September 2004. Since November 1990, Mr. Icahn has been chairman of the board of Icahn Enterprises G.P. Inc., the general partner of Icahn Enterprises L.P. Icahn Enterprises L.P. is a diversified holding company engaged in a variety of businesses, including investment management, metals, real estate and home fashion. Mr. Icahn was chairman of the board and president of Icahn & Co., Inc., a registered broker- dealer and a member of the National Association of Securities Dealers, from 1968 to 2005. Mr. Icahn has served as chairman of the board and as a director of American Railcar Industries, Inc., a company that is primarily engaged in the business of manufacturing covered hopper and tank railcars, since 1994. From October 1998 through May 2004, Mr. Icahn was the president and a director of Stratosphere Corporation, the owner and operator of the Stratosphere Hotel and Casino in Las Vegas, which, until February 2008, was a subsidiary of Icahn Enterprises L.P. From September 2000 to February 2007, Mr. Icahn served as the chairman of the board of GB Holdings, Inc., which owned an interest in Atlantic Coast Holdings, Inc., the owner and operator of The Sands casino in Atlantic City until November 2006. Mr. Icahn has been chairman of the board and a director of XO Holdings, Inc., a telecommunications services provider, since February 2006, and of its predecessor from January 2003 to February 2006. Mr. Icahn has served as a Director of Cadus Corporation, a company engaged in the ownership and licensing of yeast-based drug discovery technologies since July 1993. In May 2005, Mr. Icahn became a director of Blockbuster Inc., a provider of in-home movie rental and game entertainment. In October 2005, Mr. Icahn became a director of WestPoint International, Inc., a manufacturer of bed and bath home fashion products. In September 2006, Mr. Icahn became a director of ImClone Systems Incorporated, a biopharmaceutical company, and since October 2006 has been the chairman of the board of ImClone. In August 2007, Mr. Icahn became a director of WCI Communities, Inc., a homebuilding company, and since September 2007 has been the chairman of the board of WCI. In December 2007, Mr. Icahn became a director of Federal-Mogul Corporation, a supplier of automotive products, and since January 2008 has been the chairman of the board of Federal-Mogul. In April 2008, Mr. Icahn became a director of Motricity, Inc., a privately-held company that provides mobile content services and solutions. Mr. Icahn received his B.A. from Princeton University.

  • Keith A. Meister

Since March 2006, Keith Meister has served as Principal Executive Officer and Vice Chairman of the Board of Icahn Enterprises G.P. Inc., the general partner of Icahn Enterprises L.P., a diversified holding company engaged in a variety of businesses, including investment management, metals, real estate and home fashion. Since November 2004, Mr. Meister has been a Managing Director of Icahn Capital LP, the entity through which Carl C. Icahn manages third party private investment funds. Since June 2002, Mr. Meister has served as senior investment analyst of High River Limited Partnership, an entity primarily engaged in the business of holding and investing in securities. Mr. Meister also serves on the boards of directors of the following companies: XO Holdings, Inc., a telecommunications company; WCI Communities, Inc., a homebuilding company; Federal-Mogul Corporation, a supplier of automotive products; and Motorola, Inc., a mobile communications company. With respect to each company mentioned above, Carl C. Icahn, directly or indirectly, either (i) controls such company or (ii) has an interest in such company through the ownership of securities. Mr. Meister received an A.B. in government, cum laude, from Harvard College in 1995.

  • Edward H. Meyer

Mr. Meyer serves as Chairman, Chief Executive Officer and Chief Investment Officer of Ocean Road Advisors, Inc., an investment management company. From 1970 to 2006, he served as Chairman, Chief Executive Officer and President of Grey Global Group, Inc., a multi-billion dollar global advertising and marketing agency. Mr. Meyer serves as a Director of Harman International Industries, Inc., Ethan Allen Interiors, Inc., National CineMedia, Inc. and NRDC Acquisition Corp. Mr. Meyer holds a B.A. in Economics from Cornell University.

  • Brian S. Posner

Brian S. Posner is a private investor. From 2005 through March 2008, he served as Chief Executive Officer and co-Chief Investment Officer of ClearBridge Advisors LLC (and its predecessor company, CAM North America), an asset management company based in New York with approximately $90 billion in assets and a wholly owned subsidiary of Legg Mason Inc. Prior to ClearBridge Advisors, he was a co-Founder and the Managing Partner of Hygrove Partners LLC, a hedge fund company that was formed in 2000. Prior to ClearBridge Advisors and Hygrove Partners, he served as a Portfolio Manager and an Analyst, first at Fidelity Investments from 1987 to 1996 and then at Warburg Pincus Asset Management/Credit Suisse Asset Management from 1997 to 1999. At Warburg Pincus Asset Management/Credit Suisse Asset Management he was a Managing Director and served as the Senior Investment Manager of the Value Equity Group, co-Portfolio Manager of the Warburg Pincus Growth & Income Fund, and Portfolio Manager of the Warburg Pincus Institutional Value Fund and the Warburg Pincus Trust, Growth and Income Fund. Prior to the acquisition of Warburg Pincus Asset Management (“WPAM”) by Credit Suisse Asset Management in July 1999, he was co-Chief Investment Officer, Director of Research, Chairman of the Global Asset Allocation Committee, and a member of the Executive Operating Committee at WPAM. At Fidelity Investments, he was the Portfolio Manager of the Fidelity Equity Income II Fund from 1992 to 1996 and the Fidelity Value Fund from 1990 to 1992. He also managed the Select Life Insurance, Select Property Casualty Insurance and Select Energy Portfolios. From 1987 to 1990, he was an Oil, Insurance, and Financial Services Analyst. From August 2000 to April 2003 he served on the Board of Directors for Sotheby’s Holdings, Inc. He currently a member of the Board of Trustees at Northwestern University and the Board of Visitors for the Weinberg College of Arts and Sciences at Northwestern University. Mr. Posner received his undergraduate degree in history from Northwestern University in 1983 and his M.B.A. in finance from the University of Chicago Graduate School of Business in 1987.

  • Robert K. Shaye

Robert Shaye is Co-Chairman and Co-CEO of New Line Cinema. As the Founder of New Line Cinema and a filmmaker himself, Robert Shaye has spent more than 40 years developing and distributing films that reflect a wide array of cultural movements, creating new paradigms for the motion picture business, and most importantly, entertaining millions of moviegoers. Since he founded New Line in 1967, Shaye has guided the company’s growth from a privately-held art film distributor to one of the entertainment industry’s leading independent studios and a veritable box office force. He has been involved in such films as The Lord of the Rings trilogy, Rush Hour, Austin Powers and Seven. A University of Michigan graduate with a degree in business administration and a J.D. degree from Columbia University Law School, Shaye is also a Fulbright Scholar, member of the New York State Bar, and serves on the Board of Trustees of the Motion Picture Pioneers, and the American Film Institute.

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Businesses today face a greater than ever need to differentiate themselves, often on a global scale. So how can they harness the acceleration of technology innovation instead of focusing solely on productivity tools for their employee’s desktops? One of the most common approaches is to seek out tailored business solutions capable of addressing complex business challenges. Today, Microsoft is focusing on those customer needs by addressing the way it serves its largest customers and delivers the value they need and expect.

Austen Mulinder, Microsoft Worldwide Enterprise Sales Vice President.As former head of Fujitsu Transaction Solutions, Austen Mulinder is bringing CEO leadership experience to his role as Microsoft’s vice president of Worldwide Enterprise Sales. His goal: Increase the velocity of the transition from the traditional product sales approach to one delivering increased business value built on deep customer relationships.

The foundation of this strategy includes three sales programs designed to counsel and support Microsoft’s largest customers as they solve real-world business challenges through IT. Microsoft’s PP recently met with Mulinder to learn how the Worldwide Enterprise Sales team is building its programs and talent to enable new opportunities for customers, partners and Microsoft.

  • You have the unique distinction of having been a CEO, as well as a customer and partner of Microsoft. How are those experiences influencing your strategy?

From my previous experience outside the company, I’ve been able to observe the journey Microsoft has taken over the past several years. Microsoft has gone from being primarily a desktop company to being a serious player in the enterprise. I’ve seen the company move away from a product focus and become more solution centric. I’ve watched the good advancements and the stumbles along the way. Microsoft has come a long way, and we now have the opportunity to provide deep strategic counsel to the world’s biggest global companies.

We aspire to be the industry benchmark for sales excellence and to attain “trusted advisor” status with all of our customers, but we recognize this is a journey. We have some of the smartest sales people I’ve ever come across, and a lot of strong tools supporting them. Now our focus is increasingly around building relationships that encourage deeper customer dialogues and greater transparency and sharing of information. This enables us to partner with our customers to jointly explore how to leverage technology for differentiated business value.

Our best (customer) account leaders, and we are fortunate to have many role models, have achieved trusted advisor status with their customers. We’re working hard to achieve that status with all of our customers.

  • Who sets the sales priorities, and how do those priorities translate to the sales resources you deploy?

A huge element of our effectiveness is being close enough to our major customers at the right levels to really understand their priorities and respond effectively. If we’re getting it right, customers will set the priorities.

Having said that, we have the Sales, Marketing and Services Group (SMSG) led by Kevin Turner, and he is ultimately responsible for driving the organization to be effective for customers, while at the same time delivering business results for our shareholders. In the enterprise space, part of Kevin’s team is Simon Witts, who runs the Worldwide Enterprise and Partner Group. We also have two verticals, Public Sector led by Gerri Elliott and the Communications Sector led by Martha Bejar. They all have a tremendous influence on our sales priorities.

To carry out the broad strategies set by the leadership team, we want as many of our sales assets to be as close to the customer as possible, and so the vast majority of our customer-facing people report to the field, not to headquarters. We also have some major sales groups that make sense to lead from Redmond on behalf of Microsoft globally-the Incubation, Category and Specialist Sales team, the Global and Multinational Account Sales team, and the Sales Escalation team, with the vast majority of their team members based in the field.

  • Let’s talk about global accounts and multi-national companies. How does Microsoft engage with these customers?

The Global and Multinational Accounts program is currently focused on 50 of the largest corporations in the world, and we plan to double that over the next couple of years. The 50 global accounts are headquartered in 12 countries, and they have subsidiaries in another 90. We manage them globally, and each has a dedicated global business manager. The 50 accounts actually include support for some 850 companies, including downstream subsidiaries.

We give these accounts a heightened level of support because we see them as the ultimate proving ground for solutions that deliver real business value on a global scale. Within these accounts we are working to build a stronger strategic business relationship. We also increase their access to our product teams and senior executives at Microsoft.

Since I joined Microsoft in June of last year, I have talked extensively with many of the leaders of these global customers. What they want from Microsoft is to partner successfully to deliver solutions that drive real business value, whether that’s helping them innovate to differentiate themselves in the market, or reducing the total cost of ownership for IT

  • How do you incorporate newly acquired technologies, or those that haven’t reached the critical mass of flagship Microsoft solutions?

That is the job of our Incubation, Category and Specialist sales teams. The incubation program exists because our business groups are making huge investments in both new and acquired products. In the early lifecycle of these products, we typically don’t have enough resources for the field to deploy them on day one.

Incubation is a dedicated set of sales resources that we manage centrally in partnership with the field. Their focus is to develop the sales strategy and drive the adoption of these products so that we can achieve real critical mass and develop our expertise in servicing these customers.

When we’ve grown an incubation product to a large enough volume and level of capability, it moves under the Category sales team for strategic and operational leadership. We then move those resources directly into the field, where they are managed locally. We continue to work closely with the business groups and the field to take those products into the mainstream.

A great example of this process would be our acquisition of Softricity and their SoftGrid product – which we now call MDOP, the Microsoft Desktop Optimization Pack. Before the acquisition, Softricity, in several years of existence, had sold about 250,000 seats of Softgrid. Within 13 months using the Microsoft incubation sales capability model we sold more than five million seats.

  • How are you working with customers to sell, integrate and deploy specific solutions or products?

Historically the sales approach has been about selling and licensing products to customers, and enabling them to work out the deployment via the partner ecosystem. Now we are aligning our sales priorities with solutions, and bringing real expertise to bear against that goal. We have Specialist Team Units in the Incubation, Category and Specialist Sales team, who are sales resources with deep technical knowledge. We also have a Sales Escalation team, which is a group of highly technical consultants who can dive deeply into specific customer scenarios. We also partner closely with Microsoft’s product groups and business units to drive solutions that create real business value.

Ford Sync is an example where that broad partnership paid off for the customer. The account team who orchestrated the dialogue, together with the business groups, partnered with Ford to look at how they could differentiate themselves in the market for cars. Ford Sync took advantage of Microsoft’s mobile technology and voice recognition technology to create a unique offering. Today cars that are Sync-enabled far outsell those without that capability. So that’s a tremendous example of a solution we built with a customer, to help them serve their customers’ needs, and that delivered true business value.

  • How does your team address competing technologies?

To be effective advisors, considering the breadth of products that Microsoft sells and the number of markets we’re in, we need people with deep expertise in myriad technologies. This is where the Sales Escalation team comes in.

The Sales Escalation team contains many of the strongest technical resources in the company. Typically they’ve been hired from outside as experts in technologies that we interoperate with and compete with.

We manage over 3,000 escalations for our field each year, supporting them in competitive situations. Our subject matter experts help customers make the right buying decision based on factual comparisons of technical capability, total cost, and risk. These experts play a strong role in helping customers understand the full value of existing and new solutions. As part of these field engagements we also gather important customer feedback which we use to report back to Business Groups and product engineering teams to ensure that our products and partners constantly improve and become more compelling in the market.

This group is also highly sought after in our Executive Briefing Centers (EBCs), which are facilities we manage around the world to host enterprise customer meetings. Executive Briefings help Microsoft to go more deeply into a customer’s business needs and examine how technology can solve the challenges they face.

  • How does the enterprise sales group work with industry partners to enhance the overall value delivered to customers?

One of Microsoft’s biggest strengths in the marketplace over the past 25 years has been its broad and vibrant partner ecosystem. We have one of the largest partner channels in the industry, with thousands of partners worldwide deploying millions of IT, marketing, and sales professionals that carry Microsoft’s products to market.

The only way we can realize the full potential of the R&D we spend across industries is to ensure we have a healthy partner ecosystem that understands our product set and is skilled in deploying it. This has always been a cornerstone of our business.

Our account teams orchestrate the combination of service delivery by Microsoft and partners from the ecosystem. Many times the partner will take the lead, and we’ll support that. It’s key to understand that we drive a high percentage of our sales through and with our partner community, and that is not going to change.

As we move forward to evolve the software plus services model, Microsoft is defining new opportunities for the partner community to deliver value to customers. There will still be opportunities to resell, refer, add value through professional services, package with customized capabilities, and realize business growth through annuities and subscriptions, but there will also be abundant new opportunities for innovative, value-added services and customization as these hosted products roll out.

  • How does Redmond’s involvement in enterprise sales impact the enterprise customer experience?

In an ideal world, the field has major competency in all of our products and solutions, and doesn’t require support from Redmond. But in the real world , we’re forever evolving the overall value proposition and the product elements that make up that value proposition. Having key technical resources and key leadership from Redmond engaged in important customer opportunities brings benefits all around. The customers appreciate the access, the insight they gain from it, and the opportunity to influence our direction. The Redmond resources benefit from the connection to the real world of our customers and their experience with, and leverage of our products.

One of the ways we embed this connection into our way of doing business is through the Executive Sponsorship program that connects our most strategic customers and their Microsoft Account teams with Microsoft Executives. I am fortunate to be Executive Sponsor to a number of our Accounts and it is one of the most fulfilling aspects of my role. I know many of my peers feel the same way.

Our team works to provide that bridge. If we’re getting the sales model right, we will get a good mix of field leadership and Redmond involvement for the biggest accounts, so they feel they’re getting the best of all worlds from Microsoft. To that end there are a number of strategies, like those outlined here, that are being driven to create a more customer and sales centric environment in Redmond, and thus create a better platform to enable success in the field.

  • How else does Microsoft connect with customers at the enterprise level?

One of the things that impressed me the most as a partner and customer of Microsoft is the investment the company makes in connecting with customer executive teams. I knew that if I came to Microsoft seeking insight and information, the facilities would be first class, the content would be excellent, the quality of the people would be very high, and my team would leave with a better view of our overall technology and business strategy. Microsoft does an amazing job of that.

We had 20,000 visitors come to our eight EBCs globally last year, nearly half of them to the EBC in Redmond. Recently we expanded our Redmond capability with a 50 percent increase in capacity. This year we expect to host some 15,000 visitors in Redmond, representing about 2,000 discrete customers. That is a tremendous advantage in that it gives us the opportunity to deploy our A-team across many more customers than we could if they had to visit customer sites. If you look at the utilization and the feedback we get for our EBCs, we really leverage them to the hilt. The EBCs are one of our most strategic sales tools.

Additionally, we have 16 Microsoft Technology Centers around the world – which provide facilities, technology experts and a virtual deployment site for customer solutions – and we manage nearly 3,500 engagements annually in those centers. The success rate of when we prove out a customer solution in one of the MTCs is extremely high.

Microsoft is also known for running tremendous executive events. Every year we run the CEO Summit, the Global CIO Summit and the Global Account Summit, to name a few. These exclusive events bring together top business leaders with Microsoft executives and external thought leaders for unique business and technology discussions.

Through all of these venues, we create value for the customer, both now and in the future, with how we evolve our relationship and our understanding – by listening and engaging in deep discussions with them on a range of topics.

There are a huge number of assets that Microsoft Account teams can leverage to add value to our customers and build deeper relationships in the process. I have been very impressed with how fully utilized these capabilities are. It is a good indicator of the ever increasing level of customer centricity in how we do business, and as someone who enjoys customer connection more than any other aspect of my role; it is great to be part of this team.

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The Bill & Melinda Gates Foundation has selected Jeff Raikes as the next CEO of the foundation. Raikes, formerly president of the Microsoft Business Division, will assume the role presently held by Patty Stonesifer on September 2, 2008.

Jeff Raikes, CEO, Bill & Melinda Gates Foundation.“Bill and I considered many extraordinary candidates from around the world during the search for our foundation’s new CEO,” said Melinda Gates, foundation co-chair. “Jeff brings more than 25 years of experience in the private sector and has earned a reputation as a trusted and respected leader. Equally important, he shares our passion for these issues and for continuing Patty’s work to build a great culture at the foundation. Jeff is the right CEO to lead the strategies we have in place to help reduce inequities in the United States and around the world.”

As president of the Microsoft Business Division, Raikes built a strong team of leaders and transformed the Information Worker business, delivering dramatic growth in the company’s business productivity line and nearly doubling revenues to more than $16 billion annually. In January 2008, he announced his retirement from Microsoft and currently serves on the company’s leadership team.

“Joining the Gates Foundation is an honor and a once-in-a-lifetime opportunity to focus on improving the lives of others,” said Raikes. “Patty Stonesifer is a remarkable leader who has cultivated equally remarkable leadership at the foundation. I am thrilled to join Bill and Melinda and this team because I’m convinced that through strong partnerships, ambitious goals, and a commitment to impact, we can transform people’s lives.”

“I’ve known and admired Jeff for more than 25 years,” said foundation co-chair Bill Gates. “He’s a smart, independent thinker who’s passionate about using innovation to help people change their lives. I’m excited to be working with him again.”

The Seattle-based foundation has a $37.3 billion endowment and more than 500 employees. It is organized into three program groups, Global Health, Global Development, and the U.S. Program, each led by a president. Since its inception, the foundation has committed more than $16 billion in grants intended to ensure that all people have the opportunity to live healthy, productive lives.

Raikes has been deeply involved in philanthropy in the Pacific Northwest, focusing particularly on education and children’s issues. He co-founded the Raikes Foundation and is an active member of the United Way of King County, where he served as co-chair of the 2006-2007 fundraising campaign–its most successful campaign ever. A native Nebraskan, Raikes is also a trustee of the University of Nebraska Foundation.

“Jeff will step into this role at a good time,” said Warren Buffett, foundation trustee. “Patty Stonesifer has spent the past 10 years building a broad, highly experienced leadership team and has designed the right approach to accomplishing the foundation’s mission. I’ve known Jeff for years, and we have chosen a leader who embodies the characteristics essential to continuing this work: an extraordinary mind and an uncompromising commitment to getting the job done.”

In February 2008, Stonesifer announced her plan to transition from her current position as CEO. She was the foundation’s first CEO, joining after a long career in technology that included eight years as a Microsoft executive. The work of the foundation and its partners to date has led to millions of lives saved globally through immunizations and other health advances and more young people in the U.S. graduating high school ready for college and life. Beginning in September, Stonesifer will transition into a new role, still to be defined, at the foundation. For more information visit http://www.gatesfoundation.org.

Bill & Melinda Gates Foundation

Guided by the belief that every life has equal value, the Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people’s health and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to ensure that all people-especially those with the fewest resources-have access to the opportunities they need to succeed in school and life. Based in Seattle, the foundation is led by CEO Patty Stonesifer and co-chair William H. Gates Sr., under the direction of Bill and Melinda Gates and Warren Buffett.

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Looks like a Microhoo  hangover:

Yahoo! Shares fall 17 percent after Microsoft Withdraws Bid.

But Hey!!! There ain’t seem to be any signs of unpleasant physiological effects. Moreover they’re dancing their way, with 2% confusion.

Yahoo! Shares fall 17 percent after Microsoft Withdraws Bid.

Update: Someone’s in need of an Accountant, what say guys?

Yahoo! Shares fall 16 percent after Microsoft Withdraws Bid.

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Microsoft Corp. has announced that it has withdrawn its proposal to acquire Yahoo! Inc.

“We continue to believe that our proposed acquisition made sense for Microsoft, Yahoo! and the market as a whole. Our goal in pursuing a combination with Yahoo! was to provide greater choice and innovation in the marketplace and create real value for our respective stockholders and employees,” said Steve Ballmer, chief executive officer of Microsoft.

Microsoft Yahoo logos.“Despite our best efforts, including raising our bid by roughly $5 billion, Yahoo! has not moved toward accepting our offer. After careful consideration, we believe the economics demanded by Yahoo! do not make sense for us, and it is in the best interests of Microsoft stockholders, employees and other stakeholders to withdraw our proposal,” said Ballmer.

“We have a talented team in place and a compelling plan to grow our business through innovative new services and strategic transactions with other business partners. While Yahoo! would have accelerated our strategy, I am confident that we can continue to move forward toward our goals,” Ballmer said.

“We are investing heavily in new tools and Web experiences, we have dramatically improved our search performance and advertiser satisfaction, and we will continue to build our scale through organic growth and partnerships,” said Kevin Johnson, Microsoft president for platforms and services.

Below is the text of the letter from Microsoft CEO Steve Ballmer to Yahoo! CEO Jerry Yang.

May 3, 2008

Mr. Jerry Yang
CEO and Chief Yahoo
Yahoo! Inc.
701 First Avenue
Sunnyvale, CA 94089

Dear Jerry:

After over three months, we have reached the conclusion of the process regarding a possible combination of Microsoft and Yahoo!.

I first want to convey my personal thanks to you, your management team, and Yahoo!’s Board of Directors for your consideration of our proposal. I appreciate the time and attention all of you have given to this matter, and I especially appreciate the time that you have invested personally. I feel that our discussions this week have been particularly useful, providing me for the first time with real clarity on what is and is not possible.

I am disappointed that Yahoo! has not moved towards accepting our offer. I first called you with our offer on January 31 because I believed that a combination of our two companies would have created real value for our respective shareholders and would have provided consumers, publishers, and advertisers with greater innovation and choice in the marketplace. Our decision to offer a 62 percent premium at that time reflected the strength of these convictions.

In our conversations this week, we conveyed our willingness to raise our offer to $33.00 per share, reflecting again our belief in this collective opportunity. This increase would have added approximately another $5 billion of value to your shareholders, compared to the current value of our initial offer. It also would have reflected a premium of over 70 percent compared to the price at which your stock closed on January 31. Yet it has proven insufficient, as your final position insisted on Microsoft paying yet another $5 billion or more, or at least another $4 per share above our $33.00 offer.

Also, after giving this week’s conversations further thought, it is clear to me that it is not sensible for Microsoft to take our offer directly to your shareholders. This approach would necessarily involve a protracted proxy contest and eventually an exchange offer. Our discussions with you have led us to conclude that, in the interim, you would take steps that would make Yahoo! undesirable as an acquisition for Microsoft.

We regard with particular concern your apparent planning to respond to a “hostile” bid by pursuing a new arrangement that would involve or lead to the outsourcing to Google of key paid Internet search terms offered by Yahoo! today. In our view, such an arrangement with the dominant search provider would make an acquisition of Yahoo! undesirable to us for a number of reasons:

  • First, it would fundamentally undermine Yahoo!’s own strategy and long-term viability by encouraging advertisers to use Google as opposed to your Panama paid search system.  This would also fragment your search advertising and display advertising strategies and the ecosystem surrounding them.  This would undermine the reliance on your display advertising business to fuel future growth.
  • Given this, it would impair Yahoo’s ability to retain the talented engineers working on advertising systems that are important to our interest in a combination of our companies.
  • In addition, it would raise a host of regulatory and legal problems that no acquirer, including Microsoft, would want to inherit.  Among other things, this would consolidate market share with the already-dominant paid search provider in a manner that would reduce competition and choice in the marketplace.
  • This would also effectively enable Google to set the prices for key search terms on both their and your search platforms and, in the process, raise prices charged to advertisers on Yahoo.  In addition to whatever resulting legal problems, this seems unwise from a business perspective unless in fact one simply wishes to use this as a vehicle to exit the paid search business in favor of Google.
  • It could foreclose any chance of a combination with any other search provider that is not already relying on Google’s search services.

Accordingly, your apparent plan to pursue such an arrangement in the event of a proxy contest or exchange offer leads me to the firm decision not to pursue such a path. Instead, I hereby formally withdraw Microsoft’s proposal to acquire Yahoo!.

We will move forward and will continue to innovate and grow our business at Microsoft with the talented team we have in place and potentially through strategic transactions with other business partners.

I still believe even today that our offer remains the only alternative put forward that provides your stockholders full and fair value for their shares. By failing to reach an agreement with us, you and your stockholders have left significant value on the table.

But clearly a deal is not to be.

Thank you again for the time we have spent together discussing this.

Sincerely yours,
/s/ Steven A. Ballmer

Steven A. Ballmer
Chief Executive Officer
Microsoft Corporation

About Microsoft

Microsoft LogoFounded in 1975, Microsoft (Nasdaq: MSFT) is the worldwide leader in software, services and solutions that help people and businesses realize their full potential.

This release does not constitute an offer to sell or the solicitation of an offer to buy any securities or a solicitation of any vote or approval. This material is not a substitute for the prospectus/proxy statement Microsoft Corporation would file with the Securities and Exchange Commission (the “SEC”) if an agreement between Microsoft Corporation and Yahoo! Inc. is reached or any other documents which Microsoft Corporation may file with the SEC and send to Yahoo! stockholders in connection with the proposed transaction. INVESTORS AND SECURITY HOLDERS OF YAHOO! INC. ARE URGED TO READ ANY SUCH DOCUMENTS FILED WITH THE SEC CAREFULLY IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION.

Investors and security holders will be able to obtain free copies of any documents filed with the SEC by Microsoft Corporation through the web site maintained by the SEC at http://www.sec.gov. Free copies of any such documents can also be obtained by directing a request to Investor Relations Department, Microsoft Corporation, One Microsoft Way, Redmond, Washington 98052-6399.

Microsoft Corporation and its directors and executive officers and other persons may be deemed to be participants in the solicitation of proxies in respect of the proposed transaction. Information regarding Microsoft Corporation’s directors and executive officers is available in its Annual Report on Form 10-K for the year ended June 30, 2007, which was filed with the SEC on August 3, 2007, and its proxy statement for its 2007 annual meeting of stockholders, which was filed with the SEC on September 21, 2007. Other information regarding the participants in a proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in any proxy statement filed in connection with the proposed transaction.

Statements in this release that are “forward-looking statements” are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors such as Microsoft Corporation’s ability to achieve the synergies and value creation contemplated by the proposed transaction, Microsoft Corporation’s ability to promptly and effectively integrate the businesses of Yahoo! Inc. and Microsoft Corporation, the timing to consummate the proposed transaction and any necessary actions to obtain required regulatory approvals, and the diversion of management time on transaction-related issues. For further information regarding risks and uncertainties associated with Microsoft Corporation’s business, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of Microsoft Corporation’s SEC filings, including, but not limited to, its annual report on Form 10-K and quarterly reports on Form 10-Q, copies of which may be obtained by contacting Microsoft Corporation’s Investor Relations department at (800) 285-7772 or at Microsoft Corporation’s website at http://www.microsoft.com/msft.

All information in this release is as of May 3, 2008. Microsoft Corporation undertakes no duty to update any forward-looking statement to conform the statement to actual results or changes in the company’s expectations.

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Microsoft Research has recognized five innovative, young faculty members from across the nation to join the ranks of Microsoft Research New Faculty Fellows. This program now encompasses 20 academic researchers whose exceptional talent for research and thought leadership make them standouts in their fields. The selected professors are exploring breakthrough, high-impact research that has the potential to help solve some of today’s most challenging societal problems.

“We want to make it easier for early-career faculty to take risks in their research,” said Sailesh Chutani, senior director of Microsoft External Research. “We believe our New Faculty Fellows program provides young professors with the means to pursue research with the potential to make a profound impact.”

About 100 young faculty members from the United States and Canada were nominated for the 2008 awards. The five 2008 New Faculty Fellows are as follows:

Grauman’s work is in the area of inferring object properties such as shape or pose from electronic images, which has major implications for data mining and search.Kristen Grauman, University of Texas at Austin. Grauman’s research focuses on designing the algorithms and learning processes that will allow computers to understand and organize visual information. In particular, she is interested in tackling the major scalability issues that surround visual recognition and search. The goal is to make it possible to efficiently index large volumes of visual data (images or videos) based on their content – a functionality that has the potential to greatly benefit a variety of users, from consumers to scientists and engineers.

Hohenberger has done some groundbreaking work in the area of cryptography, including electronic transactions, and verifying the authenticity of incoming messages and encrypting outgoing ones in energy, data and time constrained applications.Susan Hohenberger, Johns Hopkins University. Hohenberger focuses on cryptography, the art of securely communicating. She is interested in designing secure solutions for pervasive settings, where devices everywhere are constantly talking to their environments, which may require the ability to quickly process a large number of incoming messages. Her research includes an emphasis on developing privacy-friendly technologies, such as anonymous communication and electronic cash.

Kleinberg is developing algorithms and theory to address complex interactions in a networked environment. His work has implications for the fields of online learning, routing and information transmission in networks.Robert Kleinberg, Cornell University. Kleinberg studies the theory of algorithm design under informational limitations. This means that he looks at practical questions in computer science – such as how to design more robust adaptive systems for Web search, network routing, online auctions and product recommendations – and address these questions using mathematically rigorous techniques that build on ideas from learning theory, game theory and information theory.

Phil Levis is working on advanced operating systems for sensor networks, which has tremendous implications for environmental science and other fields.Philip Levis, Stanford University. Levis researches software and networking for tiny, low-power, wireless sensors. He focuses on making these networks of sensors easier to deploy and maintain by researching ultrasimple algorithms that use robust local rules to achieve desirable global behaviors. Software he develops is used by hundreds of research groups worldwide and runs on millions of nodes.

Russ Tedrake has taken a whole new view on the control of robots, incorporating the physics of natural motion into the design of his controls.Russell Tedrake, Massachusetts Institute of Technology. Tedrake focuses on computational and machine-learning approaches to control system design for robots that walk, run, swim and fly more like real animals. He believes that to succeed, both the mechanical design of the robots and the algorithms for controller design must exploit the natural, nonlinear dynamics of locomotion. In the next few years, he aims to build bipedal robots that can walk and jump across piles of rocks, and develop robotic birds with flapping wings that can gracefully land on a perch.

“I’m delighted and honored to be selected for the Microsoft fellowship, and to be included among the group of past and present winners whom I deeply admire,” said Robert Kleinberg, assistant professor in the department of computer science at Cornell University. “The most important resource that my research requires is interaction with gifted colleagues, and the fellowship funds give me a wide range of options, such as supporting graduate students and postdocs, and organizing symposia. I’m grateful to Microsoft Research for this extremely generous gift and for the hugely positive influence they’ve had on my growth as a researcher over the years.”

The Microsoft Research New Faculty Fellowship program was created in 2005 to honor first-, second- and third-year university professors who demonstrate exceptional talent for unique research and thought leadership in computer science and related fields. These awards provide funds to encourage creative freedom and collaboration opportunities among tomorrow’s most promising new professors.

The Microsoft Research New Faculty Fellowship program provides $1 million in funding each year. Each chosen fellow receives $200,000 to be used at his or her discretion. Additional resources include software, invitations to academic and professional conferences, and the opportunity to engage firsthand with leading researchers from Microsoft Research. As an unrestricted gift, the fellows have the freedom to plan their research agenda, hire grad students, build labs and purchase equipment.

According to the eligibility criteria, only one nominee per university may be entered into the program’s rigorous, multitier selection process, which culminated this year with 11 finalists being interviewed face to face by a distinguished panel of Microsoft Research executives and researchers, as well as faculty members from some of the nation’s leading universities. From the 11 finalists, five were chosen as the 2008 Microsoft Research New Faculty Fellows.

“Microsoft is committed to the New Faculty Fellows program with its potential to create exciting opportunities for the computer science researchers, educators and leaders of tomorrow,” Chutani said. “For the pipeline of computer science and engineering students to increase, there also needs to be a pipeline of dynamic faculty like these to inspire and lead them.”

These awards are part of Microsoft Research’s broader efforts aimed at funding innovative academic research that will significantly extend the state of the art in computing and ensure a rich future for computing through recognition and support of the next generation of computer science leaders.

About Microsoft Research

Founded in 1991, Microsoft Research is dedicated to conducting both basic and applied research in computer science and software engineering. Its goals are to enhance the user experience on computing devices, reduce the cost of writing and maintaining software, and invent novel computing technologies. Researchers focus on more than 55 areas of computing and collaborate with leading academic, government and industry researchers to advance the state of the art in such areas as graphics, speech recognition, user-interface research, natural language processing, programming tools and methodologies, operating systems and networking, and the mathematical sciences. Microsoft Research currently employs more than 800 people in six labs located in Redmond, Wash.; Cambridge, Mass.; Silicon Valley, Calif.; Cambridge, England; Beijing, China; and Bangalore, India. Microsoft Research collaborates openly with colleges and universities worldwide to enhance the teaching and learning experience, inspire technological innovation, and broadly advance the field of computer science. More information can be found at http://www.research.microsoft.com.

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