425
Filed by Microsoft Corporation pursuant to
Rule 425 of the Securities Act of 1933 and
deemed filed pursuant to Rule 14a-12 of the
Securities Exchange Act of 1934
Subject Company: Yahoo! Inc.
Commission File No.: 000-28018
This communication 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 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! shareholders 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 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
8, 2007, and its proxy statement for its 2007 annual meeting of shareholders, which was filed with
the SEC on September 29, 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 communication is as of February 4, 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.
*************
2
THE FOLLOWING IS THE TEXT OF THE INTERVIEW WITH STEVE BALLMER (CHIEF EXECUTIVE OFFICER,
MICROSOFT CORPORATION) THAT APPEARED IN THE WALL STREET JOURNAL ON FEBRUARY 4, 2008.
WSJ: Is the Yahoo bid a bet that the economy is brighter than people think?
Mr. Ballmer: Most everything that goes on in our business has payout periods that are more than a
year or two. That would be true of this acquisition. It’s true of any R&D investments we make. Even
the number of sales and marketing investments frankly don’t pay out in a year.
Making investment decisions with a primary focus to the shorter term economic conditions is
probably not a wise thing to do for the leadership of this company. It doesn’t mean that we’re
oblivious; it doesn’t mean that we’re not affected; it doesn’t mean we might not tune [strategy]
slightly, but big strategic calls can’t be guided by short-term economic reality.
Now, if we thought we were headed into something really terrible, maybe all bets are off, but I
think at worst people think we have a few years of tough economic sledding in front of us as
opposed to some more major issues.
WSJ: The Yahoo deal implies a certain faith in the continued growth of online advertising. If
advertising growth dipped, how would your outlook for this deal change?
Mr. Ballmer: In the longer term — two, four, five, seven years — there’s no less reason to be
optimistic about online advertising than ever before. Offline advertising will all be online
sometime in the next 10 years. That means there’s going to be huge growth in online advertising,
and we think the market deserves, at least on the advertising platform side, some good competition
for the current leader [Google].
WSJ: Is Microsoft “betting the company” with its bid for Yahoo?
Mr. Ballmer: This is clearly a big move for us. It’s a big move for us. I would certainly not call
it a bet-the-company move.
We have many technologies but we go to market with four big businesses: the desktop business, for
which this may or may not be additive, but it’s not a bet-the-company move for what we’ve been
doing in Windows and Office; our enterprise business, this is not a bet-the-company move. In our
online efforts this is a chance for us to really take the progress we’ve been making in our online
efforts to the next level. So, we’re excited about that. I trust this acquisition is going to
close. We will then integrate it successfully. But we’re going to continue to make progress in that
online business in any regard.
In our entertainment and devices business, I actually think this is quite helpful, because a lot of
what’s going to happen, particularly on the entertainment side, is going to be very tied into
online services.
WSJ: Two years out, how is this acquisition going to help Microsoft?
3
Mr. Ballmer: Can we deliver more value to consumers? Answer: Between the two of us, taking the same
aggregate R&D staff, and having them be able to focus on priorities differently, we get an
opportunity to invest in more new innovation. Instead of having two people doing exactly the same
work on the search index, you can have one person do the work, and free up the second person to
invest in some of the emerging social media, et cetera, aspects.
From an advertiser perspective, the opportunity to see good competition to the market leader, to
see a thriving and successful pool of innovation will mean the ability to reach audience, the
ability to have great tools and targeting capabilities against audience.
And last but certainly not least is other publishers. Right now there’s not much competition to
Google when it comes to soliciting third-party publishers. We’ve dug down and done a good job of
winning guys like Viacom and Facebook and others, but we and Yahoo together will have a lot of
opportunity to make a difference there.
WSJ: Can you really take two companies that are perceived as the slow-moving players in the online
market, combine them, and make it an “accelerant,” to your business, as you described it?
Mr. Ballmer: We have fantastic talent in this area. We don’t have the market-leading position, but
we’ve got fantastic talent, and we have some fantastic assets. I know a number of the Yahoo people.
I know leadership. They’ve got incredible talent. They do have great assets. They’ve done a
phenomenal job on their portal, their mail offering is leading. So, I think there’s just a great
base to build from.
WSJ: The challenge though is in managing that talent to be faster, get products out faster.
Mr. Ballmer: Look, both Yahoo and Microsoft have not been short on products coming out quickly. The
reason why Google is a market leader is not because they have products. They’re the leader because
they’re the leader in one product area, called search. Our job is to do a good job of integration.
And of course we want to move quickly, but the No.1 thing we want to do is break through in search
and advertising. The ability to do more with the talented engineers at Yahoo and Microsoft in
search and advertising is compelling.
WSJ: For the record, have you heard back from Yahoo?
Mr. Ballmer: For the record, I wouldn’t answer that question. We have had the opportunity to put an
offer in front of their board and their shareholders, which is great. They’ve said they’re
considering the offer. When they have something important to say publicly, I’m sure they will, as
will we. Other than that, there’s not really much to say.
WSJ: What are your options if there’s a rival bid?
Mr. Ballmer: We’ve got a very fair offer in front of the Yahoo shareholders, and I think the chance
to work with our engineers and to work with us is just a great opportunity for everybody to create
value for shareholders, for employees at both companies and for customers.
WSJ: What will be the focus of your comments to analysts today?
Mr. Ballmer: No. 1, I do want people to understand the strong year we’re having from a revenue
perspective. I think because we have as broad a footprint as we do, it’s important for people to
4
understand that we’re really getting strong performance in all four of our businesses: desktop,
server/enterprise, online, as well as entertainment and devices, and that that success reflects
past investment.
No. 2, I will emphasize the fact that that investment is broader than anybody else has made.
No. 3, I do want people to understand that we have a lot of things or a set of things that we need
to invest in going forward, across all of these businesses. There’s so much more that we have
coming in the enterprise, there’s so much more we’re investing in from an R&D, innovation, sales
and marketing standpoint, across the board.