Ozzie Says Microsoft Would Be Careful With Yahoo Integration

Ozzie said Microsoft should be very cautious of integrating technologies with a merger. "Technology companies, if they dive in and just smash things together for smashing them together's sake, it's reckless, it's just simply reckless," Ozzie told the Financial Times.

Yahoo has its own technology platform and its own work ethic, Ozzie said. "They have a number of different types of technologies. They have their own corporate culture," he said.

Ozzie's view of such mergers is correct, said Barry Parr, media analyst with JupiterResearch, a research and analysis firm. Microsoft should be careful not to create discord if it completes the Yahoo acquisition of Yahoo, said Parr.

"There is a marketing risk in moving (Yahoo technologies) things over (to Microsoft)," Parr added. "Microsoft ought to be thinking about how to move Yahoo forward rather then how to increase Microsoft sales. Most people believe that operating Yahoo as a separate subsidiary, at arms length, makes more strategic sense."

Still, Microsoft will have to deal with inherent conflicts, Parr added. "These kind of contradictions, especially when there are expectations of cost savings, coming with their commitment to backend changes, have some risk," he said.

"The low-hanging fruit would be combining ad networks," Parr said. "Replacing one ad network with another is easier than replacing one system infrastructure with another."

Still, Microsoft will be dealing with organizational issues, no matter how it goes about the merger, Parr said. "The question is, how does it play over the long term? There are few mergers like this that don't have organizational issues. They are two different development organizations. An organization like Microsoft that creates tools that has a large organization inside that doesn't use those tools -- there is a dissonance that you have to scratch eventually."

The possible deal hit a snag last month when Yahoo rebuffed an offer that Microsoft made public, valuing the company at $31 per share in cash and stock. Yahoo said the figure grossly undervalued its worth.