Source: http://money.cnn.com/news/newsfeeds/articles/djf500/200805191449DOWJONESDJONLINE000502_FORTUNE5.htm

Microsoft Corp.’s (MSFT) weekend statement that it’s in renewed talks with Yahoo Inc. (YHOO) means a broad range of possible outcomes - ranging from a deal to outsource internet advertising to a full takeover - are now back on the table.

While the statement was crafted to suggest collaboration is a more likely short-term outcome than acquisition, most observers see it as a public relations exercise to soothe frayed relations with Yahoo’s management to prevent them from rushing into a defensive agreement with Internet search market leader Google Inc. (GOOG), the worst outcome from the Redmond, Wash.-based software giant’s perspective.

“We think the real intent of the resumed talks is to mend relationships between the two companies and to gauge Yahoo’s willingness to renegotiate a merger, which we view as the most likely outcome,” Standard & Poor’s equity research analyst Jim Yin said.

Yahoo’s shares rose Monday on Microsoft’s statement and recently traded up 15 cents, or 0.5%, at $27.81, with Microsoft’s shares trading down by 32 cents, or 1%, at $29.67. Yahoo’s shares have remained in the high 20s since Microsoft pulled out of talks, suggesting to many that Wall Street believed a Microsoft purchase of Yahoo was still a possibility.

Microsoft withdrew its offer for Yahoo of about $47 billion, or $33 a share, three weeks ago amid intransigence from Yahoo. Since then Carl Icahn, a billionaire activist investor who now owns more than 50 million Yahoo shares, has announced plans to unseat the Yahoo board and has nominated an alternative slate of directors. In a letter to Yahoo chairman Roy Bostock, he said Yahoo had behaved “irrationally” in snubbing Microsoft and wants to restart talks.

Sandeep Aggarwal, an Internet equity analyst with Collins Stewart, shares the conviction that Microsoft is likely paving the way for a transaction that goes beyond search outsourcing.

“Our view is that with Microsoft’s recent announcement, it is just a matter of timing, but some kind of Microsoft/Yahoo combination is imminent,” he wrote.

Microsoft’s statement, issued Sunday, says that it has raised with Yahoo “an alternative that would involve a transaction with Yahoo but not an acquisition of all of Yahoo.”

If read at face value, analysts say, this suggests Microsoft and Yahoo are exploring a search outsourcing arrangement. Needham modeled several scenarios in which Yahoo outsources its paid search, ranging from 25% to 100% of paid search business. In each case, analyst Mark May notes, this would generate a revenue uplift of about 20%, but he adds the incremental cost savings that would come from outsourcing a larger portion of search would generate more profitability.

However, May notes, “outsourcing search would be the wrong long-term strategic move for Yahoo, and we believe several large shareholders are against such a move.”

Others think a break-up of Yahoo, with Microsoft taking a significant portion of assets but either not acquiring or acquiring and then disposing of less core properties, is an increasingly likely scenario.

According to Stifel Nicolaus analyst George Askew, one option would be for Yahoo to sell its search business to Microsoft.

“Our current guesstimate is that Yahoo’s search advertising business generates around $1.6 billion in annual revenues excluding traffic acquisition costs and perhaps adjusted earnings before interest, tax, depreciation and amortization of $650 million. We believe the search business may be worth $11 billion or more in a sale to Microsoft.”

Source: http://www.contractoruk.com/news/003795.html

Lloyds TSB has announced plans to offshore 200 IT contractor jobs from the UK to India.

The bank’s exporting of tech freelance jobs is part of its wider aim to transfer 655 IT roles from its UK division to the sub-continent over the next nine months.

In the six IT divisions affected by this phase of the bank’s outsourcing plan, only 30% of all jobs will remain in the UK, while 70% will be based in India, unions say.

Two-hundred contractor roles will be exported overseas from August, alongside 250 permanent roles, with all the transfers due to be made by early 2009.

The bank’s IT workers in London and Wythenshawe, where Lloyds has a total of 1,760 staff, are likeliest to be hit hardest, although as many as 11 UK-wide offices could be affected.

Officials at the LTU union said they fear Lloyds’ plan to export 450 jobs, announced internally last week, sets a precedent for more of its 2,400-strong IT workforce to be based offshore.

Earlier this year, Barclays also announced that some of its UK IT jobs will be offshored to support the worldwide growth of its financial services hubs.

As a result, staff in Poole fear their division will close by the end of the year, resulting in the expected loss of a few hundred IT jobs, sources said.

A Barclays spokesman refused to be drawn on whether its transfer of UK tech jobs, some of which may be destined for Africa, would result in a dramatic cut to its domestic IT workforce.

“As each part of the business grows there will be changes and within those changes there may be [an] impact on the IT function and then [there] may be some element of offshoring to meet the needs of business,” he said.

“Our business in Africa is growing, therefore we have [service] hubs that we need to develop to meet the [region’s] growing needs;…[these] may require the offshoring of some jobs from the UK to Africa.”

The spokesman admitted that during 2007, a number of Barclays domestic IT staff “may have been impacted” by the changes the bank has made to its business.

When Barclays makes a decision to offshore any jobs from the UK, the bank stressed that those affected are promptly informed and made aware of the remuneration package.

Barclays said it is “very sensitive” to the impact of offshore outsourcing upon its UK workforce, and said that any concerned IT staff should speak to their HR partner.