It's like he took the playbook from ObjectShare (Smalltalk vendor) when the CEO announced, "Hey gang, let's go Java!" then was surprised when the personnel situation started to go pear shaped.
Someone is out of touch with his employees here.
I think the move to WP7 may well be a savvy one (though I too would like to have seen a demo of it running), but can completely understand the employees concern.
Perhaps it would have made more sense to be more specific about what is going to happen with their employees, and done it internally - before rushing to tell the world about their new partnership. The resultant leaks wouldn't have been much bigger than what we already had this week.
So was ObjectShare's move to Java. That's not the issue. The issue is management being so out of touch with the employees. It's like a car with a loose steering linkage. Lots of things can go wrong, but a mechanism by which you'd even feel those things is also compromised.
I've read the same script before. The way this move was presented to the employees had bad results. I doubt the bad parts were really necessary.
It's a complicated situation. I doubt there was a binary choice whether or not to knife the baby.