Investors Value Yahoo's Core Business At Less Than $0 150
An anonymous reader writes "Yahoo is most known for its search, email, and news services. But its U.S. web presence is only part of its corporate portfolio. It also owns large stakes in Yahoo Japan and Alibaba (a web services company based in China). Yahoo Japan is publicly traded, and Alibaba is heading toward an IPO, so both have a pretty firm valuation. The thing is: when you account for Yahoo's share of each and subtract them from Yahoo's current market cap, you get a negative number. Investors actually value Yahoo's core business at less than nothing. Bloomberg's Matt Levine explains: 'I guess this is fairly obvious, but it leads you to a general theory of the conglomerate discount, which is that a business can be worth less than zero (to shareholders), but a company can't be (to shareholders). ... A fun question is, as fiduciaries for shareholders, should Yahoo's directors split into three separate companies to maximize value? If YJHI and YAHI are worth around $9 billion and $40 billion, and Core Yahoo Inc. is worth around, I don't know, one penny, then just doing some corporate restructuring should create $13 billion in free shareholder value. Why not do that?'"
Re:Ummm... (Score:3, Informative)
Today, Yahoo is estimated to be worth ~$36.72 Billion
It doesn't own YJHI and YAHI, it owns a percent stake in them. Those stakes are the estimated 9 and 40 billions. So what I believe he is saying is that if they sold those shares, then they would be 13b dollar richer then their current actual market of Yahoo.
Re:Ummm... (Score:5, Informative)
9 + 40 = 13? Since when?
Let me explain the math: Yahoo has a market cap of about $40B. Yahoo's stakes in Alibaba and Yahoo-Japan are worth a combined $53B. So the $-13B is the value of Yahoo's core business. If they liquidate or spin off the holdings, that would generate $53B in cash, which could be returned to shareholders. Then, even if the stock price drops to zero (it cannot go lower), $13B in value has been created.
Disclaimer: I am aware that the numbers in the summary and the numbers in TFA don't actually match up.
breakups damage synergies (Score:5, Informative)
common flaw in greenmailer philosophy... except they only care about the now, and screw the future.
the subsidiary operations that look cash-positive are dependent on services from the core company, and generally share synergies (back-office costs, research, brand value, facilities, yo'momma, whatever) which make them look better on the spreadsheet.
take that away in a breakup, all of a sudden the "haves" are hurting for resources, and need to spend big to replace them. but the experience needed to utilize the resources went with another arm of the octopus.
therefore, (5a): no profit and flounder.
this "unlocking shareholder value" thing is a cloak over the same old pirate uniform.
Re:Ummm... (Score:2, Informative)
42
Re:Yahoo does make money. (Score:5, Informative)
Not just "popular" -- Yahoo News is the #1 news site in the world (by traffic), Yahoo Finance is the #1 finance site in the world, Yahoo Sports is one of the top three sports sites in the world (tends to bounce around a little), and Yahoo as a whole trades the #1 ComScore spot back and forth with Google quite regularly.
I'm sure there's a lot of "hip" companies out there that *wish* they could even come close.
Re:Ummm... (Score:5, Informative)
they rely don't think there is such a premium.
Or the board members are more interested in keeping their jobs than in representing the interests of the shareholders. Right now, Mayer is considered a genius for doubling Yahoo's stock price. But if she spun off the holdings, it would be much more obvious that the price run-up was due to factors beyond her control, and that the core business, that she does control, has plummeted in value. It is in her interest to keep the merry-go-round spinning.
I am not surprised that the core business has lost value. I used to use several Yahoo services, but now use none. They all got so bad, they were no longer usable. Here are some specific examples:
1. movies.yahoo.com - I used to be able to go to this page, type in my zip-code, and see play times for theaters near my house. Then they changed the algorithm. Now it takes the zip-code, uses it to locate the center of the nearest large city, and shows the play times for the theaters closest to that point. I have no idea why they made this change, or what idiot thought it was a good idea.
2. news.yahoo.com - I had this configured to show news articles that I was interested in. Then they changed the interface so that all my custom configurations are gone, and instead I see articles about Kim Kardasian and Justin Beiber.
3. mail.yahoo.com - The mail interface has always been horrible, but it has worsened. They have always lacked sub-folders, and still do. So I can have a folder for "Friends", but cannot create sub-folders inside for each friend. So I can either have hundreds of folders at the top level, or file semi-related emails together. When Yahoo mail first started, I emailed them and asked about this. They replied that lots of people asked for sub-folders, and it was a "top priority". Now, 15 years and 14 thousand employees later, still no sub-folders. But at least I used to be able to narrow the "Search Mail" feature to a particular folder. That no longer works. It will now search ALL of my mail, mixing the needle I am looking for with plenty of unrelated hay.
Yahoo is destroying their mail service (Score:2, Informative)
I have a Yahoo email account. In fact, it is my most active email account. Over the last few months Yahoo has been working very hard to make Yahoo email less usable. From my experience, they seem to have slowed the response time, added race conditions in the UI which prevent controls from working, completely ruined address completion, and done other things that I just cannot understand. Let me give an example, from my real-world use, of the address completion problem.
I have a user named William Whatever whose nickname is Bill. (Yahoo contact info has a nickname field.) Until a couple of weeks ago when I wanted to send email to Bill I could just type Bill in the "To" field and William Whatever's address would pop up as a choice along with one other contact called Bill. Pretty simple and useful, right? Now when I type Bill it seems that Yahoo searches all my old mail, with an associated long pause while the search occurs, and presents a list of eight names which potentially match Bill, mostly names that are not in my contact list but were gleaned from address lists emails I received in the past, which I did not add to my contact list. However, my friend Bill's name, which is in my contact list, is not included among the choices. Instead, I have to type William. But it get's better! After I select William from the list Yahoo pops up another list of choices which are "frequently included" and, lo and behold, Bill is first on that list! Yes, Bill, the nickname which did not show up at all on the first list. To make matters worse, many of the email addresses in the first list are wrong because the person who sent me an email in the past has changed his email address and the address presented in the list is no longer in use. I ask myself why Yahoo has decided to ignore my declared contacts in favor of unused and unwanted names gleaned from old emails, but I cannot imagine any situation where that is desirable.
If anyone out there has any internal influence at Yahoo then please find the architects, programmers, and PHBs responsible for stupidity such as this and slap them! Repeatedly!