The Market Thinks Yahoo's Business Is Only Worth $4 A Share

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In her interview with CNBC yesterday Yahoo CEO Carol Bartz called the company’s investment in Asia “a very good investment in the future.” 

They are also a good investment in the present.  Yahoo’s minority stakes in Yahoo Japan and Chinese e-commerce company Alibaba are now worth more than 50% of Yahoo’s market value.  That’s near an all-time high.

When you subtract the value of these stakes and Yahoo’s cash from Yahoo’s market value, you’ll see just how low an opinion the market has of Yahoo’s actual operations.

How low?

About $4 a share.

Yahoo’s stakes in Yahoo! Japan and Alibaba  are not included in Yahoo’s consolidated financial results.  Thus, they can be viewed as separate assets when valuing the company’s operations. 

Using publicly-traded market caps for Yahoo Japan (traded on Tokyo Exchange) and Alibaba (traded on Hong Kong Exchange) here is what we found as of yesterday’s close:

Now, of course these stakes aren’t the same as cash.  If Yahoo wanted to monetise the stakes and return the cash to shareholders, it would have to pay taxes and it would likely sell the stakes at below the market price.

But the overall message stands:

Once you subtract the value of Yahoo’s cash ($4 billion) and equity stakes ($12 billion) from Yahoo’s market cap ($22 billion), you’re left with an imputed value of of Yahoo’s business of $6 billion.  That’s about $4 a share.

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