[nugget]

Yahoo today is a private equity fund first and an operating business second. By that I mean, the vast majority of Yahoo's value derives from investments like Alibaba and Yahoo Japan. The core business is relatively small. You might have to do a deal like this in order to get the core business spun out cleanly from the rest.

Regarding the core business, we're in an era where markets are becoming more winner-take-all meaning scale is your network effect and there are huge gaps between 2nd or 3rd place and the rest. This is especially true in ad tech and ad supported businesses (Facebook, Google, and the rest). From this perspective, Yahoo core is probably hugely more valuable to Verizon or another massive company who can credibly challenge Facebook and Google, than it would be by itself.

[gtrubetskoy]

In fact if you add all the numbers for the Alibaba and Yahoo Japan, it ads up to less than what it should be, i.e. on its own the core business has a negative value, which is kind of interesting.

[rokhayakebe]

Excluding Alibaba and Yahoo Japan, is Yahoo unprofitable?

[henrikschroder]

No, Core Yahoo is a profitable multi-billion-dollar company in a slowly declining market.

The reason the market values Core Yahoo negative, is because it thinks the current management will destroy capital by spending it on useless acquisitions and costly R&D to become a growth company again.

But accepting that it is a stable company that's going to bring in billions in revenue for years, and just milking it dry is actually not a bad strategy. It's a very boring strategy though.

[rockinghigh]

The core business has positive earnings if you ignore goodwill on the balance sheet. However, earnings are declining.

[petra]

How can Verizon be a serious ad business challenger ? aren't the valuable data using https?

[phamilton]

IPs are still visible. And when you can tie IPs to individual households, addresses, and credit card information there's a lot of information to be gained.