[rdl]

Yahoo, like a lot of shitty corporations in death spiral, is worth less than the sum of its parts. It's not as if the stock price times shares = market cap is really a great figure, at least over short periods of time, but in the long term, reality tends to converge.

Sun was sitting on a cash hoard of billions when Oracle bought it -- plus MySQL, plus some actually valuable technology, plus a lot of great engineers, plus patent portfolio. The assets were probably worth 2-3x the acquisition price!

When HP split into HP and Agilent, the printer business alone was valued at more than the entire market cap of the company; the rest of HP was perceived as having negative value.

A lot of Yahoo's value is in investments in Asia, investments which are rapidly trying to divorce themselves from Yahoo.

Yahoo arguably has a sustainable display ad business, and some destination sites, (although I personally am not into advertising), but to make the turnaround, you'd want to axe the top several tiers of management. The new CEO is a good start; this is a great second step.

A rational world with honest and effective boards of directors, coupled with greedy and self interested PE firms of large size probably would have already broken up Yahoo, HP, and RIM. The biggest crime with these companies is the thousands of great engineers stuck there, not accomplishing what they could at more effective organizations.

[fleitz]

Death spiral? Please don't get your financial information from techcrunch. I'd suggest checking public market data which suggests that in the last few years has massively increased its profitability

Net income for YHOO 2010 1,231.66 m 2009 597.99 m 2008 418.92 m 2007 639.15 m

[steve8918]

This is the danger of relying on a single financial measure to determine the health of a company. That's like only using a person's weight to determine if they're fat or skinny, when it also depends on how tall they are, their gender, the amount of muscle they have, etc.

Their net income may have increased, but they did it by selling businesses (Hotjobs and Zimbra) and cutting costs (sales and marketing and product development) dramatically. Their revenues have dropped considerably, and they have had a humungous brain drain. The 2011 estimates for annual revenues are $4.4 billion, down from $6.3 billion in 2010 and from $7.2B in 2008. That's a plunge of 30% YoY.

This is what a death spiral is. They achieved profitability by hacking and slashing. At some point, which was likely already passed, you cut to the bone, and you no longer can sustain a viable company, and the pace of decline gets quicker.

[fleitz]

Conversely you could argue that they cut unprofitable fat that while bringing in revenue did not bring in profit. Hotjobs and Zimbra don't strike me as particularly profitable.

Also, often times the best outcome for shareholders is to wind down the business and allow them to reinvest the profits, which so far is not an action that YHOO has taken.