This, IMHO, is the crucial point: what exactly is Yahoo's business?
As an outside watcher I have no clue (I am also stupid). Hopefully people working there have better insight than myself.
As an outside watcher I have no clue (I am also stupid). Hopefully people working there have better insight than myself.
http://static.tumblr.com/7drgjla/386nnw4n9/yahoo_inc._2014_a...
"We generate revenue principally from search and display advertising on Yahoo Properties and Affiliate sites, with the majority of our revenue coming from advertising on Yahoo Properties. Our margins on revenue from advertising on Yahoo Properties are higher than our margins on revenue from advertising on Affiliate sites as we pay TAC to our Affiliates. Additionally, we generate revenue from other sources including listings-based services, facilitating commercial transactions, royalties, and consumer and business fee-based services."
Matt Levine did quite a long writeup about this a while back: http://www.bloombergview.com/articles/2014-04-17/how-can-yah...
Taking an uncharitable view, Yahoo!'s core business actually has negative value -- and the current round of layoffs is a direct result of Wall Street pressure to stop subsidizing said core business and preserve the value of the Ali Baba stock.
I imagine the natural duopoly of tech is at work here. Google/Bing is pretty much it for web searching in the US, with no room for whatever engine Yahoo is borrowing this week. Gmail (gmail.com, google business apps, etc)/MS(Outlook/Hotmail, Azure, Exchange 365) for mail, etc. Not sure where Yahoo even fits anymore.
That last trade price times number of outstanding shares -- market cap -- is the only common basis for overall valuation of publicly traded firms (that is, the only basis that is guaranteed, by definition, to be available for every publicly traded firms) does not mean it is a particularly accurate and meaningful measure of the overall value in any useful sense.
If you assume zero discount of the Alibaba stake due to taxes or other uncertainty, then Yahoo has zero or negative value.
However, there is >0% chance that the Alibaba stake will be taxed or that Yahoo leadership will sell and spend the money instead if returning it to the shareholders.
The more accurate statement is that the uncertainty a "core" business brings outweighs the value of said business. Part of that uncertainty is the tax treatment issue of BABA shares, the other part is a vote of (or lack of) confidence in Yahoo leadership.
Yahoo itself has plenty of value. Probably not 10B, but probably more than 1B.
Recently I tried watching Yahoo's Other Space (https://screen.yahoo.com/other-space/), but gave up after a few episodes - even though I enjoyed what I was able to watch. From what I could tell, the show wasn't available through the Yahoo Screen mobile app. (Which brings another question, WTF is the point of that app?!) The website lets you watch streaming video, but the site is impossible to use from mobile, and it would randomly crash every iOS browser I tried (Safari, Chrome, Firefox). When I tried watching from a desktop the video stream would occasionally freeze, and the Ads would randomly reset the stream back to the beginning of the episode.
Yahoo reminds me of Apple in the mid 90's. Even good ideas are just terribly executed. They hired the wrong leader to try and fix their problems.
Keeping the C-levels employed?
I think Yahoo's business has been to be the internet, but they never noticed that other companies and services took that all away from them piece by piece. Now they're just a stock.
It sucks that this is locked into yahoo, but I'm sure it was the most convenient option at the time.