The math that made the rounds was based on a faulty premise. You basically had what I'll call Yahoo Group (YG) comprised of Core Yahoo (CY), a stake in Alibaba (YAB) and Yahoo Japan (YJ).
People were saying that if you took YG and subtracted YAB and YJ, that the value of the remaining business, CY, was negative.
What they missed was that you can't just plop in the current market price of YAB and YJ. Yahoo's ownership in those companies was old enough that they would have to pay significant taxes to unload them.
So the real math would be YG = [YAB x (1-T)] + [YJ x (1-T)] + CY
Where T is the tax rate. Realistically, it'd be some Monte Carlo of the likelihood of tax rates as they were aggressively trying to minimize the tax paid, but still, CY wouldn't be negative.
As a final bit of evidence for this -- Yahoo's core business was just bought for over $4.5 billion. So.. you know.. not a negative number.
mikeyouse|9 years ago
The math that made the rounds was based on a faulty premise. You basically had what I'll call Yahoo Group (YG) comprised of Core Yahoo (CY), a stake in Alibaba (YAB) and Yahoo Japan (YJ).
People were saying that if you took YG and subtracted YAB and YJ, that the value of the remaining business, CY, was negative.
What they missed was that you can't just plop in the current market price of YAB and YJ. Yahoo's ownership in those companies was old enough that they would have to pay significant taxes to unload them.
So the real math would be YG = [YAB x (1-T)] + [YJ x (1-T)] + CY
Where T is the tax rate. Realistically, it'd be some Monte Carlo of the likelihood of tax rates as they were aggressively trying to minimize the tax paid, but still, CY wouldn't be negative.
As a final bit of evidence for this -- Yahoo's core business was just bought for over $4.5 billion. So.. you know.. not a negative number.