> You cannot just subtract the value of Alibaba and declare the company "less than worthless".
I can and do.
> Company valuations don't work that way
I disagree, except if you care to shell out <10 million and say "see it's worth something!" which is disingenuous. The amount to maintain the remnants will dwarf the cost of acquisition, making it a net loss.
Then you're wrong. That isn't how company book value works. A company's book value is the total of its assets minus the total of its liabilities. Removing an asset from the calculation without adjusting the liabilities is just wrong. It isn't proper accounting.
> I disagree, except if you care to shell out <10 million and say "see it's worth something!" which is disingenuous. The amount to maintain the remnants will dwarf the cost of acquisition, making it a net loss.
What numbers do you have to support this? What portion of Yahoo's liabilities are coming along with the assets Verizon wants to buy?
> Yahoo’s total market cap is less than the $40.5 billion, and after accounting for the cash on the company’s balance sheet, this means Yahoo’s core business is valued at less than $0. Now, this isn’t a new development that will disappear with some quick arbitrage. In fact, the value of Yahoo’s core business has been negatively valued for more than a year, so investors are seeing the value discrepancy measured by traditional means but just don’t believe in the company’s trajectory.
That article is making a different mistake. It is looking at market cap versus total assets. That isn't a very good measure and does not mean investors place negative value on the core business. Yahoo's book value is only about $27B, which is the amount that would be left if the company were liquidated today (notwithstanding liquidation costs). Since their price/book ratio is greater than 1 it means investors do put value on the future business, albeit not very much.
I can and do.
> Company valuations don't work that way
I disagree, except if you care to shell out <10 million and say "see it's worth something!" which is disingenuous. The amount to maintain the remnants will dwarf the cost of acquisition, making it a net loss.