Probably valuations dropped low enough that yahoo can be valued as a classic media company instead of a tech company.
What generally scares Buffet from tech is that the price of tech stocks is greatly inflated to reflect expectations of future growth. Buffet is very skeptical of inflated expectations of future growth.
But I do not think there is any great expectations of future growth in yahoo. In fact many analysts say that if you strip out the valuable asian assets, the value implied by the market for Yahoo's US business is about zero or even negative.
So the answer is that Yahoo is not really a tech stock anymore, but the traditional definition of that term. At least it is not priced like a tech stock.
> In fact many analysts say that if you strip out the valuable asian assets, the value implied by the market for Yahoo's US business is about zero or even negative.
If the value implied by the stock price is zero or negative, then even buying the company and selling off the office furniture nets you a tidy profit.
More realistically, it's very likely that if a company has negative value -- ie, that someone would pay you to take it off their hands -- then it is severely undervalued.
> if a company has negative value...then it is severely undervalued
Or severely fucked. Every company on the verge of bankruptcy skirts with negative equity value.
As for enterprise value, there are oil E&P companies trading below zero today. One must consider the costs of diligence, maintaining the asset until oil goes up and environmental clean-up. The economic value of some companies is questionable.
On Yahoo!, there is a difference between minority-stake investing and buying companies. Some managers are terrible. A hundred million dollars put in a box, put in a corporation, and handed to them is worth zero if they can't be replaced before the cash has been burnt.
I don't think that's true. Even badly performing companies like Yahoo! aren't only priced as a sum of their physical assets, but also intangible ones, e.g. the skills of their employees, their market position etc.
Someone actually did a calculation of this just recently, like about a month ago max. Adding up the Alibaba stake, the Yahoo Japan stake, the office and associated infrastructure, that summing those up totalled far less than the current share price. Somewhere around -8 billion IIRC.
It was a Bloomberg article[1] of rather disappointing quality. The authors apparently just took the market values of BABA and Yahoo! Japan, multiplied by Yahoo!'s percentage stake, added some unsourced number for cash and assets, and arrived at -$8 billion. They even included the statement, "The implication: Everything you think of as Yahoo—apps, websites, employees, computers, buildings—has a negative value."
It's terribly sloppy logic that led to this, as a pass through Yahoo!'s balance sheet[2] demonstrates. "Long-term Investments", which I presume includes their stakes in Alibaba and Yahoo! Japan, is listed as $34B (not the $38B in the article). Adding all other assets gets to a grand total of $44.1B. However, that is gross asset value, not book value. Now you have to take off the liabilities. Yahoo! apparently has $13 billion in deferred income tax on the books. It has about $13B in other liabilities, cutting its book value to about $28.4B and giving Yahoo! a price/book ratio of 1.21, not 0.81 as that analysis erroneously concluded.
You can't just compare gross assets to stock price and expect anything meaningful, and you sure as hell can't compare the values of a couple cherry-picked assets that sum up greater than the net equity and claim the entire rest of the business is worth a negative amount. I find it pretty shameful that Bloomberg actually published that clickbaity bullshit.
Yahoo!'s problem right now is not that their traditional businesses are unprofitable. Their problem is the massive liabilities they have on their books.
What generally scares Buffet from tech is that the price of tech stocks is greatly inflated to reflect expectations of future growth. Buffet is very skeptical of inflated expectations of future growth.
But I do not think there is any great expectations of future growth in yahoo. In fact many analysts say that if you strip out the valuable asian assets, the value implied by the market for Yahoo's US business is about zero or even negative.
So the answer is that Yahoo is not really a tech stock anymore, but the traditional definition of that term. At least it is not priced like a tech stock.