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.
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.
[1] http://www.bloomberg.com/features/2016-yahoo/
[2] https://www.google.com/finance?q=NASDAQ%3AYHOO&fstype=ii&ei=...