From yesterday&#x27;s article &#x27;How to Value Yahoo’s Core Business&#x27;
<a href="http:&#x2F;&#x2F;www.nytimes.com&#x2F;2015&#x2F;12&#x2F;10&#x2F;business&#x2F;dealbook&#x2F;how-to-value-yahoos-core-business.html" rel="nofollow">http:&#x2F;&#x2F;www.nytimes.com&#x2F;2015&#x2F;12&#x2F;10&#x2F;business&#x2F;dealbook&#x2F;how-to-v...</a><p><i>With Yahoo exploring a separation of its core business, the world may soon know what the company — minus its lucrative stake in Alibaba — is worth.<p>As of Wednesday, that figure is a negative (yes, negative) $13 billion.<p>How can a company that has $4.5 billion in revenue and one billion users be worth less than zero?<p>Let’s walk through the numbers.<p>The value of Yahoo’s stake in Alibaba is $32.5 billion and its stake in Yahoo Japan is $8.6 billion. The company’s net cash — or cash minus debt — is $4.2 billion. All told, that is $45.3 billion.<p>But stock market investors are assigning a valuation of $32.5 billion, based on Wednesday’s trading. The news that Yahoo was halting a spinoff of its stake in Alibaba, the Chinese e-commerce giant, choosing instead to explore a spinoff of Yahoo’s core Internet operations plus its stake in Yahoo Japan, sent shares lower, widening that gap.<p>On average, analysts value Yahoo’s core based on five times projected Ebitda – some a little higher, some a little lower. That yields a market capitalization of $4.6 billion if Yahoo were an independent company. Tack on the 35 percent stake in Yahoo Japan, worth about $8.6 billion, and you’ve got a $13.2 billion business that could be spun out.<p>If the transaction ultimately is taxed, the bill would be a lot smaller for the Yahoo core plus Yahoo Japan entity than the original plan to spin off its Alibaba stake. Assuming a 41 percent tax rate, as CRT did in Wednesday’s note, Yahoo would pay $5.4 billion in taxes, versus $13.3 billion in taxes if it spun out Alibaba – potential savings that amount to $8 billion. That’s an extra dollar back for each share outstanding. Yet, interestingly, the stock lost 45 cents a share Wednesday.</i>