> > The now-isolated core business would have positive value.
> The article doesn't really make the case for that. It says the core business is profitable, but current profitability doesn't mean positive value; it could be in debt, profitable, and not expected by the market to remain profitable long enough to get out of debt -- that would give it negative market value.
Stock can't have negative value. If a company becomes insolvent, its stockholders aren't forced to pay its debts.
The article agrees: "Unless the probability of that outcome is 100 percent -- a rare thing in this life -- then Core Yahoo should have some positive value."
A component of a business can. Ignoring the problems that make marginal stock prices problematic for overall valuation, and transaction costs, etc., the stock price of a corporation should be max(0,sum(value of all components of the business)). The fact that this value should never be less than zero doesn't mean that no component of the business has a negative contribution.
I think we're in agreement. I agree that "Core Yahoo" might presently have negative value, because it could lose money in the future and eat into the company's other assets.
I'm just saying that if Yahoo sold its major stock assets and transferred most of its cash to shareholders, the remainder of the company (consisting of "Core Yahoo" and not much else) would have positive value.
> The article doesn't really make the case for that. It says the core business is profitable, but current profitability doesn't mean positive value; it could be in debt, profitable, and not expected by the market to remain profitable long enough to get out of debt -- that would give it negative market value.
Stock can't have negative value. If a company becomes insolvent, its stockholders aren't forced to pay its debts.
The article agrees: "Unless the probability of that outcome is 100 percent -- a rare thing in this life -- then Core Yahoo should have some positive value."