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Yahoo! Earnings: Getting the Amazon Treatment From Investors

NEW YORK ( TheStreet) -- Yahoo! (YHOO - Get Report) came out with its earnings last night.

At first, the stock sold off 5%. Investors liked that Yahoo! met EPS estimates (shattered them actually), but not that it was light on revenue and guidance for next quarter (although Yahoo! kept its full-year Ebitda guidance intact).

However, in part thanks to a Justin Post upgrade this morning on the hope for an Alibaba IPO, the stock made back all those losses and was even up a bit -- even though the rest of the market was in the tank.

The stock bounceback reminded me of how Amazon.com (AMZN) seems to perform every quarter. It "misses" earnings and the stock sells off at first in the after-hours, before roaring back to the green the following day.

Are Amazon investors a cult? Sure. I clearly don't understand the forward price-to-earnings ratio of 75x. To me, that behavior is a cult, although I have no problem with Amazon as a company.

Perhaps we're seeing Yahoo! become a little more Amazon-like in this way. Is that because of its core business or Marissa Mayer's leadership? No way. I think it's because of the remaining 24% stake in Alibaba Group.

Most of the press, sell-side analysts, and non-Yahoo! investors who complain about Yahoo! treat it like it only consists of the core business just like AOL (AOL) only consists of its core business.

I would say most people who are investors in Yahoo! look at the investments in Alibaba and Yahoo! Japan first and foremost. I think Alibaba IPOs in the second half of this year for over $80 billion. The stake in Yahoo! Japan is worth $10 billion now (pre-tax), double what it was back in December.

That means, on an after-tax basis, you're getting the Alibaba and Yahoo! Japan investments, plus Yahoo!'s cash (over $5 billion) for $25 billion out of the total market cap of $26.5 billion. That means at current prices, YHOO's core is only being valued at $1.5 billion.

I don't care how bad display ads were in the quarter. That's too cheap!
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