This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Yahoo!'s Marissa Mayer Receives a Wall Street No-Confidence Vote

NEW YORK (TheStreet) -- Wall Street is voting with its wallet as it always does, and the results are in: Internet giant Yahoo's (YHOO) CEO Marissa Mayer is receiving a no-confidence vote.

When I profiled Internet giant Yahoo! during April in Yahoo!'s Next Hire Will Make or Break Marissa Mayer I focused on the market's increasing impatience with the company's CEO.

Mayer left Google (GOOGL) about two years ago to take command of Yahoo! and the news media immediately fell in love with her. As a number cruncher, I willingly and readily joined in and concluded the stock was one of the best values on Wall Street.

Logically, it's almost impossible to comprehend why shares in Yahoo! are trading so cheaply. Using my back-of-the-envelope current asset valuation method, I arrive at an appraisal greater than Yahoo!'s market cap.

YHOO Operating Income (Annual) Chart

Estimates on China's Alibaba valuation range from $120 billion to $250 billion, and the $200 billion figure is thrown around often lately. Since I'm conservative and risk-averse by nature, I'll use $150 billion as an appropriate Alibaba valuation.

Yahoo! owns 24% of Alibaba, and based on $150 billion total valuation it's worth (pretax) about $36 billion. Surprisingly to many investors is the fact that Yahoo! Japan is a separate company and Yahoo! only owns a minority stake.

Yahoo! owns about 35% of Yahoo! Japan. The Yahoo! Japan investment adds another $5.4 billion to Yahoo!'s balance sheet. Between the two Asian investments, Yahoo! has $41.4 billion mark-to-market value of assets. Add another billion dollars in cash over and above debt, and we arrive at $42.4 billion in two investments and cash.

However, as of this writing, Yahoo's market cap is only $33.5 billion. That means a share in Yahoo! is worth more than the trading price. That can happen during extreme pessimism, but it doesn't normally last long. The market is too efficient for such an obvious discrepancy to linger. Yahoo! shares recently traded around $33, down 18% for the year to date.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,156.85 +24.88 0.15%
S&P 500 2,001.57 +2.59 0.13%
NASDAQ 4,562.1890 +9.43 0.21%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs