What's Yahoo! Really Worth Once Alibaba Is Gone?

NEW YORK (TheStreet) -- There was a great article by Doug MacMillan last week in the Wall Street Journal about how Yahoo! (YHOO) is going to be under increasing pressure after Alibaba goes public later this year.

In the article, there's an interesting graphic that basically outlines of what Yahoo!'s current $34 billion market cap consists. The valuation is important in how the market views the worth of Yahoo!'s core business, which will have an effect on its stock price.

The Journal does an accurate job of categorizing the value of the Alibaba and Yahoo! Japan stakes net of taxes, which Yahoo! would have to pay. This is something that several other articles -- stating the Yahoo! core business currently has a negative value -- have omitted.

According to the article, Yahoo!'s Alibaba stake is worth $22.42 billion, using a $160 billion valuation for Alibaba. Yahoo!'s 35% stake in Yahoo! Japan is worth $5.4 billion net of taxes.

The article then says Yahoo! has $1.71 billion in cash on hand, and so the Yahoo! core business has an implied value of $4.7 billion.

However, I would dispute the Journal's conclusion that Yahoo! has $1.7 billion in net cash on hand. On the last earnings call, Yahoo! reported it had $4.571 billion in "cash and marketable securities." The reason for the discrepancy between Yahoo! and the Journal article is contained in the company's 10-Q.

Yahoo! did report $2.9 billion in "cash and cash equivalents" as well as "short-term marketable securities." It also reported $1.2 billion in convertible notes or debt. Therefore, the net cash reported was $1.71 billion, as the newspaper says. However, Yahoo! also reported $1.631 billion in "long-term marketable securities," which could be 10-year bonds or bonds maturing in 90 days.

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