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Is Yahoo Worth More Than the Sum of Its Parts?

Some investors don't think so
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During a Wednesday meeting with Wall Street analysts, Yahoo CEO Carol Bartz was charged with the task of convincing them that the company should remain whole rather than be sold off part by part, Marketwatch reports. Yahoo created a stir among investors when it announced that Alibaba, in which Yahoo holds a 43% stake, had handed off its payment business, Alipay, leading to speculation that Yahoo had become powerless in Alibaba's affairs. Some investors now think that Yahoo should sell its Asian assets, including Alibaba, before finding a way to hand off the rest.

“The beauty was going along for the ride. You got the Chinese assets basically for free when you bought Yahoo,” said Adam Seessel of Gravity Capital Management. “Now, I think they’re going to have to sell their Alibaba stake, and they’ve talked about monetizing Yahoo Japan. What’s left is the core of Yahoo and I expect they’ll do an LBO [leveraged buyout] of that.” He estimates that the individual parts of Yahoo are worth more than the company’s current value.

But Bartz gave no indication that the company was breaking up, or considering getting rid of its Asian assets. Instead, she made sure to let investors know that one of Yahoo’s top priorities is ensuring that Alibaba stays strong—despite the fact that many of these same investors don’t have much faith in her to begin with. “I will say the general perspective is that she hasn’t done a good job,” said Kerry Rice of Wedbush Securities. “Yahoo has been deteriorating on some levels for a while, but I don’t know if anybody could have come in and righted the ship and not been under that kind of pressure.”

Unlike Seessel, Rice doesn’t believe that the company would be worth more in pieces, even if it is struggling: “If you break the whole thing up, I don’t think the value is there.”