This is the correct answer.

Matt Levine did quite a long writeup about this a while back: http://www.bloombergview.com/articles/2014-04-17/how-can-yah...

Taking an uncharitable view, Yahoo!'s core business actually has negative value -- and the current round of layoffs is a direct result of Wall Street pressure to stop subsidizing said core business and preserve the value of the Ali Baba stock.

Alibaba's market cap is $174B. Yahoo owns 24% of their stock. That's $41B of wealth right there. That's actually more than their own market cap, which is $28B!

I imagine the natural duopoly of tech is at work here. Google/Bing is pretty much it for web searching in the US, with no room for whatever engine Yahoo is borrowing this week. Gmail (gmail.com, google business apps, etc)/MS(Outlook/Hotmail, Azure, Exchange 365) for mail, etc. Not sure where Yahoo even fits anymore.

> Alibaba's market cap is $174B. Yahoo owns 24% of their stock. That's $41B of wealth right there.

That last trade price times number of outstanding shares -- market cap -- is the only common basis for overall valuation of publicly traded firms (that is, the only basis that is guaranteed, by definition, to be available for every publicly traded firms) does not mean it is a particularly accurate and meaningful measure of the overall value in any useful sense.

It does illustrate the point that Yahoo's wealth is really in its holdings. Yahoo as a company really doesn't produce much, or anything, of positive value.

In terms of actual money, that's not wrong. The core operations are at about break-even per the 2014 report:

http://i.imgur.com/f23T3Xc.png