Yahoo Trades at $36, Supposed To Be Worth $50-$55 And No One Really Cares

Have you even seen less excitement over a potential deal for a major company garner less excitement and interest than what is going with Yahoo! Inc. YHOO?

Everyone and their brother seems to calculate that the company is worth $50-$55/share. Compute their stake in Alibaba Group Holding Ltd BABA-taxed or not taxed, core Yahoo, Yahoo Japan and the items on the balance sheet and the math is simple (if you believe the math).

However, no one really cares. At this time, none of the potential suitors have come forth a publicized bid for the perceived instantaneous profit if shares are purchased at its current price ($36) and a deal goes through at the proposed break up value of the company.

Is this just the case of the "efficient market theory" not being so efficient? Or is the overhang of the tax implications from the Alibaba stake, scaring potential suitors away. If anything it is former as opposed to the latter. In the words of Sean Udall, "markets are horribly inefficient and Yahoo's valuation for years is just one prime example."

No matter how the numbers are put together, they seem to come up with a value much higher than its current price. Whereas the potential tax implications of the sale of Alibaba, have been know for quite some time.

Clearly, the best and brightest minds on Wall Street have not come with the answer and the issue wallows at the $36 level.

So what is the problem with a deal moving forward? Perhaps its start at the top of Yahoo, with its CEO Marissa Mayer. Does the Street lack so much confidence in her that do not believe the supposed numbers?

It is hard to dispute that she has up to this point enhanced shareholder value, over doubled from $16 since she took the helm in July 2012. But is its appreciation of the price more symptomatic of the bull market that has been in place over this period of time?

Most likely, it is her strategies over the last few years to enhance shareholder value, that have not resulted in adding to the bottom line. Although her basic premise to augment growth by purchasing growth was on track, perhaps she could have spent the company's money more wisely.

According to Sean Udall of the The Tech Stock Strategist, the monies spent to acquire growth has not panned out in the way she had anticipated. Udall adds, "Yahoo has bought the wrong assets, post Mayer." "The YHOO Japan and BABA stakes were bought many years pre-Mayer." Since Mayer, I'm not sure I can think of one purchase YHOO has made which had yielded significant investment return.

For example, what has the $1.1 billion paid for Tumblr in May 2013, yielded? Not much, as the platform has not come close to providing the digital content it was supposed to. In other words, the site has morphed into a hodge podge of blogs than are easily replicated on many other platforms.

In fact, Tumblr traffic peaked the month they were acquired by Yahoo. Instead of being a boon to growth, it has now been encumbered in the Yahoo product cycle of stagnation.

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Only time will tell if this purchase will yield the gains imagined when originally purchased.

Similarly, what has become of the purchase of Summly )news reading app? In March of 2103, Yahoo paid millions to a 17-year-old high school student, who was not even born when Yahoo was founded in 1994. Just another expensive investment that is extremely difficult to determine how much value it any its added. The reason being that the Summly app was shut down after it was purchased..Therefore, how much the algorithm enhanced Yahoo's mobile experience is truly an unknown,

Along these lines, it is very difficult to determine the exact amount of money spent by the company for their numerous acquisitions over the last three years, since the price tag of many of these purchases were not revealed publicly.

Could it be that many of these acquisitions, in which the price paid is hard to determine may be worthless? Furthermore, at some point many of the purchases in pursuit of growth, may actually end up being writedowns on the balance sheet. As a result, the potential value of $50-$55, may be well below the true value of the company after writedowns from the failed acquisitions.

Udall went to suggest that potential suitors for Yahoo may be turned off by the approach Mayer took to improve the bottom line at the company. Instead of looking to the outside, she may have overlooked unlocking potential value in the company's current assets.

Udall added, the once leader in search, could end its relationship with Microsoft and make wise acquisitions to enhance revenues from search and advertising. Also, harvest the value from some of 800 million email accounts they have amassed over the years.

At this time, there are many more questions than answers surrounding the Street's pursuit of Yahoo's true value. However, whatever is taking place nothing is signaling to the Street, that is company is worth the $50-$55 supposed value. If so, there would be several pursuers, jumping bids to get in the on the "free money" being handed out on Wall Street.