Why Yahoo is under siege, in one chart

Internet giant/business basket case Yahoo is embroiled in a new round of controversy, with activist investors at Starboard Value demanding big changes and the board debating proposals to essentially liquidate the company. A majority of board members appear to still be backing CEO Marissa Mayer, but the swirling controversy may nonetheless force her to pause some of her current plans.

Yahoo is a big company with a lot of moving parts, but the reason it's so contentious can be summed up in one chart of data borrowed from Bloomberg's Matt Levine.

Here, I've taken the total value the stock market places on Yahoo. I've also listed the total value the stock market places on the shares in the Chinese internet company Alibaba that Yahoo owns. And the total value the stock market places on the shares in the Japanese internet company Yahoo Japan that Yahoo owns. And the value of the cash that Yahoo owns in the bank. Subtract all that, and you reach the conclusion that the rest of Yahoo is worth less than nothing.

Now, is Yahoo worth less than nothing? Obviously not. If you actually put the core Yahoo business up for sale as some people are talking about, someone would buy it for a greater-than-zero sum of money.

At a minimum, you could shut down everything except the fantasy football app, fire everyone, and you'd have a company that's worth something.

And plenty of other bits and pieces of Yahoo seem to clearly have some value too.

The issue is that tying these various businesses together and then linking them with the Asian stock assets and considering potential tax liability on selling those assets appears to be destroying billions of dollars in potential value. The result is a company that is worth considerably less than the pre-tax sum of its parts. So investors are fighting over how to best break up or reengineer the company in order to maximize the flow of money into their own pockets.

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