I recently wrote an article on Yahoo (YHOO) here, on WhoTrades. In the article, I argued that Yahoo's core business is worthless and gave my points to back up the thesis. Today, I read a very interesting article about the company by a renowned professor Aswath Damodaran, a teacher of finance at New York University. In this write-up, I will give you a summary of Damodaran's article and give my thoughts to it. In the past few days, Yahoo's board of directors made a press release stating that it is evaluating an opportunity to sell Yahoo's core business, which includes Mail, its sports sites, and advertising technology. The company's current CEO, Marissa Mayer, failed to save the company that had found itself in an existential crisis back in 2012. Yahoo's success has been short-lived on a historical scale, as Damodaran's chart depicts: (Source: Aswath Damodaran's blog) Yahoo lost its vision and mission after it had lost the search engine war to Google. Ironically, while the company failed at its main business, it made two phenomenal investments along the way: it bought a stake in Alibaba as early as 2005 and invested in Yahoo Japan, which succeeded (check out the margins on this one here) in the market despite the parent's stumbling. Professor Damodaran gave the following valuation to Yahoo's stock just over year ago: (Source: Aswath Damodaran's blog) Note: as of the time of the writing of this article, Yahoo's stock is trading at just below $34.50 per share. Professor Damodaran valued Yahoo's operating assets at about $6.4B back in 2014. This was before Yahoo posted disappointing top line results both in 2014 and 2015. This was also before Yahoo showed negative cash flows from operations in September 2015 for the first time in many years. Aswarth Damodaran thinks only an aggressive buyer with the so-called "Steve Jobs's syndrome" will be willing to buy Yahoo's operating assets. He believes the money from the sale should be returned to shareholders, while the remaining investments in Alibaba and Yahoo Japan should be held in a closed-end fund. Professor Damodaran sees a good opportunity to indirectly own a stake in these companies by buying Yahoo's shares: (Source: Aswath Damodaran's blog) At the current price per share, Yahoo's investors get a piece of Alibaba and Yahoo Japan at a ~29% discount to market value. However, keep in mind that this discount is justified given that the current market value of Yahoo's equity does not reflect capital gain taxes due on the realization of these assets. I respectfully disagree with Professor. Although the numbers seem to work on paper, I see too much risk and uncertainty with Yahoo at the current moment. There are two things I want readers to consider: (1) If Yahoo definitely decides to sell its operating assets, do you want to bet your own money (by owning its stock) on the success of the deal? Keep in mind that you have control over the sale process. Even if you did, how many companies, in your opinion, would want to pay Yahoo top dollars for its customer base given that they know the company is now in trouble? (2) If Yahoo drops this idea, things will not improve: the company will still be without a steering wheel. Moreover, it will still be losing money in all lines. The bottom line is, stay away from Yahoo. If you want to risk your money to get above-market returns, search for companies that have different kinds of problems than Yahoo.