Key points of note re intrinsic value estimates  Udanchoo is a Hindu phrase for flyaway or disappear

Venkat Subramaniam writes: I have calculated the intrinsic value of the operating assets using a DCF method, with source information from company financials (please see at appendix for the intrinsic value calculation for Alibaba, Yahoo Japan, and Yahoo’s Core Business).

The debt, cash, and non-operating assets have been taken from the most recent earnings reports available.

I have applied a 2% discount to Alibaba and Yahoo Japan’s intrinsic value to account for the fact Yahoo Inc’s stake is trapped inside a corporate structure and cannot easily be crystallised. In the Yahoo Inc Consolidated column, I have added up the net value of equity based on Yahoo Inc’s share of equity (15.4% for Alibaba, 35.5% for Yahoo Japan, and 100% for the Core Business).

The value of employee stock options has been calculated using information available from the company financials, and using Black Scholes method.

In conclusion – my value of intrinsic value for the Alibaba and Yahoo Japan business is comparable with the Market Cap for those business; and, after adding Yahoo’s Core Business value, it appears that the market is pricing a 32% discount to intrinsic value. This discount needs to be compared with the estimated tax liability in order to identify any mispricing in the Market.  Yahoo’s Value