The day will come when the latest news about Internet pioneer Yahoo won’t rate headlines. That day hasn’t yet arrived.
The Wall Street Journal reported Tuesday that Yahoo’s board will consider selling its core Internet business, currently valued at less than nothing by investors. Wall Street instead values Yahoo (yhoo) at slightly less than its cash plus stakes in Chinese e-commerce company Alibaba (baba) and Yahoo Japan (yahoy) , a joint venture between Yahoo and Japanese company SoftBank.
It's humiliating for any company’s main asset to be valued below zero. Although Yahoo still makes money, investors are betting that the investments CEO Marissa Mayer is making won’t pay off. Mayer has been focusing Yahoo on mobile apps and investing heavily in the company’s media properties. But nothing much is working, and Mayer has said she plans to slim down the company.
This all begs the question of why we care so much about Yahoo. That’s an easy one. At 21 years old, Yahoo is ancient by Silicon Valley’s standards. It’s also one of the first companies people of a certain age associate with the Internet. Its survival is a testament to how hard it is to kill companies with established cash flows. Properties like Yahoo Mail and Yahoo Finance still command the loyalty of users and generate meaningful revenues.
Who would buy Yahoo? Microsoft or Verizon seem highly unlikely—the former because it is successfully pivoting away from consumer businesses, the latter because it recently bought AOL. Alibaba itself could find an easy way into the U.S. market by buying Yahoo, a sizable media property. Most likely of all is a private-equity company, which can make money with an asset that isn’t growing simply by buying at the right price, reducing costs, and milking the profits.
Private-equity firms eyed Yahoo at higher valuations. They may well circle again with the price substantially lower.
This article first appeared in the daily Fortune newsletter Data Sheet. Subscribe here for a daily dose of analysis from Adam Lashinsky and a curation of the day’s technology news from Heather Clancy.