Was Yahoo’s Tumblr acquisition a flop?

Fortune

Is Starboard Value right about Tumblr?

The activist hedge fund has stepped up its attack on Yahoo [fortune-stock symbol=”YHOO”] and its CEO Marissa Mayer, and it’s not hard to see why. Following the initial public offering of the e-commerce company Alibaba [fortune-stock symbol=”BABA”], Yahoo netted $9.4 billion. It retains a stake worth approximately $32 billion in the Chinese company. Yahoo also owns a multi-billion dollar slice in Yahoo Japan.

Despite this, Yahoo’s total market value is about $40 billion—a clear signal that Wall Street doesn’t think much of Yahoo’s core business. The market is showing “significant skepticism about the company’s strategy,” Starboard wrote in a letter to Yahoo. It’s hard to argue with that.

(Starboard actually contends that the market gives a negative value to Yahoo’s core. Some analysts disagree, as any sale of its stakes in Alibaba or Yahoo Japan would come along with hefty tax bills…

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