Yahoo may be selling its core internet business - here's what that business looks like

Yahoo's board is reportedly weighing whether to sell its core internet business, the Wall Street Journal reported on Tuesday.

Yahoo's business is currently valued at less than zero by Wall Street, which assigns all of the company's value to Yahoo's Asian investments, including its 15% stake in Chinese e-commerce giant Alibaba Group.

But Yahoo has $5.9 billion in cash and short-term investments on its balance sheet, as well as $1.6 billion in property and equipment (although it's also carrying $1.2 billion in debt from convertible notes). So the business is not really worthless.

Beyond the cash, a company that acquired core Yahoo would get a variety of online businesses, including:

• Yahoo's search business: Yahoo handed off much of its search technology to Microsoft when the two struck a partnership in 2010. But the search business generates about $2 billion a year in revenue, accounting for roughly 40% of Yahoo's total business. Under CEO Marissa Mayer, Yahoo has revised its deal with Microsoft, added a search ads deal with Google, and begun re-investing resources into developing new mobile search products, such as the Index project. Yahoo's search revenue topped $509 million in the third quarter, up 13% from a year ago.
• Yahoo websites including the homepage, Yahoo Finance, Yahoo Mail, and Yahoo fantasy sports. Yahoo's online properties draw more than a billion users every month including more than 600 million mobile users, Yahoo says. This is the online real estate that Yahoo's display advertising business is built on. That display business has been under pressure, as ad networks have battered the price for display ads. Display revenue topped $500 million in the third quarter, up about 14% from the previous year. Most of that growth, though, came from ads on affiliate sites - Yahoo's own display ad revenue dropped 21%.
• A fairly large and strong sales force to sell those ads.
• Tumblr, a social blogging company Yahoo bought in 2013 for $1.1 billion. Tumblr now has more than 200 blogs.
• Flurry, a mobile analytics company that Yahoo bought in 2014 for $270 million. Flurry helps mobile app makers and advertisers reach audiences more effectively.
• A bunch of people and intellectual property it gained through a series of small acquisitions over the last few years - mostly small mobile app makers and ad tech companies.

Activist shareholder Starboard wrote a letter to Yahoo last month urging it to halt its plan to spin off its 15% stake in Alibaba through a complex tax-free spinoff that Yahoo hopes to complete by January. Starboard said the risk of incurring taxes on the deal was too great. Instead, Starboard said Yahoo should sell its core internet search and ad business.

Starboard's thinking was that Yahoo would then retain its stake in Alibaba, which is more valuable than this core business. A number of hedge funds are reportedly thinking of buying the core Yahoo business.

Pressure is mounting on Mayer, a former Google executive, more than three years into a turnaround effort that has so far shown little progress. Yahoo's revenue remains stagnant and the company has failed to create any new mobile apps or services that have been big consumer hits. A string of Yahoo executives have recently jumped ship, and Yahoo has reportedly hired consulting firm McKinsey and Co. to help craft a companywide reorganization.