24/7 Wall St. has obtained a copy of the Bernstein Research report on the break-up of Yahoo!.
The first model done by Bernstein assume that the company is broken into three parts.
The first piece is Display Advertising. Using comparable figures for valuations of companies including DoubleClick, the value of this unit is put at $25.5 billion.
The next piece is the Search Unit. Looking at the values of Google (GOOG) and Ask.com, the research firm values this piece at $15.6 billion.
The last piece is Subscriptions. To get a value for this Bernstein used Match.com and RealNetworks (RNWK) and came up with a value of $1.3 billion.
The values of Yahoo! Japan and China e-commerce company Alibaba was added to cash and net operating losses, bringing the total break-up value of Yahoo! to $54.3 billion, or $38.65 a share.
Bernstein offered a second analysis based on Yahoo! outsourcing its search business to Google. If this was done, search revenue would rise 28% in 2008, and total revenue by 16% over current projections. Yahoo! could cut 25% of its head count dropping operating expenses by 17%. The combined benefit of these actions would improve operating income by 205% over current Wall St. estimates.
Maybe Yahoo! could contract out management of the company to Bernstein.
Douglas A. McIntyre can be reached at email@example.com. He does not own securities in companies that he writes about.