You can read about this in Securities Analysis (1940). Basically you don't trust management, so companies can trade for less than liquidation value [edit: and investors don't trust / overlook that a negative subsidiary can be unwound, although that's not technically true in yahoos case if all subs are profitable].
It's really amazing how nothing changes in finance; it's just that memories are short.
It's really amazing how nothing changes in finance; it's just that memories are short.