Last December, I wrote that fading internet stock Yahoo was trading below the sum of its parts.

You can read the whole article here, but the basic idea was that when you looked at the component value of Yahoo’s major parts, the market was saying that the core business was worthless.

At that time, Yahoo owned stock in Alibaba worth $32 billion, stock in Yahoo Japan worth $8.5 billion and cash on hand of $5.9 billion for a total of $46.4 billion.  Back then the market value of Yahoo was $31 billion suggesting that everything else was worth negative -$15.4 billion.

Shareholders were upset and forced management to evaluate their ‘strategic options,’ which means break up the company and realize some value for shareholders.

I wrote that it was probably a good trade for someone, but not us.  Several strategic buyers like Verizon have taken a look and yesterday, the New York Times reported that Warren Buffet was looking at the deal with the owner of Quicken Loans, Dan Gilbert.

The reporting suggests that Gilbert is the interested buyer with Buffet as the financier, much like the Heinz deal that Buffett completed with private equity firm 3G last year (more on that deal here).

While Yahoo stock is up somewhat since my last article, I said that this deal wasn’t for us.  It’s could be a terrific deal for Buffett, though, because he and Gilbert can make changes in the business, like they did with Heinz.

First, they have to work through the tax issues associated with selling Alibaba and Yahoo Japan.  Other firms have looked at the tax issues and aren’t sure that they can sell those assets efficiently, but Buffett’s army of tax lawyers may have some clever tricks up there sleeve.

The harder part comes next, however, when they have to figure out how to improve Yahoo’s core business, advertising.  Their banner ads are suffering, but they do have strong assets in the sense that their site is among the most visited in the world and their mail service still reaches millions of consumers.

I don’t know what it’s worth, but it’s a smart bet that it’s something more than negative -$15.4 billion.