European Technology UpdateEuropean Technology Update ... Sep 13, 2010 آ  Optical transceiver chip maker

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  • European Technology UpdateEuropean Technology Update September 13, 2010

    Thierry MonjauzeThierry Monjauze Managing Director 63 Brook Street London W1K 4HS United Kingdom Phone: +44 20 7518 8901 tmonjauze@harriswilliams.com

    Francois Morin Vice President 63 Brook Street

    www.harriswilliams.com This report has been prepared by Harris Williams & Co. Ltd and approved by Sturgeon Ventures LLP in accordance with Conduct Of Business rules COBS 4 of the FSA Handbook.

    Harris Williams & Co. Ltd is an authorised representative of Sturgeon Ventures LLP which is Authorised and Regulated by the Financial Services Authority. This report is being made by Harris Williams & Co Ltd. Investment banking services are provided by Harris Williams LLC, a registered broker-dealer and member of FINRA and SIPC, and Harris

    Williams & Co. Lt. Harris Williams & Co. is a trade name under which Harris Williams LLC and Harris Williams & Co. Ltd conduct business in the U.S. and Europe, respectively.

    63 Brook Street London W1K 4HS United Kingdom Phone: +44 20 7518 8907 fmorin@harriswilliams.com

  • Recent Developments

    HP agreed to acquire data storage solutions provider 3Par for $33 per share, or $2.3 billion, in a highly competitive bidding war with Dell Security software provider McAfee has agreed to be acquired by Intel for $7.7 billion HgCapital has agreed to acquire software provider TeamSystem for €565 million Electronic payment solutions provider DataCash has agreed to be acquired by MasterCard for $493 million I li l t ki d t id Att ti h d t b i d b 3M f $230 illi

    Company Specific

    News

    p

    Israeli people-tracking products provider Attenti has agreed to be acquired by 3M for $230 million IBM has agreed to acquire marketing software solutions company Unica for $447 million Volvo Technology Transfer and Industrifonden have divested Illuminate Labs, a provider of lighting and illumination technology for video games, to Autodesk The online gambling industry has been the subject of M&A speculation particularly surrounding 888, Sportingbet and PartyGaming1 Chinese online gaming company Shanda Games acquired South Korean competitor Eyedentity for $95 million Palamon Capital has sold broadcast equipment manufacturer OmniBus Systems to Miranda Technologies for C$ 48.7 million Francisco Partners has acquired a majority stake in email marketing software provider Emailvision in a €46Francisco Partners has acquired a majority stake in email marketing software provider Emailvision in a €46 million transaction LinkedIn has acquired recommendation technology provider MSpoke in its first acquisition Zynga acquired Japanese online gaming platform Unoh for “several billion yen” Google acquired social payments provider Jambool for approximately $75 million Optical transceiver chip maker Phyworks has been acquired by Maxim Integrated Products for $72.5 million Visual search engine Like.com has been acquired by Google Nokia has agreed to acquire mobile analytics company Motally Index Ventures and Greylock Partners led a £7.5 million round in ecommerce company Notonthehighstreet.comoto t e ig st eet.co Private online shopping clubs continue to attract significant interest with Tagadas launching its U.K. children’s products site; Brands4friends making an additional “multi-million” pound investment in the U.K. operator Secretsales.com; and Accel investing €37 million in Showroomprivee.com HgCapital business software portfolio company Visma is targeting a 2011 IPO Online video platform Hulu has begun preparations for an IPO that could value the company at more than $2 billion Online ticket retailer Volagratis hired advisors to prepare for a Zurich Stock Exchange listing Advertising on Facebook generated $665 million in 2009 and is expected to double in 2010 to reach $1.3 billion, according to eMarketer

    Global IT spending is expected by IDC to grow 6% to $1.5 trillion for 2010 with China growing by 21%, Western Europe by 3% and the U.S. by 5%

    Cisco Systems launched its own tablet PC designed for enterprise use called the Cius and RIM intends to launch the BlackPad in November Google unveiled new search technology feature Instant, which displays likely search results as the user types MySpace rolled out its new music video service as a first step in transforming the site into a social media portal

    Industry Trends

    ComScore reported that smartphone sales in Europe’s five biggest markets grew by 32% in 2009 and by 70% in the U.K According to Canalys, the Android platform now accounts for a greater share of new smartphones than RIM in the U.S. (34% Android, 32% RIM, 22% Apple) Amazon has announced that it controls 70-80% of the ebook market eMarketer forecasted the population of mobile video viewers in the U.S. to grow by nearly 30% through 2014 to reach 57 million viewers and $1.3 billion in revenue research2guidance reported that global revenue from mobile apps reached $2.2 billion in the first half of 2010, up from $1.7 billion in 2009, with an average price of $3.60 per app A di t th P f i Ri ht S i t di it l i l t f l 25% f t t l i

    e ds

    According to the Performing Rights Society, digital music sales now account for nearly 25% of total music revenue in the U.K. The global market for boxes enabling web access on TVs is estimated by In-Stat to grow by 42% to reach $1.3 billion by 2014

    Source: Industry news sources. (1) Source: MergerMarket.

    1

  • Public Market Trading Statistics

    Stock Performance

    5%

    10%

    Last 30 Days

    g

    5.6% 3.3%

    (10%)

    (5%)

    0%

    11 Aug 17 Aug 23 Aug 29 Aug 04 Sep

    DJ Stoxx 600 Technology Nasdaq Composite Software and IT Services Communications Internet and Digita l Media

    2.4% 1.3% 1.3%

    (5%)

    0%

    5%

    10%

    15%

    20%

    25%

    Last Twelve Months

    14.7% 10.2% 7.3%

    (7.1% ) (10 7% )

    CY2010E EBITDA Margin Growth CY2010E CY2011E CY2010E CY2011E CY2010E CY2011E

    P / EEV / Revenue EV / EBITDA

    (20%)

    (15%)

    (10%)

    Sep 2009 Dec 2009 Mar 2010 Jun 2010 Sep 2010

    DJ Stoxx 600 Technology Nasdaq Composite Software and IT Services Communications Internet and Digital Media

    Comparable Trading

    Sources: Capital IQ, 9 September 2010; Brokers’ reports.

    (10.7% )

    Software and IT Services Enterprise Applications 19.6% 0.2% 1.5x 1.5x 7.8x 6.9x 14.7x 12.6x European Large Cap Software 32.2% 10.2% 3.6x 3.4x 11.1x 9.7x 18.1x 15.8x Financial Software 23.6% 7.8% 2.1x 2.0x 8.6x 7.3x 16.7x 13.8x Healthcare Software 20.3% 33.2% 1.9x 1.7x 9.3x 7.7x 18.2x 18.7x Large Cap IT Services 13.1% (3.1%) 0.9x 0.9x 6.5x 5.9x 13.8x 11.7x Mid Cap IT Services 11.1% (6.7%) 0.7x 0.7x 6.2x 5.7x 10.9x 9.4x Offshore IT Services 25.1% 19.8% 4.0x 3.6x 15.5x 13.1x 22.7x 19.1x Security Software 34.1% 5.3% 3.1x 3.0x 9.2x 8.2x 17.3x 15.4x

    Communications

    Summary

    Communications Digital Broadband 13.2% 3.7% 0.7x 0.7x 5.5x 4.9x 11.4x 10.4x Diversified Communication Equipment 12.4% 19.1% 1.2x 1.2x 7.9x 9.4x 19.0x 15.5x Mobile Content / Solutions Providers 16.0% 24.8% 1.9x 1.7x 12.0x 7.4x 27.8x 18.2x Mobile Infrastructure Software 23.8% 7.0% 2.2x 2.1x 10.6x 8.0x 17.2x 16.7x

    Internet and Digital Media Chinese Internet Leaders 41.2% 33.0% 8.1x 7.0x 18.5x 13.5x 24.1x 21.4x Online Classifieds 38.6% 14.1% 5.2x 5.2x 12.9x 10.3x 25.7x 22.1x Content Providers / Communities 21.4% 7.7% 2.2x 2.1x 10.6x 8.4x 25.4x 24.0x Ecommerce 15.8% 21.5% 3.4x 3.0x 19.8x 14.4x 32.4x 30.1x Global Internet Leaders 33 4% 24 5% 6 1x 5 3x 16 8x 12 9x 22 7x 22 6xGlobal Internet Leaders 33.4% 24.5% 6.1x 5.3x 16.8x 12.9x 22.7x 22.6x Interactive Entertainment 16.3% 26.4% 0.8x 1.0x 5.2x 4.6x 21.1x 16.4x Intermediation and Comparison 27.5% 7.6% 1.9x 1.7x 7.1x 6.3x 17.4x 15.4x Online Gambling 31.8% (8.9%) 3.4x 3.3x 9.3x 8.2x 13.7x 12.0x Online Marketing 13.3% 7.0% 1.2x 1.2x 9.9x 7.1x 22.1x 17.3x Online Travel 27.7% 17.5% 4.5x 4.1x 16.4x 13.1x 31.0x 22.4x

    2

  • Software and IT Services

    15%

    Security Software 13.0% European Large Cap Software 6.7% Offshore IT Services 3.4% Enterprise Applications 2.7% Financial Software 2.5% H lth S ft 2 2%

    Last 30 Days Performance

    0%

    5%

    10%

    Healthcare Software 2.2% Mid Cap IT Services 0.5% Large Cap IT Services (0.7% )

    (10%)

    (5%)

    11 Aug 17 Aug 23 Aug 29 Aug 04 Sep

    European Large Cap Software Financial Software Enterprise Applications Healthcare Softwarep pp Security Software Large Cap IT Services Mid Cap IT Services Offshore IT Services

    Last Twelve Months Performance Offshore IT Services 46.4% European Large Cap Software 18.1% Enterprise Applications 15.6% Financial Software 13.4% Healthcare Software 1.3% Security Software (4.3% ) Mid Cap IT Services (5.3% )

    50% p ( )

    Large Cap IT Services (8.2% )

    10%

    20%

    30%

    40%

    (20%)

    (10%)

    0%

    Sep 2009 Dec 2009 Mar 2010 Jun 2010 Sep 2010

    European Large Cap Software Financial Software Enterprise Applications Healthcare Software

    Source: Capital IQ, 9 September 2010. 3

    p pp Security Software Large Cap IT Services Mid Cap IT Services Offshore IT Services

  • Software and IT Services (Continued)

    Market Enterprise CY2010E Cap ($m) Value ($m) EBITDA Margin Growth CY2010E CY2011E CY2010E CY2011E CY2010E CY2011E

    European Large Cap Software SAP 54,613 48,272 33.5% (1.3%) 3.2x 3.0x 9.6x 8.3x 16.7x 14.4x Dassault Systemes 7,580 6,650 27.8% 8.1% 3.4x 3.1x 12.3x 10.2x 20.9x 17.9x Autonomy 6