Web 2.0 Weekly - June 16, 2010: "Endless Money for Online Gaming?"

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Web 2.0 Weekly

“Funds for Online Gaming Appear Endless”

Copyright © 2000-2010, Mackie Research Capital Corporation, All rights reserved

June 16, 2010

David Shore, CFA, MBA [email protected]

Damian Wojcichowsky, CFA 416.860.7652

This report has been created by Analysts that are employed by Mackie Research Capital Corporation, a Canadian Investment Dealer.For further disclosures, please see last page of this report.

www.mackieresearch.com

www.mackieresearch.com2

Key Developments (past week)

Deals (M&A, Finance) – Online Gaming Continues to Attract Significant Money

� 888 Holdings acquired online gaming company Mytopia for $18 mm.

� In the second largest financing overall this year, Zynga (online gaming) raised another $147 mm from Softbank, bringing its total financing to $381 mm.

Financial Results/Guidance� Cyberplex Inc. (TSX:CX) completed the acquisition of Tsavo Media, Inc. from

Fountainhead Estate Holding Corp., American Capital Equity I of American Capital Equity Management LLC, and others on June 8, 2010.

� NetDragon WebSoft, Inc. (SEHK:777), announced first quarter revenues of RMB 139,476,000 compared to RMB 173,898,000 for the same period a year ago. Profit before taxation was RMB 21,379,000 compared to RMB 53,502,000 for the same period a year ago. Profit for the period attributable to owners of the company was RMB 21,215,000 compared to RMB 48,943,000 for the same period a year ago. Diluted EPS was 4.03 cents compared to 9.31 cents for the same period a year ago.

� Gravity Co., Ltd (NasdaqGM:GRVY) reported net income attributable to parent company was $337 million or $0.05 per share on total net revenues of $9,840 million compared to net income attributable to parent company of $4,649 million or $0.67 per share on total net revenues of $14,696 million for the same period a year ago.


Public Company Data


Aggregate Public Data

Web 2.0 Public Companies Total Median Max Min# Companies 101 - - -

Market Cap (US$ mm) 75,829.5 69.8 29,926.5 1.7

Revenue (US$ mm) 23,428.4 56.6 3,057.7 0.0

1 Year revenue growth 6.7% 8961.6% -100.0%

EBITDA as % of revenue - 12.8% 63.1% -63.7%

Net cash (US$ mm) 8,998.7 2.3 1,825.8 -670.8

TEV/Revenue - 1.9x 45.2x 0.0x

TEV/EBITDA - 8.5x 43.7x 0.0x

P/E - 16.4x 89.2x 0.0x

Relative to 52 week high -39.2% -2.0% -95.6%

Source: CapitalIQ


Public Company Distribution

27

16

10

76

5

3 3 3 32 2 2 2

1 1 1 1 1 1 1 1

0

5

10

15

20

25

30

Ga

min

g

So

cia

l N

etw

ork

ing

Me

dia

Div

ers

ifie

d

Ma

rketin

g

Mobile

Infr

astr

uctu

re

SM

S/V

oic

e

Ente

rpris

e

Ad

vert

isin

g

Inte

rnet

Reta

il

Vir

tual W

orl

d

Datin

g

Mu

sic

Ve

rtic

al C

om

munit

ies

Co

llab

ora

tio

n

Po

dca

stin

g

Lea

rnin

g

Vid

eo

Sea

rch

Pay

ment

Fin

ancia

l S

erv

ices

By Sector By Country

0

5

10

15

20

25

30

35

40

45

Unit

ed S

tate

s

Cana

da

Chin

a

So

uth

Kore

a

Japa

n

Ta

iwa

n

Ge

rma

ny

Au

str

alia

Un

ited

Kin

gdom

Hong K

ong

Po

land

Ru

ssia

Fin

lan

d

Sw

ed

en

Mala

ysia

India

Italy

Sw

itz

erla

nd

Isra

el

Source: CapitalIQ


Valuation Dashboard – 1 Week

Rising

56%

Falling

36%

Flat

8%

Rising

37%

Falling

59%

Flat

4%

Rising

43%

Falling

53%

Flat

4%

Market Cap

Rising

45%

Falling

55%

Flat

0%

EV/Revenue

EV/EBITDA P/E


Median EV/Revenue

0.0x

0.5x

1.0x

1.5x

2.0x

2.5x

3.0x

3.5x

4.0x

4.5x

5.0x4

/28

/20

09

5/5

/20

09

5/1

2/2

00

95

/19

/20

09

5/2

6/2

00

96

/2/2

00

96

/9/2

00

96

/16

/20

09

6/2

3/2

00

96

/30

/20

09

7/7

/20

09

7/1

4/2

00

97

/21

/20

09

7/2

8/2

00

98

/4/2

00

98

/11

/20

09

8/1

8/2

00

98

/25

/20

09

9/1

/20

09

9/8

/20

09

9/1

5/2

00

99

/22

/20

09

9/2

9/2

00

91

0/6

/20

09

10

/13

/20

09

10

/20

/20

09

10

/27

/20

09

11

/3/2

00

91

1/1

0/2

00

91

1/1

7/2

00

91

1/2

4/2

00

91

2/1

/20

09

12

/8/2

00

91

2/1

5/2

00

91

2/2

2/2

00

91

2/2

9/2

00

91

/5/2

01

01

/12

/20

10

1/1

9/2

01

01

/26

/20

10

2/2

/20

10

2/9

/20

10

2/1

6/2

01

02

/23

/20

10

3/2

/20

10

3/9

/20

10

3/1

6/2

01

03

/23

/20

10

3/3

0/2

01

04

/6/2

01

04

/13

/20

10

4/2

0/2

01

04

/27

/20

10

5/4

/20

10

5/1

1/2

01

05

/18

/20

10

5/2

5/2

01

06

/1/2

01

06

/8/2

01

06

/15

/20

10

384040414141414343454646474747485051505150535656616161646666676464666970717174717168707472757679798180818080828285838584

Mu

ltip

le (

x)

Median Long-term average

# companies

Source: CapitalIQ

Revenue multiples flat with prior

week, well below LT average


Median EV/EBITDA

0. 0x

5. 0x

10. 0x

15. 0x

20. 0x

25. 0x

30. 0x

4/28/2009

5/5/2009

5/12/2009

5/19/2009

5/26/2009

6/2/2009

6/9/2009

6/16/2009

6/23/2009

6/30/2009

7/7/2009

7/14/2009

7/21/2009

7/28/2009

8/4/2009

8/11/2009

8/18/2009

8/25/2009

9/1/2009

9/8/2009

9/15/2009

9/22/2009

9/29/2009

10/6/2009

10/13/2009

10/20/2009

10/27/2009

11/3/2009

11/10/2009

11/17/2009

11/24/2009

12/1/2009

12/8/2009

12/15/2009

12/22/2009

12/29/2009

1/5/2010

1/12/2010

1/19/2010

1/26/2010

2/2/2010

2/9/2010

2/16/2010

2/23/2010

3/2/2010

3/9/2010

3/16/2010

3/23/2010

3/30/2010

4/6/2010

4/13/2010

4/20/2010

4/27/2010

5/4/2010

5/11/2010

5/18/2010

5/25/2010

6/1/2010

6/8/2010

6/15/2010

20 21 22 23 23 2222 2324 23 25 2324 26 26 26 26 26 2526 27 28 3329 34 3537 38 40 4039 38 41 4141 39 3942 43 42 4342 43 43 43 43 46 4544 50 51 5052 5353 51 51 49 5351

Multiple (x)


# companies

Source: CapitalIQ

EV/EBITDA multiples drop and remain depressed

below LT average


Median P/E

0. 0x

5. 0x

10. 0x

15. 0x

20. 0x

25. 0x

30. 0x

35. 0x

4/28/2009

5/5/2009

5/12/2009

5/19/2009

5/26/2009

6/2/2009

6/9/2009

6/16/2009

6/23/2009

6/30/2009

7/7/2009

7/14/2009

7/21/2009

7/28/2009

8/4/2009

8/11/2009

8/18/2009

8/25/2009

9/1/2009

9/8/2009

9/15/2009

9/22/2009

9/29/2009

10/6/2009

10/13/2009

10/20/2009

10/27/2009

11/3/2009

11/10/2009

11/17/2009

11/24/2009

12/1/2009

12/8/2009

12/15/2009

12/22/2009

12/29/2009

1/5/2010

1/12/2010

1/19/2010

1/26/2010

2/2/2010

2/9/2010

2/16/2010

2/23/2010

3/2/2010

3/9/2010

3/16/2010

3/23/2010

3/30/2010

4/6/2010

4/13/2010

4/20/2010

4/27/2010

5/4/2010

5/11/2010

5/18/2010

5/25/2010

6/1/2010

6/8/2010

6/15/2010

20 19 18 18 19 1919 1920 20 19 1819 19 20 21 24 24 2525 26 27 2927 30 3233 31 34 3435 36 38 3939 39 4040 41 42 4040 40 39 38 38 34 3332 35 35 3536 3535 33 35 32 3433

Multiple (x)


# companies

Source: CapitalIQ

P/E multiples also below LT average


Average Valuation – by Sector

-

5.0

10.0

15.0

20.0

25.0

Infr

astr

uctu

re

Music

Socia

l N

etw

ork

ing

Le

arn

ing

Div

ers

ifie

d

Vert

ical

Com

mun

itie

s

Mobile

SM

S/V

oic

e

Mark

eti

ng

Gam

ing

Se

arc

h

Colla

bora

tion

Media

Advert

isin

g

Podc

asti

ng

Vid

eo

Inte

rnet

Re

tail

Ente

rpri

se

Dati

ng

Fin

anc

ial S

erv

ice

s

Virtu

al

Wo

rld

2 2 7 1 5 1 4 3 6 21 1 1 9 3 1 1 2 3 2 1 1# Companies

-

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

20.0

Mobile

Ente

rpri

se

Div

ers

ifie

d

Inte

rnet

Re

tail

Media

Colla

bora

tion

Socia

l N

etw

ork

ing

Gam

ing

Mark

eti

ng

Dati

ng

Advert

isin

g

1 2 5 2 6 1 5 14 3 1 1# Companies

EV/Revenue EV/EBITDA


EV/Revenue Ranking

45.2

33.0

29.2

23.7

17.9

15.615.2

12.711.4

10.19.69.5

7.97.67.4

5.55.34.84.74.44.13.83.53.23.2 3.13.02.82.62.62.42.32.22.22.12.12.12.01.9 1.9 1.8 1.8 1.7 1.7 1.5 1.5 1.5 1.51.4 1.4 1.4 1.3 1.3 1.0 1.0 1.00.90.80.80.80.80.80.80.80.70.70.70.60.60.60.60.40.40.30.30.30.20.20.10.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

NeXplore Corporation

Worlds.com Inc.

Bright Things plc

SpectrumDNA, Inc.

MOKO.mobi Limited

Tencent Holdings Ltd.

GeoSentric Oyj

Paid Inc.

Beyond Commerce, Inc.

Gree, Inc.

Chinese Gamer International

Lingo Media Corporation

Dena Co. Ltd.

TransGaming, Inc.

DigitalPost Interactive, Inc.

HUGHES Telematics, Inc.

Accelerize New Media, Inc.

WebMediaBrands Inc

Fluid Music Canada, Inc.

Changyou.com Limited

SK Communications Co., Ltd.

Taleo Corp.

Mixi, Inc.

iseemedia Inc.

Kingsoft Corporation Limited

Wizzard Software Corporation

Frogster Interactive Pictures AG

ePro Ltd.

UOMO Media, Inc

Open Text Corp.

NEOWIZ Games Corporation

Modern Times Group Mtg AB

PNI Digital Media Inc.

Sohu.com Inc.

XING AG

Velti Plc

Webzen Inc.

Score Media Inc.

Shutterfly, Inc.

ValueClick, Inc.

GungHo Online Entertainment, Inc.

Unilava Corporation

Myriad Group AG

Platforma Mediowa Point Group S.A.

YD Online Corp.

Spark Networks, Inc.

NeuLion Incorporated

HanbitSoft, Inc.

Gamania Digital Entertainment Co., Ltd.

Hutchison Telecommunications Hong

SNAP Interactive, Inc.

Oriented Media Group Berhad

infoGROUP, Inc.

OAO RBC Information Systems

CornerWorld Corporation

Internet Group SA

The New York Times Company

AQ Interactive, Inc.

TheStreet.com, Inc.

IAC/InterActiveCorp.

NetDragon WebSoft, Inc.

United Online, Inc.

Ynk Korea Inc.

CDC Corp.

Uniserve Communications Corp.

AOL, Inc.

Points International Ltd.

DADA SpA

GigaMedia Ltd.

Glu Mobile, Inc.

Northgate Technologies Limited

Openwave Systems Inc.

Tree.Com, Inc.

Actoz Soft Co., Ltd.

Cyberplex Inc.

Jumbuck Entertainment Limited

RealNetworks Inc.

GameOn Co Ltd.

Asknet AG

LookSmart, Ltd.

Source: CapitalIQ

NeXplore has highest revenue multiple at 45.2x


EV/EBITDA Ranking

43.7

33.2

30.028.4

18.918.817.517.416.616.6

15.014.814.614.513.012.912.7

10.5 9.8 9.2 8.9 8.6 8.5 8.5 8.3 8.0 7.8 7.7 7.6 7.5 7.0 6.8 6.7 6.65.5 5.4 5.2 4.4 4.0 3.2 2.2 1.8 0.8 0.6

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

SK Communications Co., Ltd.

HanbitSoft, Inc.


Taleo Corp.



Gree, Inc.

Myriad Group AG

Modern Times Group Mtg AB

Dena Co. Ltd.

Openwave Systems Inc.

Mixi, Inc.

TheStreet.com, Inc.

Shutterfly, Inc.

AQ Interactive, Inc.

Score Media Inc.

YD Online Corp.

IAC/InterActiveCorp.

Platforma Mediowa Point Group S.A.

Open Text Corp.

PNI Digital Media Inc.



XING AG

Velti Plc

GungHo Online Entertainment, Inc.

DADA SpA



Spark Networks, Inc.


ValueClick, Inc.

infoGROUP, Inc.

CDC Corp.

Hutchison Telecommunications Hong Kong Holdings


Sohu.com Inc.


United Online, Inc.

Cyberplex Inc.

AOL, Inc.

Actoz Soft Co., Ltd.

GameOn Co Ltd.


Excluding EV/EBITDA > 100xSource: CapitalIQ

SK Communications leads the group at 43.7x


P/E Ranking

89.2

50.8 50.146.8 46.1

40.4 40.036.0 34.2

31.226.1 25.4

21.6 20.3 19.917.1 16.4 15.9 14.0 13.4 13.1 11.6 11.1 10.2 9.6 9.1

6.23.5 2.1 2.1 1.9 1.2

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

100.0

Shutterfly, Inc.

Points International Ltd.

CDC Corp.

infoGROUP, Inc.

Mixi, Inc.

Open Text Corp.


Dena Co. Ltd.

Gree, Inc.


Velti Plc





Hutchison Telecommunications Hong Kong Holdings

Ltd.


ValueClick, Inc.

Sohu.com Inc.

Cyberplex Inc.


DADA SpA

AOL, Inc.


United Online, Inc.

GameOn Co Ltd.



Netease.com Inc.

Giant Interactive Group, Inc.

Shanda Interactive Entertainment Ltd.

Perfect World Co., Ltd.

Source: CapitalIQ

Shutterfly has the highest P/E at 89.2x


Total Market Capitalization

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

6/23/2009

6/30/2009

7/7/2009

7/14/2009

7/21/2009

7/28/2009

8/4/2009

8/11/2009

8/18/2009

8/25/2009

9/1/2009

9/8/2009

9/15/2009

9/22/2009

9/29/2009

10/6/2009

10/13/2009

10/20/2009

10/27/2009

11/3/2009

11/10/2009

11/17/2009

11/24/2009

12/1/2009

12/8/2009

12/15/2009

12/22/2009

12/29/2009

1/5/2010

1/12/2010

1/19/2010

1/26/2010

2/2/2010

2/9/2010

2/16/2010

2/23/2010

3/2/2010

3/9/2010

3/16/2010

3/23/2010

3/30/2010

4/6/2010

4/13/2010

4/20/2010

4/27/2010

5/4/2010

5/11/2010

5/18/2010

5/25/2010

6/1/2010

6/8/2010

6/15/2010

98 98 98 98 98 98 98 98 98 98 98 98 98 98 98 99 99 99 99 99 99 99100100100100100100100100100100100100100101101101101101101101101101101101101101101101101101

(US$m)

# companies

Source: CapitalIQ

Total market cap drops to $75.5 bn


Total Market Cap – by Sector

-

5,000.0

10,000.0

15,000.0

20,000.0

25,000.0

30,000.0

35,000.0

40,000.0D

ivers

ifie

d

Gam

ing

Media

Socia

l N

etw

ork

ing

Colla

bora

tion

Mark

eting

Ente

rprise

Inte

rnet

Reta

il

Searc

h

Mobile

SM

S/V

oic

e

Music

Dating

Fin

ancia

l S

erv

ices

Virtu

al W

orld

Advert

isin

g

Vid

eo

Vert

ical C

om

munitie

s

Paym

ent

Podcasting

Infr

astr

uctu

re

Learn

ing

8 28 10 16 1 6 3 2 1 5 3 2 2 1 2 3 1 1 1 1 3 1# Companies

Eight Diversified companies totaling over $34 bn in market cap


Market Cap Ranking

0

1,000

2,000

3,000

4,000

5,000

6,000

Tencent H

old

ings L

td.

Dena C

o. Ltd

.N

ete

ase.c

om

Inc.

Modern

Tim

es G

roup M

tg A

BG

ree, In

c.

IAC

/Inte

rActiv

eC

orp

.S

handa Inte

ractiv

e E

nte

rtain

ment Ltd

.A

OL, In

c.

Open T

ext C

orp

.S

ohu.c

om

Inc.

Gia

nt In

tera

ctiv

e G

roup, In

c.

Changyou.c

om

Lim

ited

The N

ew

York

Tim

es C

om

pany

Perf

ect W

orld C

o., L

td.

Hutc

his

on T

ele

com

munic

atio

ns H

ong K

ong H

old

ings

Tale

o C

orp

.V

alu

eC

lick, In

c.

Chin

ese G

am

er

Inte

rnatio

nal

NE

OW

IZ G

am

es C

orp

ora

tion

SK

Com

munic

atio

ns C

o., L

td.

Mix

i, In

c.

Shutterf

ly, In

c.

Kin

gsoft C

orp

ora

tion L

imite

dU

nite

d O

nlin

e, In

c.

RealN

etw

ork

s Inc.

info

GR

OU

P, In

c.

Gam

ania

Dig

ital E

nte

rtain

ment C

o., L

td.

Velti

Plc

CD

C C

orp

.G

ungH

o O

nlin

e E

nte

rtain

ment, Inc.

NetD

ragon W

ebS

oft, In

c.

Myriad G

roup A

GO

penw

ave S

yste

ms Inc.

XIN

G A

GO

AO

RB

C Info

rmatio

n S

yste

ms

Gig

aM

edia

Ltd

.W

ebzen Inc.

Flu

id M

usic

Canada, In

c.

The9 L

imite

dH

UG

HE

S T

ele

matic

s, In

c.

TheS

treet.com

, In

c.

AQ

Inte

ractiv

e, In

c.

Gam

eO

n C

o L

td.

Poin

ts Inte

rnatio

nal L

td.

HanbitS

oft, In

c.

Acto

z S

oft C

o., L

td.

Tre

e.C

om

, In

c.

Spark

Netw

ork

s, In

c.

Paid

Inc.

DA

DA

SpA

Score

Media

Inc.

YD

Onlin

e C

orp

.F

rogste

r In

tera

ctiv

e P

ictu

res A

GP

NI D

igita

l Media

Inc.

Ngi G

roup Inc.

NeuLio

n Incorp

ora

ted

Moggle

, In

cP

latform

a M

edio

wa P

oin

t G

roup S

.A.

Gra

vity

Co., L

tdQ

uepasa C

orp

.G

lu M

obile

, In

c.

WebM

edia

Bra

nds Inc

Cyberp

lex Inc.

Dig

italT

ow

n, In

c.

eP

ro L

td.

Tra

nsG

am

ing, In

c.

GeoS

entr

ic O

yj

Multi

plie

d M

edia

Corp

ora

tion

Socia

lwis

e, In

c.

LookS

mart

, Ltd

.V

OIS

, In

c.

Asknet A

GY

nk K

ore

a Inc.

NeX

plo

re C

orp

ora

tion

Accele

rize N

ew

Media

, In

c.

Wiz

zard

Softw

are

Corp

ora

tion

Lin

go M

edia

Corp

ora

tion

Youbla

st G

lobal,

Inc.

Dolp

hin

Dig

ital M

edia

, In

c.

Nort

hgate

Technolo

gie

s L

imite

dis

eem

edia

Inc.

Unila

va C

orp

ora

tion

MO

KO

.mobi L

imite

dJum

buck E

nte

rtain

ment Lim

ited

Inte

rnet G

roup S

AK

ent In

tern

atio

nal H

old

ings Inc.

Dig

italP

ost In

tera

ctiv

e, In

c.

Bright T

hin

gs p

lcB

eyond C

om

merc

e, In

c.

SN

AP

Inte

ractiv

e, In

c.

Worlds.c

om

Inc.

Kiw

ibox.C

om

, In

c.

En2G

o Inte

rnatio

nal,

Inc.

Spectr

um

DN

A, In

c.

IAS

Energ

y, In

c.

Oriente

d M

edia

Gro

up B

erh

ad

Unis

erv

e C

om

munic

atio

ns C

orp

.U

OM

O M

edia

, In

cC

orn

erW

orld C

orp

ora

tion

Bro

adW

ebA

sia

Inc.

Mobile

Data

Corp

.

Source: CapitalIQ

Tencent’s $30 bn market cap dominates group


Price Performance – 1 Week

Rising

55%Flat

9%

Falling

36%

Price Momentum• Positive price momentum, with 55% of

stocks rising over the past week.


Average Price Performance – 1 Week, by Sector

26.6%

10.1% 9.8% 9.5%7.3%

4.9% 4.6% 4.2% 3.4% 3.2%1.6% 1.0% 0.9%

-1.2% -2.0% -2.1% -3.2% -4.8% -6.1%

-16.1%

-21.9%-24.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

Datin

g

Po

dca

stin

g

Inte

rnet R

eta

il

En

terp

rise

Mu

sic

So

cia

l

Ne

two

rkin

g

Me

dia

Fin

an

cia

l

Se

rvic

es

Vid

eo

Ve

rtic

al

Co

mm

un

itie

s

Ma

rketin

g

Ga

min

g

Ad

vert

isin

g

Co

llab

ora

tion

Pa

ym

en

t

Mo

bile

Div

ers

ifie

d

Sea

rch

Vir

tua

l W

orl

d

Infr

astru

ctu

re

Le

arn

ing

SM

S/V

oic

e

Source: CapitalIQ

Dating sector shows highest weekly returns


Price Performance – 1 Week

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

20.0%

40.0%

60.0%

80.0%

UN

LA

BW

BA

MB

YL

GE

O1

VW

DD

DT

SX

V:L

MB

YO

CN

XP

CS

PX

AD

PD

M7

00

SE

HK

:80

86

GR

VY

QP

SA

TS

XV

:TN

GW

SE

:PG

MA

IM:B

GT

OM

ED

IAS

ND

AL

OO

KT

SX

:FM

NA

06

62

70

IEE

HU

TC

61

80

38

12

SC

LW

21

21

KO

SE

:A0

69

08

0N

CT

YT

SE

:24

32

SH

HD

OT

EX

A0

52

79

0G

TS

M:3

08

3A

02

37

70

CW

RL

IUS

AK

IWB

ET

GI

MY

RN

AS

X:J

MB

DG

TW

DB

:M0

CT

SE

:36

32

VE

L7

77

SE

HK

:21

5R

BC

I3

88

8O

1B

C

WS

E:IG

RC

M:D

AT

SX

:PT

SG

AP

AY

D3

83

8A

CL

ZD

GL

PN

TE

SG

LU

UT

SX

:SC

RX

TR

A:A

5A

SO

HU

LO

VA

05

27

70

WE

BM

TS

X:N

LN

37

65

TR

EE

RN

WK

TS

XV

:MM

CIA

CI

59

00

57

A0

95

66

0T

SX

:CX

TS

CM

GIG

MA

OL

CY

OU

UN

TD

VC

LK

A0

47

08

0K

NT

HT

SX

V:P

NW

ZE

OP

WV

SF

LY

FR

GM

TG

BT

LE

O2

49

7C

HIN

.AP

WR

DIA

SC

.AN

YT

UO

MO

MK

BS

TV

IT

SX

V:U

SS

VO

IS

Source: CapitalIQ


Price Performance (Top 10)

1 Month

0%

20%

40%

60%

80%

100%

120%

140%

160%

Yo

ub

last

Glo

ba

l,

Inc.

Mo

bile

Da

ta

Co

rp.

Be

yo

nd

Co

mm

erc

e,

Inc.

Ve

lti P

lc

Gre

e,

Inc.

ise

em

ed

ia I

nc.

AQ

In

tera

ctiv

e,

Inc.

Un

ise

rve

Co

mm

un

ica

tion

s

Co

rp.

MO

KO

.mo

bi

Lim

ited

NE

OW

IZ G

am

es

Co

rpo

ratio

n

3 Month

0%20%40%60%80%

100%120%140%160%

Beyond C

om

merc

e,

Inc. eP

ro L

td.

LookS

mart

, Ltd

.

SK

Com

munic

ations

Co.,

Ltd

.

Glu

Mobile

, In

c.

Dig

italT

ow

n,

Inc.

Velti P

lc

Youbla

st

Glo

bal, I

nc.

Dena C

o.

Ltd

.

Hutc

his

on

Tele

com

munic

ations

Hong K

ong H

old

ings

Ltd

.

6 Month

0%

500%

1000%

1500%

2000%

2500%

OA

O R

BC

Info

rmation

Syste

ms

eP

ro L

td.

AQ

Inte

ractive,

Inc.

Beyond

Com

merc

e,

Inc.

Unis

erv

e

Com

munic

ations

Corp

.

SN

AP

Inte

ractive,

Inc.

Velti P

lc

Score

Media

Inc.

SK

Com

munic

ations

Co.,

Ltd

.

Dena C

o.

Ltd

.1 Year

0%

500%

1000%

1500%

2000%

2500%

3000%

3500%

4000%

OA

O R

BC

Info

rma

tion

Sys

tem

s

Qu

ep

asa

Co

rp.

eP

ro L

td.

Ve

lti P

lc

De

na

Co

. L

td.

Flu

id M

usic

Ca

na

da

, In

c.

Tra

nsG

am

ing

,

Inc.

Fro

gst

er

Inte

ractiv

e

Pic

ture

s A

G

Mo

de

rn T

ime

s

Gro

up

Mtg

AB

Gre

e,

Inc.

Source: CapitalIQ


Price Performance (Bottom 10)

1 Week

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Dolp

hin

Dig

ital

Media

, In

c.

Spectr

um

DN

A,

Inc.

NeX

plo

re

Corp

ora

tion

Be

yond

Co

mm

erc

e,

Inc.

Lin

go M

edia

Corp

ora

tion

Worlds.c

om

Inc.

GeoS

en

tric

Oyj

Mo

bile

Data

Corp

.

Bro

adW

ebA

sia

Inc.

Unila

va

Corp

ora

tion

1 Month

-90.0%

-80.0%

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Dolp

hin

Dig

ital

Me

dia

, In

c.

Qu

epa

sa C

orp

.

Lin

go M

edia

Co

rpora

tion

Paid

Inc

.

Sp

ectr

um

DN

A,

Inc.

NeX

plo

re

Co

rpora

tion

Bro

adW

eb

Asia

Inc.

Corn

erW

orl

d

Corp

ora

tion

IAS

Ene

rgy

,

Inc

.

Unila

va

Co

rpora

tion

6 Month

-100.0%

-90.0%

-80.0%

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Ac

toz S

oft

Co

., L

td.

Mix

i, In

c.

Kiw

ibox.C

om

,

Inc.

Cyb

erp

lex I

nc.

Un

ilava

Co

rpora

tion

NeX

plo

re

Co

rpora

tion

Sp

ectr

um

DN

A,

Inc.

En2G

o

Inte

rnatio

na

l,

Inc.

Corn

erW

orld

Corp

ora

tion

Bro

adW

eb

Asia

Inc

.1 Year

-120.0%

-100.0%

-80.0%

-60.0%

-40.0%

-20.0%

0.0%

Wiz

zard

Softw

are

Corp

ora

tion

Spectr

um

DN

A,

Inc.

Cyberp

lex Inc.

IAS

Energ

y,

Inc.

Corn

erW

orld

Corp

ora

tion

UO

MO

Media

,

Inc

Youbla

st

Glo

bal,

Inc.

Beyond

Com

merc

e,

Inc.

En2G

o

Inte

rnatio

nal,

Inc.

Bro

adW

ebA

sia

Inc.

Source: CapitalIQ


Capital Market Activity (Financing, M&A)


Financing Activity – Current MonthCompany Name Country Sector Acquis ition Ange l/Seed Debt financing Series A Series B Ser ies C Series D NA Grand Total

Zynga US A Gaming 147.0 147.0

Invite Media US A Analy tics 70.0 70.0

FetchBack US A Advertis ing 40.0 40.0

HauteLook US A Internet R eta il 31.0 31.0

Challenge Games US A Gaming 20.5 20.5

Mytopia Is rael Gaming 18.0 18.0

Marin Softw are US A Advertis ing 11.2 11.2

RockYou US A Widget 10.0 10.0

BookRenter US A S oc ial Commerce 10.0 10.0

Machinima.com US A V irtual World 9.0 9.0

Trans pera US A Mobile Ad 7.0 7.0

Kudzu Interactive US A Financia l S erv ices 7.0 7.0

Curs e US A S oc ia l Netw orks 6.0 6.0

Adis n US A Advertis ing 5.5 5.5

Connotate US A Analy tics 5.3 5.3

Metacafe US A V ideo 5.0 5.0

BigDoor Media US A Media 5.0 5.0

BeachMint US A S oc ial Commerce 5.0 5.0

Spons orPay Germany V irtual Goods 4.6 4.6

LucidMedia US A Advertis ing 4.5 4.5

Giiv US A S oc ial Commerce 3.4 3.4

Attr ibutor US A Analy tics 3.2 3.2

Tre fis US A Analy tics 3.2 3.2

Metamarkets US A Advertis ing 2.5 2.5

Snaptic US A Mobile 2.3 2.3

uC irrus US A Inf ras tructure 1.7 1.7

WOWIO US A Internet R eta il 1.7 1.7

Dilithium Networks US A V ideo 1.5 1.5

Schoology US A Online Learning 1.3 1.3

Thumbtack US A Crow ds ourced Content 1.2 1.2

SoGeo Netherlands Location-bas ed S NS 0.8 0.8

Rummble UK Location-bas ed S NS 0.8 0.8

TeamSnap US A V ertica l Communities 0.7 0.7

154.0 6.0 1.5 32.6 17.0 47.0 175.9 11.8 445.8


Financing Activity – Current Month, by Sector

Other

14%

Gaming

43%

Analytics

18%

Advertising

14%

Social

Commerce

4%Internet Retail

7%

$ Raised # Deals

Other

46%

Gaming

9%

Analytics

15%

Advertising

15%

Internet Retail

6%

Social

Commerce

9%


5.4

6.4

8.9

6.4

9.8

12.2

7.8

10.3

5.8

14.1

5.7

10.1

4.6

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

1000.0

Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Feb-10 Mar-10 Apr-10 May-10 Jun-10

(US

$m

)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

(US

$m

)

Total Average*Dec-09 includes $180m Zynga investment

Apr-10 includes $300m DST investment

Jun-10 includes $147m Zynga investment

Financing Activity

June financing remained strong with over US$290 mm raised versus ~US$260

mm monthly total deal value average


0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

500.0

Gam

ing

Div

ers

ified

Colla

bora

tion

Mobile

Media

Socia

l

Com

merc

eC

row

dsourc

ed

Conte

nt

Advert

isin

g

Analy

tics

Vid

eo

Inte

rnet R

eta

il

Socia

l

Netw

ork

sF

inancia

l

Serv

ices

Virtu

al W

orld

Wid

get

Ente

rprise

Vert

ical

Com

muniti

es

Infr

astr

uctu

re

Mobile

Paym

ent

Virtu

al G

oods

Mobile

Ad

Onlin

e

Learn

ing

Music

Aggre

gatio

n

Searc

h

Cla

ssifi

ed

Tra

vel

Locatio

n-

based S

NS

Mic

roblo

g

Mic

rom

edia

Blo

g

13 1 5 9 8 9 3 15 14 8 5 8 5 5 2 4 9 5 1 2 2 2 2 1 3 1 3 4 1 1 1

(US

$m

)

# companies

Capital Market Activity Ranking – by Sector, last three months

Gaming the biggest area of interest in the past quarter


Top 5 Sectors (2008-present)

$ Raised # Deals

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

Ja

n-0

8

Fe

b-0

8

Mar-

08

Ap

r-08

May-0

8

Ju

n-0

8

Jul-

08

Aug-0

8

Sep-0

8

Oc

t-08

No

v-0

8

Dec-0

8

Ja

n-0

9

Fe

b-0

9

Mar-

09

Ap

r-09

May-0

9

Ju

n-0

9

Jul-

09

Aug-0

9

Sep-0

9

Oc

t-09

No

v-0

9

Dec-0

9

Ja

n-1

0

Fe

b-1

0

Mar-

10

Ap

r-10

May-1

0

Ju

n-1

0

(US

$ m

m)

Social Networks Gaming Advertising Video Virtual World

0

5

10

15

20

25

30

Ja

n-0

8

Fe

b-0

8

Mar-

08

Ap

r-08

May-0

8

Ju

n-0

8

Jul-

08

Aug-0

8

Sep-0

8

Oc

t-08

No

v-0

8

Dec-0

8

Ja

n-0

9

Fe

b-0

9

Mar-

09

Ap

r-09

May-0

9

Ju

n-0

9

Jul-

09

Aug-0

9

Sep-0

9

Oc

t-09

No

v-0

9

Dec-0

9

Ja

n-1

0

Fe

b-1

0

Mar-

10

Ap

r-10

May-1

0

Ju

n-1

0

(# D

eals

)

Social Networks Advertising Gaming Virtual World Video

Top 5 sectors average $170 mm & 15 deals per month (aggregate)


Upcoming Events/Earnings

Source: CapitalIQ

Company Date Time Quarter Conf Call Details

Tree.Com, Inc. (NasdaqGM:TREE) 29-Jul-10 11:00 AM (EST) Q2/10 877-874-1588


Public Company ListingCompany Name Ticker Exchange

Trading

Currency HQ

Current

Price

US$ Market

C ap (mm) Employees

Accelerize New M edia, Inc. ACLZ OTCBB USD United States 1 15.9 10

Actoz Soft Co., Ltd. A052790 KOSE KRW South Korea 10,700 77.2 NA

AOL, Inc. AOL NYSE USD United States 22 2,309.4 6,700

AQ Interactive, Inc. 3838 TSE JPY Japan 150,000 89.4 NA

Asknet AG XTRA:A5A XTRA EUR Germany 3 20.2 NA

Beyond Commerce, Inc. BYOC OTCBB USD United States 0 6.0 16

Bright Things plc AIM :BGT AIM GBP United Kingdom 0 6.2 9

BroadWebAsia Inc. BWBA OTCPK USD United States 0 1.7 46

CDC Corp. CHIN.A NasdaqGS USD Hong Kong 2 250.1 NA

Changyou.com Limited CYOU NasdaqGS USD China 29 1,500.1 1,308

Chinese Gamer International GTSM :3083 GTSM TWD Taiwan 279 741.4 NA

CornerWorld Corporation CWRL OTCBB USD United States 0 1.9 16

Cyberplex Inc. TSX:CX TSX CAD Canada 1 37.9 NA

DADA SpA CM :DA CM EUR Italy 3 69.8 597

Dena Co. Ltd. TSE:2432 TSE JPY Japan 2,869 4,486.5 NA

DigitalPost Interactive, Inc. DGLP OTCBB USD United States 0 6.8 6

DigitalTown, Inc. DGTW OTCBB USD United States 1 37.1 3

Dolphin Digital M edia, Inc. DPDM OTCBB USD United States 0 12.4 NA

En2Go International, Inc. ETGI OTCBB USD United States 0 4.8 NA

ePro Ltd. SEHK:8086 SEHK HKD Hong Kong 1 35.8 707

Fluid M usic Canada, Inc. TSX:FM N TSX CAD United States 2 107.9 NA

Frogster Interactive P ictures AG FRG XTRA EUR Germany 18 57.6 NA

Gamania Digital Entertainment Co., Ltd. 6180 GTSM TWD Taiwan 53 260.5 NA

GameOn Co Ltd. 3812 TSE JPY Japan 77,900 85.1 NA

GeoSentric Oyj GEO1V HLSE EUR Finland 0 33.2 120

Giant Interactive Group, Inc. GA NYSE USD China 7 1,658.5 NA

GigaM edia Ltd. GIGM NasdaqGS USD Taiwan 2 133.4 NA

Glu M obile, Inc. GLUU NasdaqGM USD United States 1 41.3 479

Gravity Co., Ltd GRVY NasdaqGM USD South Korea 2 47.3 NA

Gree, Inc. TSE:3632 TSE JPY Japan 6,910 3,428.1 NA

GungHo Online Entertainment, Inc. 3765 OSE JPY Japan 189,500 238.4 NA

HanbitSoft, Inc. A047080 KOSE KRW South Korea 4,335 77.3 NA

HUGHES Telematics, Inc. HUTC OTCBB USD United States 3 94.4 276

Hutchison Telecommunications Hong Kong Holdings Ltd.SEHK:215 SEHK HKD Hong Kong 2 1,025.8 1,732

IAC/InterActiveCorp. IACI NasdaqGS USD United States 23 2,604.7 3,200

IAS Energy, Inc. IASC.A OTCPK USD Canada 0 4.1 NA

infoGROUP, Inc. IUSA NasdaqGS USD United States 8 457.9 3,146


Public Company Listing cont.

Company Name Ticke r Exchange

Trading

Currency HQ

Current

Price

US$ Market

Cap (mm ) Employees

iseemedia Inc. IEE TSXV CAD Canada 0.13 9.1 NA

Jumbuck Entertainment Limited ASX:JM B ASX AUD Australia 0.20 8.4 79

Kent International Ho ldings Inc. KNTH OTCPK USD United States 1.95 6.9 NA

Kingsoft Corporation Limited 3888 SEHK HKD China 4.22 590.7 2,735

Kiwibox.Com, Inc. KIWB OTCBB USD United States 0.01 5.0 6

Lingo M edia Corporation TSXV:LM TSXV CAD Canada 0.50 14.2 NA

LookSmart, Ltd. LOOK NasdaqGM USD United States 1.36 23.3 65

M ixi, Inc. 2121 TSE JPY Japan 388,500.00 658.6 NA

M obile Data Corp. M BYL OTCBB USD United States 0.07 1.7 NA

M odern Times Group M tg AB M TG B OM SEK Sweden 452.00 3,843.8 2,936

M oggle, Inc DB:M 0C DB EUR United States 0.85 48.9 2

M OKO.mobi Limited M KB ASX AUD Australia 0.09 9.1 NA

M ultiplied M edia Corporation TSXV:M M C TSXV CAD Canada 0.12 29.2 NA

M yriad Group AG M YRN SWX CHF Switzerland 4.40 189.1 NA

NEOWIZ Games Corporation A095660 KOSE KRW South Korea 42,800.00 734.7 NA

NetDragon WebSoft, Inc. 777 SEHK HKD China 3.37 227.6 2,901

Netease.com Inc. NTES NasdaqGS USD China 31.00 4,015.2 NA

NeuLion Incorporated TSX:NLN TSX CAD Canada 0.45 51.1 224

NeXplore Corporation NXPC OTCPK USD United States 0.30 16.7 NA

Ngi Group Inc. 2497 TSE JPY Japan 40,750.00 55.4 NA

Northgate Technologies Limited 590057 BSE INR India 16.05 12.0 160

OAO RBC Information Systems RBCI M ICEX RUB Russia 38.48 166.1 2,523

Open Text Corp. OTEX NasdaqGS USD Canada 39.78 2,258.7 3,700

Openwave Systems Inc. OPWV NasdaqGS USD United States 2.23 187.0 590

Oriented M edia Group Berhad OM EDIA KLSE M YR M alaysia 0.10 3.9 NA

Paid Inc. PAYD OTCBB USD United States 0.26 70.5 20

Perfect World Co., Ltd. PWRD NasdaqGS USD China 25.96 1,299.6 NA

Platfo rma M ediowa Point Group S.A. WSE:PGM WSE PLN Poland 1.52 47.9 NA

PNI Digital M edia Inc. TSXV:PN TSXV CAD Canada 1.69 55.7 NA

Points International Ltd. TSX:PTS TSX CAD Canada 0.55 80.1 93

Quepasa Corp. QPSA OTCBB USD United States 3.50 45.4 71

RealNetworks Inc. RNWK NasdaqGS USD United States 3.43 463.9 1,754

Youblast Global, Inc. SHHD OTCBB USD United States 0.40 13.6 6

Score M edia Inc. TSX:SCR TSX CAD Canada 0.88 69.4 230

Shanda Interactive Entertainment Ltd. SNDA NasdaqGS USD China 40.50 2,404.8 5,721


Public Company Listing cont.

Company Name Ticker Exchange

Trading

Currency HQ

Current

Price

US$ Market

Cap (mm) Employees

SK Communications Co., Ltd. A066270 KOSE KRW South Korea 19,900.00 683.9 NA

SNAP Interactive, Inc. STVI OTCBB USD United States 0.18 5.9 15

Socialwise, Inc. SCLW OTCBB USD United States 0.48 24.0 NA

Sohu.com Inc. SOHU NasdaqGS USD China 43.98 1,663.2 3,997

Spark Networks, Inc. LOV AM EX USD United States 3.57 73.5 155

SpectrumDNA, Inc. SPXA OTCBB USD United States 0.07 4.5 8

Taleo Corp. TLEO NasdaqGM USD United States 25.59 1,017.5 916

Tencent Holdings Ltd. 700 SEHK HKD China 127.40 29,926.5 7,845

The New York Times Company NYT NYSE USD United States 9.76 1,421.1 7,665

The9 Limited NCTY NasdaqGS USD China 4.04 103.1 1,010

TheStreet.com, Inc. TSCM NasdaqGM USD United States 2.95 93.1 274

TransGaming, Inc. TSXV:TNG TSXV CAD Canada 0.60 34.7 28

Tree.Com, Inc. TREE NasdaqGM USD United States 6.77 75.9 700

Unilava Corporation UNLA OTCBB USD United States 0.09 9.1 40

Uniserve Communications Corp. TSXV:USS TSXV CAD Canada 0.14 3.8 NA

United Online, Inc. UNTD NasdaqGS USD United States 6.72 585.5 1,699

UOM O M edia, Inc UOM O OTCBB USD Canada 0.02 2.1 NA

ValueClick, Inc. VCLK NasdaqGS USD United States 11.74 954.8 1,086

Velti P lc VEL AIM GBP United Kingdom 4.53 252.0 459

VOIS, Inc. VOIS OTCBB USD United States 0.01 20.6 2

WebM ediaBrands Inc WEBM NasdaqGS USD United States 1.02 38.2 83

Webzen Inc. KOSE:A069080 KOSE KRW South Korea 11,900.00 114.8 NA

Wizzard Software Corporation WZE AM EX USD United States 0.22 14.6 80

Worlds.com Inc. WDDD OTCBB USD United States 0.09 5.2 1

XING AG O1BC XTRA EUR Germany 28.78 183.0 293

YD Online Corp. A052770 KOSE KRW South Korea 4,815.00 58.8 NA

Ynk Korea Inc. A023770 KOSE KRW South Korea 2,795.00 18.1 NA


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This report has been created by Analysts that are employed by Mackie Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report.Information about Mackie Research Capital Corporation’s Rating System, the distribution of our research to clients and the percentage of recommendations which are in each of our rating categories is available on our web site at www.mackieresearch.com. The information contained in this report has been drawn from sources believed to be reliable but its accuracy or completeness is not guaranteed, nor in providing it does Mackie Research Capital Corporation assume any responsibility or liability. Mackie Research Capital Corporation, its directors, officers and other employees may, from time to time, have positions in the securities mentioned herein. Contents of this report cannot be reproduced in whole or in part without the expressed permission of Mackie Research Capital Corporation. (U.S. Institutional Clients — Research Capital U.S.A. Inc. (a wholly owned subsidiary of Mackie Research Capital Corporation) accepts responsibility for the contents of this report subject to the terms & limitations set out above. Firms orinstitutions receiving this report should effect transactions in securities discussed in the report through Research Capital U.S.A. Inc., a Broker-Dealer Registered with the United States Securities and Exchange Commission).

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