Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"

www.mackieresearch.com

Web 2.0 Weekly

“Market Declines Impact Web 2.0 Universe Valuations”

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

May 26, 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)

� Cyberplex (TSX:CX) announced plans to acquire Tsavo Media for US$75.6 mm, partially funded through a C$30 mm bought deal financing at $0.55.

� Online gaming company Gaikai, raised $10.0 mm in Series B financing.

� Blip.TV, online TV provider, raised $10.1 mm in Series C financing.

Financial Results/Guidance� Netease.com (NasdaqGS:NTES, online gaming) reported Q1/F10 revenue of RMB 1.2

bn (vs. RMB 781.7 mm in the same period last year).

� Snap Interactive (OTCBB:STVI, online dating) reported Q1/F10 revenue growth of 20% to $0.927 mm from $0.768 mm.


Public Company Data


Aggregate Public Data

Web 2.0 Public Companies Total Median Max Min# Companies 102 - - -

Market Cap (US$ mm) 76,398.3 58.8 33,384.2 1.7

Revenue (US$ mm) 23,069.7 58.3 3,057.7 0.0

1 Year revenue growth 5.5% 857.0% -91.4%

EBITDA as % of revenue - 13.3% 63.1% -75.0%

Net cash (US$ mm) 9,067.7 2.0 1,826.7 -670.8

TEV/Revenue - 1.9x 37.3x 0.0x

TEV/EBITDA - 9.2x 45.0x 0.0x

P/E - 15.0x 82.6x 0.0x

Relative to 52 week high -41.9% -4.7% -96.3%

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

33%

Falling

62%

Flat

5%

Rising

20%

Falling

77%

Flat

3%

Rising

17%

Falling

81%

Flat

2%

Market Cap

Rising

20%

Falling

80%

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

/7/2

00

94

/14

/20

09

4/2

1/2

00

94

/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

0

393940404041414043434546474746474850515150525354565859596164646463646468696870716965707170707375787780787879788081848281

Mu

ltip

le (

x)

Median Long-term average

# companies

Source: CapitalIQ

Revenue multiples down fourth

consecutive week


Median EV/EBITDA

0. 0x

5. 0x

10. 0x

15. 0x

20. 0x

25. 0x

4/7/2009

4/14/2009

4/21/2009

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

20 20 22 22 23 2322 2224 24 23 2324 24 26 26 26 26 2525 26 27 2930 32 3335 36 38 4139 40 39 4041 39 3939 42 43 4141 43 43 42 43 44 4746 45 51 5150 5353 52 53 53 5050

Multiple (x)


# companies

Source: CapitalIQ

EV/EBITDA multiples remain depressed below LT average


Median P/E

0. 0x

5. 0x

10. 0x

15. 0x

20. 0x

25. 0x

30. 0x

35. 0x

4/7/2009

4/14/2009

4/21/2009

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

19 19 19 18 18 1919 1920 20 19 1819 19 20 20 21 25 2425 25 26 2726 28 3031 32 31 3232 34 35 3738 38 3838 39 40 4139 39 39 37 36 37 3332 31 34 3434 3434 34 34 33 3135

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

0.10.10.20.20.20.30.40.4 0.50.50.60.60.6 0.70.70.70.70.70.70.80.80.80.80.90.9 1.0 1.0 1.2 1.3 1.4 1.4 1.4 1.4 1.5 1.7 1.7 1.8 1.9 2.02.02.02.12.22.32.6 2.72.92.93.0 3.13.13.4 3.53.63.9 4.14.24.34.45.45.5 5.86.26.3

7.98.48.8

11.211.812.8

14.5

17.417.5

25.7

37.3

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

LookSmart, Ltd.

Asknet AG

Cyberplex Inc.

Actoz Soft Co., Ltd.

Jumbuck Entertainment Limited

RealNetworks Inc.

Tree.Com, Inc.

Openwave Systems Inc.

SNAP Interactive, Inc.

Glu Mobile, Inc.

Northgate Technologies Limited

Points International Ltd.

GigaMedia Ltd.

AOL, Inc.

DADA SpA

CDC Corp.

Uniserve Communications Corp.

AQ Interactive, Inc.

Internet Group SA

IAC/InterActiveCorp.

United Online, Inc.

TheStreet.com, Inc.

The New York Times Company

NetDragon WebSoft, Inc.

OAO RBC Information Systems

CornerWorld Corporation

HanbitSoft, Inc.

Hutchison Telecommunications Hong

infoGROUP, Inc.

Spark Networks, Inc.

Gamania Digital Entertainment Co., Ltd.

Oriented Media Group Berhad

NeuLion Incorporated

GungHo Online Entertainment, Inc.

ValueClick, Inc.

Shutterfly, Inc.

Score Media Inc.

Platforma Mediowa Point Group S.A.

Webzen Inc.

Modern Times Group Mtg AB

XING AG

Sohu.com Inc.

PNI Digital Media Inc.

UOMO Media, Inc

Wizzard Software Corporation

Open Text Corp.

SK Communications Co., Ltd.

iseemedia Inc.

Frogster Interactive Pictures AG

ePro Ltd.

Myriad Group AG

NEOWIZ Games Corporation

Taleo Corp.

Mixi, Inc.

Kingsoft Corporation Limited

Changyou.com Limited

Unilava Corporation

WebMediaBrands Inc

Fluid Music Canada, Inc.

Lingo Media Corporation

HUGHES Telematics, Inc.

Accelerize New Media, Inc.

Velti Plc

DigitalPost Interactive, Inc.

Gree, Inc.

Dena Co. Ltd.

TransGaming, Inc.

Chinese Gamer International

GeoSentric Oyj

MOKO.mobi Limited

Beyond Commerce, Inc.

Paid Inc.

Tencent Holdings Ltd.

Bright Things plc

SpectrumDNA, Inc.

Source: CapitalIQ

SpectrumDNA has highest revenue multiple at 37.3x


EV/EBITDA Ranking

1.5 2.13.9 4.6 5.0 5.0 5.1 6.1 6.2 6.2 6.5 6.5 6.7 7.5 8.1 8.1 8.9 8.9 9.2 9.6 9.7

10.9 11.2 11.512.6 13.1 13.8

13.9 14.2 14.4 14.915.2

18.5 19.322.0

26.1

30.4

33.7

44.2 45.0

0.0

5.0

10.0

15.0

20.0

25.0

30.0

35.0

40.0

45.0

50.0

Cyberplex Inc.

AOL, Inc.

United Online, Inc.


Hutchison Telecommunications Hong Kong Holdings

Ltd.

Sohu.com Inc.


ValueClick, Inc.

GungHo Online Entertainment, Inc.

CDC Corp.


Spark Networks, Inc.

infoGROUP, Inc.


XING AG


PNI Digital Media Inc.

DADA SpA


IAC/InterActiveCorp.

Open Text Corp.

Platforma Mediowa Point Group S.A.

HanbitSoft, Inc.

Score Media Inc.


Shutterfly, Inc.

Gree, Inc.

TheStreet.com, Inc.

Modern Times Group Mtg AB

Openwave Systems Inc.

GigaMedia Ltd.

Mixi, Inc.


Dena Co. Ltd.


Taleo Corp.

Velti Plc


SK Communications Co., Ltd.


Excluding EV/EBITDA > 100xSource: CapitalIQ

Points leads the group at 45.0x


P/E Ranking

5.1 5.88.3 9.4 9.6 10.6 10.9

13.7 14.2 14.5 14.8 15.0

20.5 21.3

27.3 29.2 30.7 31.8

37.0

42.544.7 44.7

46.8 46.8 47.1 47.2

61.464.9

82.6

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

Cyberplex Inc.


GameOn Co Ltd.

United Online, Inc.


AOL, Inc.

DADA SpA

Sohu.com Inc.


ValueClick, Inc.

Hutchison Telecommunications Hong Kong Holdings

Ltd.




Gree, Inc.



Velti Plc


Open Text Corp.

Dena Co. Ltd.


infoGROUP, Inc.

CDC Corp.


Mixi, Inc.

HanbitSoft, Inc.

Actoz Soft Co., Ltd.

Shutterfly, Inc.

Source: CapitalIQ

Shutterfly has the highest P/E at 82.6x


Total Market Capitalization

-

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

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

98 98 98 98 98 98 98 98 98 98 98 98 98 98 98 98 98 98 99 99 99 99 99 99 100101101101101101101101101101101101101101102102102102102102102102102102102102102102

(US$m)

# companies

Source: CapitalIQ

Total market cap down over $6 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

Fin

ancia

l S

erv

ices

Dating

Advert

isin

g

Virtu

al W

orld

Vid

eo

Vert

ical C

om

munitie

s

Paym

ent

Infr

astr

uctu

re

Podcasting

Learn

ing

8 28 10 17 1 6 3 2 1 5 3 2 1 2 3 2 1 1 1 3 1 1# Companies

8 Diversified companies totaling over $37.5 bn in market cap


Market Cap Ranking

0

1,000

2,000

3,000

4,000

5,000

6,000

Bro

adW

ebA

sia

Inc.

UO

MO

Media

, In

cC

orn

erW

orld C

orp

ora

tion

Mobile

Data

Corp

.S

NA

P Inte

ractiv

e, In

c.

Unis

erv

e C

om

munic

atio

ns C

orp

.O

riente

d M

edia

Gro

up B

erh

ad

En2G

o Inte

rnatio

nal,

Inc.

Beyond C

om

merc

e, In

c.

Kiw

ibox.C

om

, In

c.

Bright T

hin

gs p

lcS

pectr

um

DN

A, In

c.

Worlds.c

om

Inc.

IAS

Energ

y, In

c.

Kent In

tern

atio

nal H

old

ings Inc.

Real V

alu

e E

sta

tes, In

c.

MO

KO

.mobi L

imite

dD

igita

lPost In

tera

ctiv

e, In

c.

iseem

edia

Inc.

Lin

go M

edia

Corp

ora

tion

Jum

buck E

nte

rtain

ment Lim

ited

Inte

rnet G

roup S

AN

ort

hgate

Technolo

gie

s L

imite

dW

izzard

Softw

are

Corp

ora

tion

Sahara

Media

Hold

ings, In

c.

Dolp

hin

Dig

ital M

edia

, In

c.

Accele

rize N

ew

Media

, In

c.

VO

IS, In

c.

Asknet A

GN

eX

plo

re C

orp

ora

tion

Socia

lwis

e, In

c.

LookS

mart

, Ltd

.M

ulti

plie

d M

edia

Corp

ora

tion

Unila

va C

orp

ora

tion

GeoS

entr

ic O

yj

Glu

Mobile

, In

c.

eP

ro L

td.

WebM

edia

Bra

nds Inc

Cyberp

lex Inc.

Dig

italT

ow

n, In

c.

Tra

nsG

am

ing, In

c.

Ngi G

roup Inc.

NeuLio

n Incorp

ora

ted

Pla

tform

a M

edio

wa P

oin

t G

roup S

.A.

Gra

vity

Co., L

tdP

NI D

igita

l Media

Inc.

Quepasa C

orp

.F

rogste

r In

tera

ctiv

e P

ictu

res A

GM

oggle

, In

cS

core

Media

Inc.

HanbitS

oft, In

c.

DA

DA

SpA

Acto

z S

oft C

o., L

td.

Spark

Netw

ork

s, In

c.

Poin

ts Inte

rnatio

nal L

td.

AQ

Inte

ractiv

e, In

c.

Tre

e.C

om

, In

c.

Gam

eO

n C

o L

td.

Paid

Inc.

TheS

treet.com

, In

c.

HU

GH

ES

Tele

matic

s, In

c.

Flu

id M

usic

Canada, In

c.

The9 L

imite

dW

ebzen Inc.

Gig

aM

edia

Ltd

.O

AO

RB

C Info

rmatio

n S

yste

ms

XIN

G A

GM

yriad G

roup A

GO

penw

ave S

yste

ms Inc.

GungH

o O

nlin

e E

nte

rtain

ment, Inc.

NetD

ragon W

ebS

oft, In

c.

CD

C C

orp

.G

am

ania

Dig

ital E

nte

rtain

ment C

o., L

td.

info

GR

OU

P, In

c.

RealN

etw

ork

s Inc.

Velti

Plc

SK

Com

munic

atio

ns C

o., L

td.

Unite

d O

nlin

e, In

c.

Shutterf

ly, In

c.

Kin

gsoft C

orp

ora

tion L

imite

dN

EO

WIZ

Gam

es C

orp

ora

tion

Mix

i, In

c.

Chin

ese G

am

er

Inte

rnatio

nal

Valu

eC

lick, In

c.

Hutc

his

on T

ele

com

munic

atio

ns H

ong K

ong H

old

ings

Tale

o C

orp

.P

erf

ect W

orld C

o., L

td.

The N

ew

York

Tim

es C

om

pany

Changyou.c

om

Lim

ited

Gia

nt In

tera

ctiv

e G

roup, In

c.

Sohu.c

om

Inc.

AO

L, In

c.

Shanda Inte

ractiv

e E

nte

rtain

ment Ltd

.O

pen T

ext C

orp

.IA

C/Inte

rActiv

eC

orp

.G

ree, In

c.

Modern

Tim

es G

roup M

tg A

BN

ete

ase.c

om

Inc.

Dena C

o. Ltd

.T

encent H

old

ings L

td.

Source: CapitalIQ

Tencent’s $33 bn market cap dominates group


Price Performance – 1 Week

Rising

14%

Flat

12%

Falling

74%

Price Momentum• Negative momentum again, with 74%

of stocks falling over the past week (following on last week’s 62% decline).


Average Price Performance – 1 Week, by Sector

14.9%

8.7%

1.4%0.0%

-0.4% -0.4% -1.1% -2.3% -2.6% -2.9% -3.2% -4.1% -4.3%-5.8% -6.5% -6.9% -7.3% -8.0%

-10.5%-13.9%

-21.4%

-24.9%-30.0%

-25.0%

-20.0%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

Infr

astru

ctu

re

Vir

tua

l W

orl

d

So

cia

l

Ne

two

rkin

g

Le

arn

ing

Ad

vert

isin

g

Mo

bile

Vid

eo

Inte

rnet R

eta

il

Mu

sic

Pa

ym

en

t

SM

S/V

oic

e

Ve

rtic

al

Co

mm

un

itie

s

Div

ers

ifie

d

Fin

an

cia

l

Se

rvic

es

Co

llab

ora

tion

Ga

min

g

En

terp

rise

Ma

rketin

g

Me

dia

Po

dca

stin

g

Sea

rch

Datin

g

Source: CapitalIQ

Only 3 sectors show positive returns


Price Performance – 1 Week

-100.0%

-50.0%

0.0%

50.0%

100.0%

150.0%

200.0%

BW

BA

ST

VI

IAS

C.A

A0

52

77

0A

SX

:JM

BA

06

62

70

VO

ISG

LU

UP

AY

DQ

PS

AR

BC

IW

ZE

A0

47

08

0C

HIN

.A3

81

2D

GT

WA

05

27

90

38

88

WS

E:IG

R3

76

5M

KB

NC

TY

AO

LS

EH

K:2

15

SP

XA

MT

G B

TS

X:F

MN

59

00

57

TS

CM

RN

WK

77

7L

OO

KD

GL

PG

TS

M:3

08

3S

ND

AN

XP

C7

00

HU

TC

NT

ES

24

97

21

21

TS

X:S

CR

VC

LK

OT

EX

UN

TD

KO

SE

:A0

69

XT

RA

:A5

AV

EL

PW

RD

A0

23

77

0T

RE

EF

RG

CY

OU

SO

HU

TS

E:2

43

2O

ME

DIA

TL

EO

WE

BM

SF

LY

OP

WV

TS

XV

:US

ST

SX

:PT

SG

IGM

TS

XV

:TN

GS

CL

WN

YT

LO

VA

IM:B

GT

CM

:DA

UN

LA

TS

X:N

LN

IUS

AG

AT

SX

V:P

NK

NT

HG

RV

Y6

18

0K

IWB

TS

XV

:LM

TS

XV

:MM

CE

TG

ID

PD

MD

B:M

0C

GE

O1

VC

WR

LR

VL

UW

SE

:PG

MIE

EIA

CI

38

38

TS

E:3

63

2O

1B

C

SE

HK

:80

86

TS

X:C

XA

CL

ZM

YR

NU

OM

OA

09

56

60

BY

OC

WD

DD

MB

YL

SH

HD

Source: CapitalIQ


Price Performance (Top 10)

1 Month

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Sa

ha

ra M

ed

ia

Ho

ldin

gs,

Inc.

eP

ro L

td.

Un

ise

rve

Co

mm

un

ica

tion

s

Co

rp.

Mo

bile

Da

ta

Co

rp.

Ve

lti P

lc

Lo

okS

ma

rt,

Ltd

.

Ga

ma

nia

Dig

ita

l

En

tert

ain

me

nt

Co

., L

td.

Be

yo

nd

Co

mm

erc

e,

Inc.

Lin

go

Me

dia

Co

rpo

ratio

n

Va

lue

Clic

k, I

nc.

3 Month

0%

20%

40%

60%

80%

100%

120%

140%

160%

Beyond

Com

merc

e,

Inc.

eP

ro L

td.

Sahara

Media

Hold

ings,

Inc.

LookS

mart

,

Ltd

.

IAS

Energ

y,

Inc.

Velti P

lc

Worlds.c

om

Inc.

Glu

Mobile

,

Inc.

NE

OW

IZ

Gam

es

Corp

ora

tion

Quepasa

Corp

.

6 Month

0%

500%

1000%

1500%

2000%

2500%

OA

O R

BC

Info

rmation

Syste

ms

eP

ro L

td.

Quepasa C

orp

.

AQ

Inte

ractive,

Inc.

Unis

erv

e

Com

munic

ations

Corp

.

Velti P

lc

SK

Com

munic

ations

Co.,

Ltd

.

Dena C

o.

Ltd

.

Poin

ts

Inte

rnational Ltd

.

Score

Media

Inc.

1 Year

0%

500%

1000%

1500%

2000%

2500%

3000%

OA

O R

BC

Info

rma

tio

n

Sys

tem

s

eP

ro L

td.

Qu

ep

asa

Co

rp.

Ve

lti P

lc

Tra

nsG

am

ing

,

Inc.

Un

ise

rve

Co

mm

un

ica

tion

s

Co

rp.

Dig

ita

lPo

st

Inte

ract

ive

, In

c.

Fro

gste

r

Inte

ract

ive

Pic

ture

s A

G

VO

IS,

Inc.

De

na

Co

. L

td.

Source: CapitalIQ


Price Performance (Bottom 10)

1 Week

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Quep

asa C

orp

.

Paid

Inc.

Glu

Mo

bile

, In

c.

VO

IS, In

c.

SK

Com

munic

atio

ns

Co

., L

td.

Jum

buc

k

Ente

rta

inm

ent

Lim

ited

YD

Onlin

e C

orp

.

IAS

Ene

rgy

, In

c.

SN

AP

Inte

ractiv

e, In

c.

Bro

adW

eb

Asia

Inc

.

1 Month

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

Mix

i, In

c.

Ac

toz

Soft

Co., L

td.

Ngi G

rou

p In

c.

The

9 L

imite

d

VO

IS, In

c.

Gu

ngH

o O

nlin

e

En

tert

ain

ment,

Inc.

IAS

Ene

rgy

,

Inc

.

Bro

adW

eb

Asia

Inc.

Corn

erW

orl

d

Corp

ora

tion

SN

AP

Inte

rac

tive

, In

c.

6 Month

-100.0%

-90.0%

-80.0%

-70.0%

-60.0%

-50.0%

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

No

rthg

ate

Te

ch

nolo

gie

s

Lim

ited

iseem

edia

Inc.

Kiw

ibox.C

om

,

Inc.

Cyb

erp

lex I

nc.

Ac

toz S

oft

Co

., L

td.

Wiz

zard

Soft

ware

Co

rpora

tion

Corn

erW

orld

Corp

ora

tion

En2G

o

Inte

rnatio

na

l,

Inc.

UO

MO

Me

dia

,

Inc

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

IAS

Energ

y,

Inc.

Cyberp

lex Inc.

Nort

hgate

Technolo

gie

s

Lim

ited

Spectr

um

DN

A,

Inc.

Corn

erW

orld

Corp

ora

tion

En2G

o

Inte

rnatio

nal,

Inc.

UO

MO

Media

,

Inc

Beyond

Com

merc

e,

Inc.

Bro

adW

ebA

sia

Inc.

Source: CapitalIQ


Capital Market Activity (Financing, M&A)


Financing Activity – Current Month

Company Name Country Sector Acquis ition Angel/Seed Series A Ser ies B Ser ies C Grand Total

T s avo Media US A Media 75.0 75.0

CubeTree US A Collaboration 50.0 50.0

Gilt Groupe US A Internet Reta il 35.0 35.0

Scout L abs US A Analy tics 20.0 20.0

Booyah US A V irtual World 20.0 20.0

Huddle UK Enterpris e 10.2 10.2

Blip.tv US A V ideo 10.1 10.1

Fatfoogoo Aus tria V irtual Goods 10.0 10.0

Gaikai Netherlands Gaming 10.0 10.0

Worldw ideworker UAE V ertica l Communities 9.0 9.0

Vantr ix Canada Mobile 8.7 8.7

S impleGeo US A Inf ras tructure 8.1 8.1

BuzzFeed US A Aggregation 8.0 8.0

Sw ipe ly US A S ocia l Commerce 7.5 7.5

Grock it US A V irtual World 7.0 7.0

C riteo US A Advertis ing 7.0 7.0

J e lli US A Mus ic 7.0 7.0

WordStream US A S earch 6.0 6.0

S tack Overflow US A V ertica l Communities 6.0 6.0

Enquis ite US A Analy tics 5.2 5.2

Ad.ly US A Advertis ing 5.0 5.0

HelloWalle t US A Financ ia l S erv ices 3.6 3.6

Swaptree US A S ocia l Commerce 3.3 3.3

TweetDeck UK Microblog 3.0 3.0

Woozworld Canada V irtual World 3.0 3.0

Babble US A V ertica l Communities 3.0 3.0

T icketfly US A V ertica l Communities 3.0 3.0

Groupalia S pain S oc ia l Commerce 2.5 2.5

News y US A Media 2.0 2.0

Poken Sw itz erland S ocia l Netw orks 1.8 1.8

The Extraordinar ies US A Mobile 1.1 1.1

T itan Gam ing US A Gaming 1.0 1.0

L ocalytics US A Analy tics 0.7 0.7

Etacts US A Inf ras tructure 0.7 0.7

MightyMee ting US A Collaboration 0.3 0.3

apprupt Germany Mobile Ad

164.0 5.1 43.2 45.2 96.3 353.9


Financing Activity – Current Month, by Sector

Other

40%

Media

19%

Collaboration

13%

Internet Retail

13%

Gaming

7%Virtual World

8%

$ Raised # Deals

Media

5%Collaboration

8%

Internet Retail

5%

Virtual World

10%

Gaming

10%

Analytics

8%Advertising

8%

Vertical

Communities

10%

Social

Commerce

8%

Enterprise

5%

Video

3%

Virtual Goods

3%

Mobile

5%

Infrastructure

5%

Aggregation

3%

Music

3%

Search

3%


4.6

5.4

6.6

8.9

6.2

9.6

12.2

9.1

8.2

5.3

16.6

6.3

12.1

0.0

100.0

200.0

300.0

400.0

500.0

600.0

700.0

800.0

900.0

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

(US

$m

)

0.0

2.0

4.0

6.0

8.0

10.0

12.0

14.0

16.0

18.0

(US

$m

)

Total Average*May-09 includes $200m FB investment

Dec-09 includes $180m Zynga investment

Apr-10 includes $300m DST investment

Financing Activity

May total nears trailing monthly average (excluding outlier months)


0.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

Div

ers

ified

Mobile

Colla

bora

tion

Gam

ing

Media

Cro

wdsourc

ed

Conte

nt

Socia

l

Com

merc

e

Vid

eo

Advert

isin

g

Socia

l

Netw

ork

s

Inte

rnet R

eta

il

Analy

tics

Fin

ancia

l

Serv

ices

Vert

ical

Com

muniti

es

Virtu

al W

orld

Mobile

Ad

Wid

get

Ente

rprise

Searc

h

Mobile

Paym

ent

Infr

astr

uctu

re

Locatio

n-

based S

NS

Onlin

e

Learn

ing

Music

Virtu

al G

oods

Tra

vel

Aggre

gatio

n

Blo

g

Cla

ssifi

ed

Mic

roblo

g

Mic

rom

edia

Onlin

e D

atin

g

1 8 5 11 7 6 7 10 16 11 4 10 7 10 6 3 2 4 6 2 3 4 1 2 1 4 1 2 1 2 1 1

(US

$m

)

# companies

Capital Market Activity Ranking – by Sector, last three months

Advertising has most deals in last 3 months


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

(US

$ m

m)

Social Networks Gaming Advertising Virtual World Video

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

(# D

eals

)

Social Networks Advertising Gaming Virtual World Video

Top 5 sectors average $155 mm & 14 deals per month (aggregate)


Upcoming Events/Earnings

Source: CapitalIQ

Company Date Time Quarter Conf Call Details

GigaMedia Ltd. (NasdaqGS:GIGM) 27-May-10 7:30 AM (EST) Q1/10 NA

Shanda Interactive Entertainment Ltd. (NasdaqGS:SNDA) 1-Jun-10 10:00 AM (CCT) Q1/10 1-866-730-5763


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 17.2 10

Actoz Soft Co., Ltd. A052790 KOSE KRW South Korea 9,250 65.6 NA

AOL, Inc. AOL NYSE USD United States 21 2,207.0 6,700

AQ Interactive, Inc. 3838 TSE JPY Japan 120,800 73.2 NA

Asknet AG XTRA:A5A XTRA EUR Germany 3 21.0 NA

Beyond Commerce, Inc. BYOC OTCBB USD United States 0 4.9 16

Bright Things plc AIM :BGT AIM GBP United Kingdom 0 5.4 9

BroadWebAsia Inc. BWBA OTCPK USD United States 0 1.7 46

CDC Corp. CHIN.A NasdaqGS USD Hong Kong 2 233.7 NA

Changyou.com Limited CYOU NasdaqGS USD China 27 1,405.7 1,308

Chinese Gamer International GTSM :3083 GTSM TWD Taiwan 320 851.2 NA

CornerWorld Corporation CWRL OTCBB USD United States 0 1.9 16

Cyberplex Inc. TSX:CX TSX CAD Canada 1 35.5 NA

DADA SpA CM :DA CM EUR Italy 3 65.4 NA

Dena Co. Ltd. TSE:2432 TSE JPY Japan 745,000 3,940.0 NA

DigitalPost Interactive, Inc. DGLP OTCBB USD United States 0 6.9 6

DigitalTown, Inc. DGTW OTCBB USD United States 1 35.6 3

Dolphin Digital M edia, Inc. DPDM OTCBB USD United States 0 16.1 NA

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

ePro Ltd. SEHK:8086 SEHK HKD Hong Kong 1 34.9 NA

Fluid M usic Canada, Inc. TSX:FM N TSX CAD United States 2 94.1 NA

Frogster Interactive P ictures AG FRG XTRA EUR Germany 18 56.5 NA

Gamania Digital Entertainment Co., Ltd. 6180 GTSM TWD Taiwan 52 249.5 NA

GameOn Co Ltd. 3812 TSE JPY Japan 71,000 78.8 NA

GeoSentric Oyj GEO1V HLSE EUR Finland 0 33.0 120

Giant Interactive Group, Inc. GA NYSE USD China 7 1,609.9 NA

GigaM edia Ltd. GIGM NasdaqGS USD Taiwan 2 134.1 NA

Glu M obile, Inc. GLUU NasdaqGM USD United States 1 34.9 479

Gravity Co., Ltd GRVY NasdaqGM USD South Korea 2 50.9 469

Gree, Inc. TSE:3632 TSE JPY Japan 5,510 2,776.2 NA

GungHo Online Entertainment, Inc. 3765 OSE JPY Japan 171,500 219.2 NA

HanbitSoft, Inc. A047080 KOSE KRW South Korea 3,410 59.7 NA

HUGHES Telematics, Inc. HUTC OTCBB USD United States 3 92.4 276

Hutchison Telecommunications Hong Kong Holdings Ltd.SEHK:215 SEHK HKD Hong Kong 1 888.7 1,732

IAC/InterActiveCorp. IACI NasdaqGS USD United States 23 2,507.1 3,200

IAS Energy, Inc. IASC.A OTCPK USD Canada 0 6.3 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 0.11 7.1 79

Jumbuck Entertainment Limited ASX:JM B ASX AUD Australia 0.19 7.6 NA

Kent International Ho ldings Inc. KNTH OTCPK USD United States 1.80 6.4 2,735

Kingsoft Corporation Limited 3888 SEHK HKD China 4.78 667.4 6

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

Lingo M edia Corporation TSXV:LM TSXV CAD Canada 0.65 7.5 65

LookSmart, Ltd. LOOK NasdaqGM USD United States 1.57 26.9 NA

M ixi, Inc. 2121 TSE JPY Japan 398,000.00 685.2 NA

M obile Data Corp. M BYL OTCBB USD United States 0.10 2.4 2,936

M odern Times Group M tg AB M TG B OM SEK Sweden 380.00 3,121.4 2

M oggle, Inc DB:M 0C DB EUR United States 1.00 57.3 NA

M OKO.mobi Limited M KB ASX AUD Australia 0.07 6.8 NA

M ultiplied M edia Corporation TSXV:M M C TSXV CAD Canada 0.13 29.0 405

M yriad Group AG M YRN SWX CHF Switzerland 4.27 178.6 NA

NEOWIZ Games Corporation A095660 KOSE KRW South Korea 40,250.00 678.5 NA

NetDragon WebSoft, Inc. 777 SEHK HKD China 3.40 230.4 NA

Netease.com Inc. NTES NasdaqGS USD China 28.92 3,745.7 224

NeuLion Incorporated TSX:NLN TSX CAD Canada 0.45 48.7 NA

NeXplore Corporation NXPC OTCPK USD United States 0.45 25.1 NA

Ngi Group Inc. 2497 TSE JPY Japan 33,700.00 46.5 160

Northgate Technologies Limited 590057 BSE INR India 15.25 11.2 2,523

OAO RBC Information Systems RBCI M ICEX RUB Russia 34.10 145.8 3,700

Open Text Corp. OTEX NasdaqGS USD Canada 41.89 2,378.5 590

Openwave Systems Inc. OPWV NasdaqGS USD United States 2.19 183.7 NA

Oriented M edia Group Berhad OM EDIA KLSE M YR M alaysia 0.10 4.0 20

Paid Inc. PAYD OTCBB USD United States 0.31 82.8 NA

Perfect World Co., Ltd. PWRD NasdaqGS USD China 25.56 1,279.6 NA

Platfo rma M ediowa Point Group S.A. WSE:PGM WSE PLN Poland 1.66 50.7 91

PNI Digital M edia Inc. TSXV:PN TSXV CAD Canada 1.67 52.5 91

Points International Ltd. TSX:PTS TSX CAD Canada 0.51 70.8 71

Quepasa Corp. QPSA OTCBB USD United States 4.20 54.4 NA

Real Value Estates, Inc. RVLU OTCBB USD United States 1.03 6.6 1,754

RealNetworks Inc. RNWK NasdaqGS USD United States 3.51 474.7 6

Sahara M edia Holdings, Inc. SHHD OTCBB USD United States 0.45 15.6 230

Score M edia Inc. TSX:SCR TSX CAD Canada 0.77 57.9 NA


Public Company Listing cont.

Company Name Ticker Exchange

Trading

Currency HQ

Current

Pr ice

US$ Market

Cap (mm ) Employees

SK Communications Co., Ltd. A066270 KOSE KRW South Korea 15,750.00 528.8 15

SNAP Interactive, Inc. STVI OTCBB USD United States 0.10 3.3 NA

Socialwise, Inc. SCLW OTCBB USD United States 0.51 25.5 3,997

Sohu.com Inc. SOHU NasdaqGS USD China 43.09 1,629.6 155

Spark Networks, Inc. LOV AM EX USD United States 3.31 68.1 8

SpectrumDNA, Inc. SPXA OTCBB USD United States 0.08 5.5 916

Taleo Corp. TLEO NasdaqGM USD United States 24.00 954.2 7,845

Tencent Holdings Ltd. 700 SEHK HKD China 142.40 33,384.2 7,665

The New York Times Company NYT NYSE USD United States 8.95 1,303.1 1,010

The9 Limited NCTY NasdaqGS USD China 4.20 107.2 274

TheStreet.com, Inc. TSCM NasdaqGM USD United States 2.88 90.9 28

TransGaming, Inc. TSXV:TNG TSXV CAD Canada 0.67 36.9 700

Tree.Com, Inc. TREE NasdaqGM USD United States 6.69 75.0 39

Unilava Corporation UNLA OTCBB USD United States 0.31 31.0 NA

Uniserve Communications Corp. TSXV:USS TSXV CAD Canada 0.13 3.3 1,699

United Online, Inc. UNTD NasdaqGS USD United States 6.58 573.3 NA

UOM O M edia, Inc UOM O OTCBB USD Canada 0.02 1.7 1,086

ValueClick, Inc. VCLK NasdaqGS USD United States 10.72 871.8 450

Velti P lc VEL AIM GBP United Kingdom 4.72 512.6 2

VOIS, Inc. VOIS OTCBB USD United States 0.01 20.6 83

WebM ediaBrands Inc WEBM NasdaqGS USD United States 0.94 35.2 NA

Webzen Inc. KOSE:A069080 KOSE KRW South Korea 11,700.00 110.8 80

Wizzard Software Corporation WZE AM EX USD United States 0.19 12.5 1

Worlds.com Inc. WDDD OTCBB USD United States 0.10 5.7 NA

XING AG O1BC XTRA EUR Germany 27.89 176.4 NA

YD Online Corp. A052770 KOSE KRW South Korea 4,340.00 52.1 NA

Ynk Korea Inc. A023770 KOSE KRW South Korea 2,620.00 16.7 -


Disclaimer

RELEVANT DISCLOSURES APPLICABLE TO: NONE

1. None applicable.

ANALYST CERTIFICATION

Each analyst of Mackie Research Capital Corporation whose name appears in this report hereby certifies that (i) the recommendations and opinions expressed in this research report accurately reflect the analyst’s personal views and (ii) no part of the research analyst’s compensation was or will be directly or indirectly related to the specific conclusions or recommendations expressed in this research report.

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).

Toronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.218.6375 Regina 306.566.7550 St. Albert 780-460-6460

Technology

Web 2.0 Weekly - May 26, 2010: "Market Declines Impact Web 2.0 Universe Valuations"