Software Equity Group Flash Report Report_Oct2010.pdfCAD Computer-aided Design CAM Computer-aided...

Financial and Stock Market PerformancePublic Software Companies By Product Category

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Public SaaS CompaniesPublic Internet Companies By Product Category

Software Equity Group, L.L.C.

p: (858) 509-2800f: (858) 509-2818

October 2010

Software Equity Group Flash Report

Select M&A Transactionsand


ABOUT OUR FIRM

Software Equity Group is an investment bank and M&A advisory serving the software and technology sectors. Founded in 1992, our firm has represented and guided private companies throughout the United States and Canada, as well as Europe, Asia Pacific, Africa and Israel. We have advised public companies listed on the NASDAQ, NYSE, American, Toronto, London and Euronext exchanges. Software Equity Group also represents several of the world's leading private equity firms. We were recently ranked among the top ten investment banks worldwide for application software mergers and acquisitions.

Our value proposition is unique and compelling. We are skilled and accomplished investment bankers with extraordinary software, internet and technology domainexpertise. Our industry knowledge and experience span virtually every software product category, technology, market and delivery model, including Software-as-a Service (Saas), software on-demand and perpetual license. We have profound understanding of software company finances, operations and valuation. We monitor and analyze every publicly disclosed software M&A transaction, as well as the market, economy and technology trends that impact these deals. We're formidable negotiators and savvy dealmakers who facilitate strategic combinations that enhance shareholder value.

THE SEG SOFTWARE COMPANY MENTORING PROGRAM

As part of our informal mentoring program, we are currently guiding and advising some fifty software companies around the globe that are not yet exit candidates, but aspire to be in the next few years. We meet with them periodically, invite them to call whenever they’d like our opinion on an operational issue that might have exit implications later on, and we keep them apprised of M&A activity and financings in their product category. And the best news – we don’t charge for this mentoring advice. It’s complimentary. It’s our way of building value, and relationships.

We’re looking for a few more such relationships. We begin with an introductory phone call with companies interested in being mentored, followed by a more in-depth telephone conversation. We’ll then invite qualified candidates to meet personally with four or five members of our team at our San Diego office. During this three to four hour sit-down, we’ll discuss the current market, specifically as it relates to valuations, transactions and trends in your product category. We’ll assess the strengths and weakness of your financial performance, how that compares to other software companies your size, and how that relates to buyer expectations. We’ll discuss your market strategy, sales strategy, sales team track record, software and maintenance pricing strategies, equity structure, and a wide array of other factors that can materially impact your salability and valuation down the road. We’re a terrific sounding board. We’ll give you an informed, honest and frank opinion – that’s what we’re known for. And we’ll offer informed and insightful observations, ideas and options based on 17 years of working with countless software companies worldwide.

If you run a profitable software company with revenue in excess of $10 million, and you’re interested in learning more about SEG’s complimentary, no obligation mentoring program, please contact Kris Beible at [email protected] or 858-509-2800.

ADDITIONAL RESEARCH

For our complimentary current and archived Quarterly Reports from 1Q03, please visit: http://www.softwareequity.com/research_quarterly_reports.aspx

For our complimentary current and archived Monthly Flash Reports from July 2008, please visit: http://www.softwareequity.com/research_flash_reports.aspx

For our Annual Reports from 2003 through 2008, please visit: http://www.softwareequity.com/research_annual_reports.aspx

CAD Computer-aided DesignCAM Computer-aided ManufacturingCRM Customer Relationship ManagementEBITDA Earnings before Interest, Taxes, Depreciation, and AmortizationEV Enterprise ValueFCF Free Cash FlowFORWARD Current EV / Next Four Quarters' Consensus Financial EstimatesHR Human ResourcesNASDAQ National Association of Securities Dealers Automated Quotation SystemOS Operating SystemPLM Product Lifecycle ManagementR&D Research and DevelopmentS&P Standard & Poor'sSaaS Software-as-a-ServiceSEG Software Equity GroupSG&A Selling, General, & AdministrativeSW SoftwareTTM Trailing Twelve MonthYoY Year-over-YearYTD Year-to-date

List of Commonly Used Acronyms


September 2010

Select Software Industry M&A Transactions


Select September 2010 Software Industry M&A Transactions

Date Announced Target EV/ Revenue

09/30/2010 DataCard Corporation Dynamic Card Solutions, LLC - - -09/29/2010 Omnicell Inc. (NasdaqGS:OMCL) Pandora Data Systems, Inc. - $6.0 -09/29/2010 truconneXion AS FairNet, spol. s r.o. - - -09/28/2010 Google Inc. (NasdaqGS:GOOG) Plannr Company - - -09/28/2010 CA Technologies (NasdaqGS:CA) HyPerformix, Inc. - - -09/27/2010 HighJump Software, LLC True Commerce, Inc. - - -09/27/2010 Temenos Group AG (SWX:TEMN) Odyssey Financial Technologies S.A. - $101.3 -09/26/2010 Kohlberg Kravis Roberts (NYSE:KKR) Visma ASA $608.5 $1,898.6 3.1x09/24/2010 Expesite LLC Vision Facilities Management Ltd. - - -09/24/2010 Hyland Software, Inc. Computer Systems Company, Inc. - - -09/24/2010 Zynga, Inc. Zynga Germany - - -09/23/2010 Halliburton Company (NYSE:HAL) The Permedia Research Group Inc. - - -09/22/2010 IHS Inc. (NYSE:IHS) Atrion International Inc. - - -09/22/2010 IHS Inc. (NYSE:IHS) Syntex Management Systems, Inc. - - -09/22/2010 LinkedIn Corporation ChoiceVendor, Inc. - - -09/22/2010 Tibco Software, Inc. (NasdaqGS:TIBX) OpenSpirit Corporation - $18.4 -09/22/2010 Advanced Solutions International, Inc. Donor Management Pty Ltd. - - -09/22/2010 WSI Corporation Entice Technology Limited - - -09/21/2010 Ingenix, Inc. A-Life Medical, Inc. - - -09/21/2010 Freescale Semiconductor Inc. Swell Software, Inc. - - -09/20/2010 SumTotal Systems, Inc. Softscape, Inc. - - -09/20/2010 Wolters Kluwer Financial Services, Inc. FRS Belgium NV - - -09/17/2010 GFI Energy Ventures LLC Energy Solutions, Inc. - - -09/16/2010 AutoTrader.com, Inc. VAuto, Inc. - - -09/15/2010 Microsemi Corp. (NasdaqGS:MSCC) Arxan Defense Systems, Inc. - - -09/15/2010 Mad Gravity LLC TCS Software, Inc. - - -09/14/2010 ConnectEdu, Inc. Academic Management Systems, Inc. - - -09/14/2010 GameHouse, Inc. Backstage Technologies Inc - - -09/13/2010 Google Inc. (NasdaqGS:GOOG) MentorWave Technologies Ltd. - - -09/13/2010 RadNet, Inc. (NasdaqGM:RDNT) eRAD Image Medical, Inc. - $10.8 -09/13/2010 Philips Healthcare Wheb Sistemas SA - - -09/13/2010 Hewlett-Packard Company (NYSE:HPQ) ArcSight, Inc. (NasdaqGM:ARST) $195.0 $1,503.4 7.7x09/09/2010 Measured Progress, Inc. Nimble Assessment Systems, Inc. - - -09/09/2010 SUPPLY VISION, Inc. Infotek Consulting, Inc. - - -09/08/2010 Datatech SmartSoft, Inc. PressWise, Inc. - - -09/08/2010 TNS Inc. (NYSE:TNS) Cequint Inc. - $112.5 -09/07/2010 Research In Motion Limited (TSX:RIM) DataViz Inc. - - -09/07/2010 Red Bend Software, Inc. VirtualLogix, Inc. - - -09/06/2010 Cegedim Edi Deskom SA - - -09/05/2010 Intel Corporation (NasdaqGS:INTC) Neocleus, Inc. - - -09/03/2010 Versata Inc. Metatomix, Inc. - - -09/02/2010 Stanmore Implants Worldwide Ltd. The Acrobot Company Limited - - -09/02/2010 Cisco Systems, Inc. (NasdaqGS:CSCO) Arch Rock Corporation - - -09/01/2010 MIJO Corporation adbeast - - -09/01/2010 Alcatel-Lucent (ENXTPA:ALU) Open-Plug SA - - -09/01/2010 comScore, Inc. (NasdaqGS:SCOR) Nedstat BV - $36.7 -09/01/2010 Taleo Corp. (NasdaqGM:TLEO) Learn.com, Inc. - $125.0 -09/01/2010 CoreMatrix Systems LLC Sales PRM Inc. - - -


Target TTM Revenue ($mm)Acquirer

Implied Enterprise Value ($mm)

Category Performance

SEG Software Index


SEG Software Index: All Categories

Market Cap EV TTM RevenueTTM Gross

Margin

TTM EBITDA Margin

TTM Revenue Growth EV/ Revenue

EV/ EBITDA

Forward EV/ Revenue

Forward EV/

EBITDA

YoY Stock Market Return

SEG Software Index $648.87 $612.73 $220.10 69.1% 17.3% 4.1% 2.3x 12.7x 2.1x 10.0x 8.4% Billing & Service Management $1,042.19 $875.17 $392.03 51.0% 21.2% 6.4% 1.3x 6.6x 1.6x 7.0x 10.2% Business Intelligence $988.79 $786.11 $193.01 80.0% 13.1% 5.8% 2.6x 26.0x 2.7x 13.7x 15.6% Content/Document Management $76.05 $80.31 $93.75 71.0% 23.2% -7.3% 1.9x 8.7x 3.6x 10.2x 26.0% CRM, Marketing & Sales Software $133.92 $105.80 $66.09 48.2% 0.3% -6.6% 0.8x 16.4x 1.1x 12.8x 3.6% Database & File Management $2,220.38 $1,883.54 $565.08 83.8% 22.8% 0.5% 2.6x 10.1x 3.1x 9.2x 28.8% Dev Tools, OS & Application Testing Software $785.32 $631.12 $298.09 71.9% 18.5% 15.9% 1.9x 8.6x 2.9x 13.0x 29.6% Education & eLearning $225.69 $186.28 $119.01 74.7% 15.2% 16.6% 1.2x 12.7x 1.4x 11.8x -1.0% Electronic Design Automation $1,155.50 $1,284.47 $794.84 82.3% 8.0% -1.1% 1.8x 29.4x 1.8x 9.8x 10.5% Engineering, PLM & CAD/CAM Software $1,274.40 $1,439.88 $427.58 82.2% 15.9% -0.3% 2.2x 18.9x 2.2x 11.8x 13.5% Enterprise Application Integration $1,480.38 $1,355.32 $390.05 57.4% 14.4% 5.3% 2.2x 17.0x 4.4x 19.3x 19.2% Enterprise Resource Planning $624.82 $704.44 $354.95 57.5% 17.2% -0.7% 1.9x 11.1x 2.0x 10.8x 13.0% Entertainment $1,297.08 $719.86 $1,192.29 61.7% 13.8% -12.1% 0.6x 0.9x 0.8x 6.0x -41.2% Financial Services Software $925.55 $1,044.07 $249.72 59.8% 23.1% 7.8% 2.4x 9.1x 2.8x 10.7x 14.8% Healthcare $447.13 $446.10 $176.74 65.7% 21.9% 11.7% 3.7x 15.2x 3.9x 17.5x 6.3% Messaging, Conferencing & Communications $213.95 $165.15 $75.07 67.6% 12.9% 10.6% 1.8x 16.0x 1.9x 11.1x 18.5% Multimedia, Graphics, Digital Media $470.84 $404.87 $403.03 68.6% 17.4% 3.4% 3.2x 18.2x 3.1x 10.3x 4.5% Networking & Connectivity $2,097.27 $1,084.51 $802.83 78.9% 23.1% 9.4% 2.9x 18.6x 2.8x 19.4x 53.8% Security $940.47 $741.23 $194.97 78.0% 18.5% 11.8% 4.5x 15.1x 4.1x 10.6x 7.2% Storage & Systems Management Software $9,064.22 $8,085.27 $2,163.74 77.2% 18.4% 7.0% 2.9x 11.4x 3.0x 12.2x 17.7% Supply Chain Management & Logistics $526.89 $437.89 $201.64 56.7% 11.2% 0.2% 2.2x 10.1x 2.1x 10.8x 9.0% Wireless $274.07 $289.89 $151.01 53.5% 7.9% 13.6% 1.2x 10.9x 1.2x 9.7x -19.6%

TTM Revenue Growth 4.1%TTM EBITDA Growth 13.4%TTM Earnings Growth 34.1%Gross Profit Margin 69.1%EBITDA Margin 17.3%Net Income Margin 8.2%SG&A Expenses as a % of Total Revenue 37.4%R&D Expenses as a % of Total Revenue 14.2%

Current Ratio 2.0Quick Ratio 1.7Cash as Percent of Market Cap 18.0%Avg Days Outstanding: Accounts Receivable 69Avg Days Outstanding: Accounts Payable 34Working Capital to TTM Operating Expense Ratio 0.4

Levered FCF Margin 9.9%Cash from Operations Growth (YoY) 10.8%Cash from Investing Growth (YoY) -39.7%Cash from Financing Growth (YoY) 45.9%Levered FCF Growth (YoY) 10.8%


Category Name

Income Statement Analysis (Median)

Balance Sheet Analysis (Median)

Cash Flow Statement Analysis (Median)

October 2010 Monthly Flash Report

SEG SW Index Stock Market Return: Jan-Sep 2010

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DOW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Billing and Service Management

Company Name Ticker Market Cap EV TTM RevenueTTM Gross

Margin

TTM EBITDA Margin

TTM Revenue Growth EV/ Revenue EV/ EBITDA

Forward EV/ Revenue

Forward EV/ EBITDA


Amdocs Limited DOX $5,915.97 $4,626.03 $2,929.45 36.2% 20.5% -1.7% 1.6x 7.7x 1.6x 7.0x 6.6%AsiaInfo Holdings, Inc. ASIA $1,463.43 $1,198.21 $270.12 58.3% 21.8% 29.9% 4.4x 20.3x 5.6x 31.6x -1.2%CSG Systems International, Inc. CSGS $620.95 $552.14 $513.94 43.8% 19.4% 4.9% 1.1x 5.5x 1.1x 5.1x 13.9%MIND C.T.I. Ltd. MNDO $35.48 $17.48 $19.22 67.8% 28.1% 7.9% 0.9x 3.2x n/a n/a 31.5%

Median: $1,042.19 $875.17 $392.03 51.0% 21.2% 6.4% 1.3x 6.6x 1.6x 7.0x 10.2%



Levered FCF Margin 16.0%Cash from Operations Growth (YoY) 40.7%Cash from Investing Growth (YoY) 6.7%Cash from Financing Growth (YoY) -4.3%Levered FCF Growth (YoY) 80.2%





Income Statement Analysis (Median) Billing & Service Management Software Stock Market Return: Jan-Sep 2010

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Billing & Service Management SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Business Intelligence


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Actuate Corporation ACTU $228.83 $205.85 $119.90 83.8% 13.1% -4.6% 1.7x 13.1x 1.7x 7.8x -10.7%Datawatch Corporation DWCH $17.24 $11.17 $17.96 70.4% 8.5% -11.9% 0.6x 7.4x n/a n/a 22.9%Qlik Technologies QLIK $1,700.83 $1,693.74 $193.01 89.8% 16.3% n/a 8.8x 53.8x n/a n/a n/aInformatica Corporation INFA $3,554.65 $3,392.49 $565.08 83.8% 23.1% 21.6% 6.0x 26.0x 6.5x 25.0x 70.1%MicroStrategy Incorporated MSTR $988.79 $786.11 $410.72 80.0% 20.2% 16.1% 1.9x 9.5x 2.1x 8.1x 21.1%Pegasystems Inc. PEGA $1,152.58 $1,078.54 $295.10 63.9% 11.3% 23.8% 3.7x 32.4x 3.7x 20.9x -10.1%PROS Holdings PRO $242.46 $181.69 $68.60 73.1% 7.0% -7.8% 2.6x 38.1x 2.7x 13.7x 10.2%

Median: $988.79 $786.11 $193.01 80.0% 13.1% 5.8% 2.6x 26.0x 2.7x 13.7x 15.6%

TTM Revenue Growth 5.8%TTM EBITDA Growth -18.1%TTM Earnings Growth -11.9%Gross Profit Margin 80.0%EBITDA Margin 13.1%Net Income Margin 6.3%SG&A Expenses as a % of Total Revenue 50.0%R&D Expenses as a % of Total Revenue 15.7%


Levered FCF Margin 8.0%Cash from Operations Growth (YoY) -24.7%Cash from Investing Growth (YoY) -6.0%Cash from Financing Growth (YoY) 57.3%Levered FCF Growth (YoY) -7.1%






Business Intelligence Software Stock Market Return: Jan-Sep 2010

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Business Intelligence SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Content & Document Management


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Adobe Systems Incorporated ADBE $13,734.61 $12,680.78 $3,549.34 89.3% 34.0% 14.4% 3.6x 10.5x 4.3x 10.4x -20.9%Datawatch Corporation DWCH $17.24 $11.17 $17.96 70.4% 8.5% -11.9% 0.6x 7.4x n/a n/a 22.9%EasyLink Services International ESIC $76.05 $80.31 $82.15 71.0% 23.2% -7.3% 1.0x 4.2x n/a n/a 56.6%Ninetowns Internet Tech Grp Ltd. NINE $49.52 -$48.57 $93.75 69.5% -38.5% -10.3% n/a n/a n/a n/a 38.2%Open Text Corporation OTEX $2,674.13 $2,648.45 $912.02 74.1% 29.1% 16.1% 2.9x 10.0x 2.9x 10.0x 26.0%

Median: $76.05 $80.31 $93.75 71.0% 23.2% -7.3% 1.9x 8.7x 3.6x 10.2x 26.0%

TTM Revenue Growth -7.3%TTM EBITDA Growth -3.4%TTM Earnings Growth 101.0%Gross Profit Margin 71.0%EBITDA Margin 23.2%Net Income Margin 1.7%SG&A Expenses as a % of Total Revenue 49.1%R&D Expenses as a % of Total Revenue 15.0%


Levered FCF Margin 23.7%Cash from Operations Growth (YoY) -4.9%Cash from Investing Growth (YoY) 65.9%Cash from Financing Growth (YoY) 31.6%Levered FCF Growth (YoY) 18.6%





Income Statement Analysis (Median) Content & Document Management Software Stock Market Return: Jan-Sep 2010

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Content & Document Management SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: CRM, Marketing, and Sales


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Astea International Inc. ATEA $6.75 $3.26 $19.67 35.5% -8.7% -6.6% 0.2x n/a n/a n/a 12.2%Blackbaud, Inc. BLKB $1,053.12 $1,044.07 $315.09 61.1% 20.2% 1.1% 3.3x 16.4x 3.4x 12.8x 3.6%Callidus Software, Inc. CALD $133.92 $105.80 $66.09 36.5% -20.5% -36.4% 1.6x n/a 1.4x n/a 41.9%CDC Software Corporation CDCS $171.26 $161.06 $206.06 54.9% 16.8% -4.5% 0.8x 4.6x 0.9x 3.5x -34.6%Rainmaker Systems Inc. RMKR $29.15 $17.23 $48.06 48.2% 0.3% -7.2% 0.4x 136.8x 0.3x 13.6x -9.7%

Median: $133.92 $105.80 $66.09 48.2% 0.3% -6.6% 0.8x 16.4x 1.1x 12.8x 0.0x

TTM Revenue Growth -6.6%TTM EBITDA Growth -5.0%TTM Earnings Growth 13.0%Gross Profit Margin 48.2%EBITDA Margin 0.3%Net Income Margin -11.6%SG&A Expenses as a % of Total Revenue 31.2%R&D Expenses as a % of Total Revenue 14.4%








CRM, Marketing, & Sales Software Stock Market Return: Jan-Sep 2010

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CRM, Marketing, & Sales SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Database and File Management


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


BMC Software, Inc. BMC $7,230.78 $6,188.88 $1,922.10 78.1% 32.5% 2.0% 3.2x 9.9x 3.4x 7.8x 7.9%Guidance Software, Inc. GUID $139.38 $112.43 $81.90 74.3% -2.5% -1.8% 1.4x n/a 1.5x n/a 32.4%Informatica Corporation INFA $3,554.65 $3,392.49 $565.08 83.8% 23.1% 21.6% 6.0x 26.0x 6.5x 25.0x 70.1%Oracle Corporation ORCL $134,978.01 $128,785.01 $29,268.00 76.7% 43.0% 27.4% 4.4x 10.2x 5.0x 10.4x 28.8%Pervasive Software Inc. PVSW $79.30 $38.95 $47.21 87.4% 14.7% 0.0% 0.8x 5.6x 0.8x 4.3x -0.4%Quest Software, Inc. QSFT $2,220.38 $1,883.54 $722.66 90.5% 22.8% 0.5% 2.6x 11.5x 2.8x 9.2x 45.9%Versant Corporation VSNT $37.56 $12.10 $15.53 88.2% 17.3% -22.4% 0.8x 4.5x n/a n/a -35.6%

Median: $2,220.38 $1,883.54 $565.08 83.8% 22.8% 0.5% 2.6x 10.1x 3.1x 9.2x 28.8%








Income Statement Analysis (Median) Database & File Management Software Stock Market Return: Jan-Sep 2010

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Database & File Management SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Development Tools, OS, and App Testing


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


BSQUARE Corporation BSQR $34.48 $19.01 $75.44 17.9% -2.0% 14.2% 0.3x n/a n/a n/a 29.6%Google Inc. GOOG $167,748.43 $137,689.43 $26,213.56 63.6% 41.3% 17.7% 5.3x 12.7x 6.0x 13.0x 6.0%Magic Software Enterprises Ltd. MGIC $79.87 $54.13 $69.16 46.5% 16.1% 18.7% 0.8x 4.9x n/a n/a 46.2%Microsoft Corporation MSFT $211,925.86 $181,338.86 $62,484.00 80.2% 43.5% 6.9% 2.9x 6.7x 2.9x 6.9x -4.8%Phoenix Technologies Ltd. PTEC $137.47 $98.28 $62.38 86.0% -13.1% -9.0% 1.6x n/a 1.4x n/a 6.8%Progress Software Corporation PRGS $1,433.16 $1,163.95 $520.74 85.1% 25.9% 4.8% 2.2x 8.6x 2.5x n/a 46.1%Red Hat, Inc. RHT $7,746.38 $6,771.16 $819.12 84.4% 21.0% 18.8% 8.3x 39.4x 8.6x 31.6x 48.3%GeekNet GKNT $120.09 $92.10 $73.41 30.6% -8.1% 18.6% 1.3x n/a 1.4x NM 57.1%

Median: $785.32 $631.12 $298.09 71.9% 18.5% 15.9% 1.9x 8.6x 2.9x 13.0x 29.6%



Levered FCF Margin 15.4%Cash from Operations Growth (YoY) 25.2%Cash from Investing Growth (YoY) 35.6%Cash from Financing Growth (YoY) 65.2%Levered FCF Growth (YoY) 38.4%






Dev Tools and App Testing Software Stock Market Return: Jan-Sep 2010

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Development Tools, OS, and App Testing SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Education and eLearning


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Archipelago Learning, Inc. ARCL $315.51 $383.67 $48.71 92.6% 35.2% 32.3% 7.9x 22.4x 9.4x 24.6x n/aBlackboard Inc. BBBB $1,235.63 $1,257.59 $407.24 70.5% 24.3% 17.5% 3.1x 12.7x 3.6x 15.9x -4.6%GSE Systems Inc. GVP $64.01 $38.09 $44.26 27.3% 3.3% 29.6% 0.9x 25.8x 1.0x n/a -46.1%Renaissance Learning, Inc. RLRN $298.90 $252.79 $127.45 79.0% 26.7% 10.7% 2.0x 7.4x 2.1x n/a 2.5%Rosetta Stone, Inc. RST $437.39 $337.71 $269.19 86.8% 16.4% 15.6% 1.3x 7.7x 1.4x 8.1x -7.5%Saba Software, Inc. SABA $152.48 $119.77 $110.57 66.0% 6.1% 7.0% 1.1x 17.7x 1.2x 11.8x 29.2%Scientific Learning Corporation SCIL $87.30 $72.75 $59.42 79.4% 14.0% 33.7% 1.2x 8.8x 1.2x 9.3x 34.5%

Median: $225.69 $186.28 $119.01 74.7% 15.2% 16.6% 1.2x 12.7x 1.4x 11.8x -1.0%








Income Statement Analysis (Median) Education & eLearning Software Stock Market Return: Jan-Sep 2010

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Education & Computer Based Training SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Electronic Design Automation


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Cadence Design Systems, Inc. CDNS $2,031.44 $2,094.75 $885.40 82.3% 8.0% 1.1% 2.4x 29.4x 2.5x 31.7x 4.0%Magma Design Automation, Inc. LAVA $220.19 $227.39 $126.79 83.9% 5.5% -2.5% 1.8x 32.5x 2.0x 9.4x 77.0%Mentor Graphics Corporation MENT $1,155.50 $1,284.47 $794.84 86.7% 8.3% -1.1% 1.6x 19.5x 1.6x 10.1x 13.5%PDF Solutions, Inc. PDFS $100.15 $68.21 $59.27 59.7% 3.7% 13.2% 1.2x 30.9x 1.4x n/a 5.7%Synopsys, Inc. SNPS $3,679.88 $2,470.06 $1,343.48 82.0% 20.6% -2.3% 1.8x 8.9x 1.8x 5.9x 10.5%

Median: $1,155.50 $1,284.47 $794.84 82.3% 8.0% -1.1% 1.8x 29.4x 1.8x 9.8x 10.5%

TTM Revenue Growth -1.1%TTM EBITDA Growth 114.6%TTM Earnings Growth 96.3%Gross Profit Margin 82.3%EBITDA Margin 8.0%Net Income Margin -1.8%SG&A Expenses as a % of Total Revenue 43.0%R&D Expenses as a % of Total Revenue 32.9%


Levered FCF Margin 6.8%Cash from Operations Growth (YoY) 72.8%Cash from Investing Growth (YoY) -104.4%Cash from Financing Growth (YoY) 125.1%Levered FCF Growth (YoY) n/a






Electronic Design Automation Software Stock Market Return: Jan-Sep 2010

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Electronic Design Automation SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Engineering, PLM, & CAD/CAM


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


ANSYS, Inc. ANSS $3,840.31 $3,594.00 $552.37 88.5% 49.7% 11.4% 6.5x 13.1x 6.9x 11.8x 12.9%Autodesk, Inc. ADSK $7,266.24 $6,179.64 $1,820.40 89.6% 18.5% -6.0% 3.4x 18.4x 3.6x 17.6x 34.3%AutoNavi Holdings AMAP $797.55 $775.47 $62.13 65.6% 30.5% n/a 12.5x 41.0x n/a n/a n/aCadence Design Systems, Inc. CDNS $2,031.44 $2,094.75 $885.40 82.3% 8.0% 1.1% 2.4x 29.4x 2.5x 31.7x 4.0%Cimatron Ltd. CIMT $14.63 $5.56 $33.31 82.1% 4.8% -8.1% 0.2x 3.5x n/a n/a -100.0%Dassault Systèmes DSY $6,442.46 $5,729.08 $1,328.29 84.9% 27.2% 0.5% 4.3x 15.9x n/a n/a 41.7%DigitalGlobe, Inc. DGI $1,393.29 $1,595.29 $302.80 87.8% 54.2% 9.6% 5.3x 9.7x 5.9x 9.8x 35.9%GSE Systems Inc. GVP $64.01 $38.09 $44.26 27.3% 3.3% 29.6% 0.9x 25.8x 1.0x n/a -46.1%Magma Design Automation, Inc. LAVA $220.19 $227.39 $126.79 83.9% 5.5% -2.5% 1.8x 32.5x 2.0x 9.4x 77.0%Mentor Graphics Corporation MENT $1,155.50 $1,284.47 $794.84 86.7% 8.3% -1.1% 1.6x 19.5x 1.6x 10.1x 13.5%Parametric Technology Corporation PMTC $2,254.04 $2,035.02 $988.33 69.3% 13.2% -0.3% 2.1x 15.5x 2.2x 13.0x 41.4%PDF Solutions, Inc. PDFS $100.15 $68.21 $59.27 59.7% 3.7% 13.2% 1.2x 30.9x 1.4x n/a 5.7%Stratasys, Inc. SSYS $569.87 $537.92 $108.62 50.1% 20.6% -1.5% 5.0x 24.0x 5.5x 30.2x 61.5%Synopsys, Inc. SNPS $3,679.88 $2,470.06 $1,343.48 82.0% 20.6% -2.3% 1.8x 8.9x 1.8x 5.9x 10.5%

Median: $1,274.40 $1,439.88 $427.58 82.2% 15.9% -0.3% 2.2x 18.9x 2.2x 11.8x 13.5%

TTM Revenue Growth -0.3%TTM EBITDA Growth 21.4%TTM Earnings Growth 69.7%Gross Profit Margin 82.2%EBITDA Margin 15.9%Net Income Margin 5.4%SG&A Expenses as a % of Total Revenue 35.0%R&D Expenses as a % of Total Revenue 21.4%







Income Statement Analysis (Median) Engineering, PLM, & CAD/CAM Software Stock Market Return: Jan-Sep 2010

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Engineering, PLM, & CAD/CAM SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Enterprise Application Integration


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


BluePhoenix Solutions, Ltd. BPHX $52.60 $50.65 $71.74 40.6% 6.6% -14.8% 0.7x 10.7x 0.6x n/a -40.6%Citrix Systems, Inc. CTXS $12,756.79 $11,941.98 $1,724.91 91.2% 23.1% 9.4% 6.9x 30.0x 6.5x 22.4x 73.9%Jacada Ltd. JCDA $18.64 $8.44 $19.09 40.1% -31.6% 1.1% 0.4x n/a n/a n/a -35.5%TIBCO Software Inc. TIBX $2,908.15 $2,660.00 $708.36 74.2% 22.1% 15.9% 3.8x 17.0x 4.4x 16.2x 86.9%

Median: $1,480.38 $1,355.32 $390.05 57.4% 14.4% 5.3% 2.2x 17.0x 4.4x 19.3x 19.2%

TTM Revenue Growth 5.3%TTM EBITDA Growth 21.7%TTM Earnings Growth 34.7%Gross Profit Margin 57.4%EBITDA Margin 14.4%Net Income Margin -5.4%SG&A Expenses as a % of Total Revenue 47.1%R&D Expenses as a % of Total Revenue 17.1%


Levered FCF Margin 7.2%Cash from Operations Growth (YoY) 21.0%Cash from Investing Growth (YoY) -23.0%Cash from Financing Growth (YoY) -76.1%Levered FCF Growth (YoY) 27.9%






Enterprise Application Integration Software Stock Market Return: Jan-Sep 2010

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Enterprise Application Integration SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Enterprise Resource Planning


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


American Software, Inc. AMSW.A $151.56 $114.86 $76.54 54.7% 12.9% -0.2% 1.5x 11.6x 1.6x 10.8x -9.6%CDC Software Corporation CDCS $171.26 $161.06 $206.06 54.9% 16.8% -4.5% 0.8x 4.6x 0.9x 3.5x -34.6%Deltek PROJ $541.11 $552.46 $262.73 65.2% 20.3% -4.1% 2.1x 10.4x 2.2x n/a 4.2%Epicor Software Corporation EPIC $550.77 $696.58 $418.93 55.4% 13.6% -8.3% 1.7x 12.3x 1.9x 12.3x 36.6%Intuit Inc. INTU $13,911.25 $13,287.25 $3,455.00 82.5% 32.4% 11.1% 3.8x 11.9x 4.1x 11.0x 53.7%Lawson Software, Inc. LWSN $1,380.40 $1,276.02 $742.08 56.4% 16.2% 0.9% 1.7x 10.6x 1.8x 9.2x 35.7%Oracle Corporation ORCL $134,978.01 $128,785.01 $29,268.00 76.7% 43.0% 27.4% 4.4x 10.2x 5.0x 10.4x 28.8%QAD Inc. QADI $131.16 $91.98 $211.07 58.6% 7.5% -9.3% 0.4x 5.8x 0.4x 3.4x -8.6%SAP SAP $43,112.86 $41,348.86 $11,101.00 67.8% 30.9% -1.2% 3.7x 12.1x 3.9x 13.0x 8.1%Tyler Technologies, Inc. TYL $698.87 $712.30 $290.97 44.3% 17.7% 3.9% 2.4x 13.9x 2.5x 12.9x 18.0%

Median: $624.82 $704.44 $354.95 57.5% 17.2% -0.7% 1.9x 11.1x 2.0x 10.8x 13.0%

TTM Revenue Growth -0.7%TTM EBITDA Growth 4.3%TTM Earnings Growth 20.6%Gross Profit Margin 57.5%EBITDA Margin 17.2%Net Income Margin 8.2%SG&A Expenses as a % of Total Revenue 31.2%R&D Expenses as a % of Total Revenue 12.5%








Enterprise Resource Planning Software Stock Market Return: Jan-Sep 2010

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Enterprise Resource Planning SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Entertainment


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Electronic Arts Inc. ERTS $5,432.54 $3,702.54 $3,825.00 53.8% -0.7% -5.6% 1.0x n/a 1.0x 12.0x -13.7%Giant Interactive GA $1,453.75 $719.86 $1,192.29 88.0% 67.5% -12.1% 0.6x 0.9x 3.6x 5.4x -15.2%Glu Mobile, Inc. GLUU $43.44 $46.34 $71.94 63.9% -6.8% -16.5% 0.6x n/a 0.6x 11.5x 20.5%Konami Corporation KNM $196,720.76 $195,972.76 $259,352.00 28.9% 13.8% -12.1% 0.8x 5.5x 0.8x 5.7x -99.1%Majesco Entertainment Company COOL $26.07 $16.86 $76.17 24.6% -1.6% -14.0% 0.2x n/a 0.2x n/a -51.8%Perfect World PWRD $1,297.08 $1,049.14 $2,417.11 85.1% 50.3% 38.4% 0.4x 0.9x 3.4x 6.0x -46.7%THQ Inc. THQI $272.39 $156.43 $805.02 61.7% 27.6% -14.0% 0.2x 0.7x 0.2x 6.0x -41.2%

Median: $1,297.08 $719.86 $1,192.29 61.7% 13.8% -12.1% 0.6x 0.9x 0.8x 6.0x -41.2%








Income Statement Analysis (Median) Entertainment Software Stock Market Return: Jan-Sep 2010

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Entertainment SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Financial Services


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


ACI Worldwide, Inc. ACIW $746.86 $706.47 $410.54 68.6% 19.2% 4.4% 1.7x 9.0x 1.8x 10.7x 48.0%Advent Software, Inc. ADVS $1,334.39 $1,231.86 $266.08 71.2% 15.8% 4.7% 4.6x 29.3x 4.7x 19.1x 29.7%Blackbaud, Inc. BLKB $1,053.12 $1,044.07 $315.09 61.1% 20.2% 1.1% 3.3x 16.4x 3.4x 12.8x 3.6%Bottomline Technologies EPAY $494.88 $372.20 $157.99 56.4% 15.7% 14.5% 2.4x 15.0x 2.4x 11.0x 19.1%DST Systems, Inc. DST $2,095.87 $2,974.37 $2,283.60 21.6% 21.6% 2.0% 1.3x 6.0x 1.9x 7.0x 0.1%Ebix, Inc. EBIX $822.51 $842.65 $118.41 77.3% 45.1% 42.0% 7.1x 15.8x 8.6x 18.8x 27.1%EPIQ Systems, Inc. EPIQ $467.89 $444.82 $233.36 58.5% 23.1% -6.4% 1.9x 8.3x 1.9x 6.6x -15.4%Fair Isaac Corporation FICO $1,028.59 $1,306.81 $602.47 70.4% 25.1% -8.3% 2.2x 8.6x 2.1x 8.2x 14.8%Fiserv FISV $8,078.60 $11,179.60 $4,084.00 41.9% 30.7% -0.4% 2.7x 8.9x 2.8x 8.7x 11.7%Fundtech Ltd. FNDT $218.89 $164.33 $131.58 54.1% 13.7% 13.7% 1.2x 9.1x 1.4x 10.7x 20.1%Jack Henry & Associates, Inc. JKHY $2,190.60 $2,442.78 $836.59 41.3% 30.8% 12.2% 2.9x 9.5x 3.0x 10.0x 8.6%Longtop Financial Technologies LFT $2,220.71 $1,887.12 $189.45 61.9% 41.7% 64.1% 10.0x 23.9x 11.1x 23.7x 38.3%MSCI, Inc. MSCI $3,912.01 $3,769.73 $871.73 71.0% 33.6% 102.0% 4.3x 12.9x 11.8x 24.4x 12.1%NetSol Technologies Inc. NTWK $64.73 $88.72 $36.78 68.9% 36.1% 39.1% 2.4x 6.7x 2.8x 9.7x 67.8%S1 Corporation SONE $276.63 $240.15 $222.73 51.9% 12.7% -5.8% 1.1x 8.5x 1.1x 5.6x -15.7%SS&C Corporation SSNC $1,135.54 $1,364.15 $299.73 49.9% 38.2% 10.9% 4.6x 11.9x n/a n/a n/aSapiens International SPNS $61.76 $52.66 $49.14 40.3% 13.9% 14.3% 1.1x 7.7x n/a n/a 152.3%TradeStation Group, Inc. TRAD $266.42 n/a $134.00 77.6% n/a -13.2% n/a n/a n/a n/a -19.3%

Median: $925.55 $1,044.07 $249.72 59.8% 23.1% 7.8% 2.4x 9.1x 2.8x 10.7x 14.8%








Income Statement Analysis (Median) Financial Services Software Stock Market Return: Jan-Sep 2010

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Financial Services SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Healthcare


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Allscripts Healthcare Solutions Inc. MDRX $3,442.37 $3,301.25 $704.50 55.2% 17.8% 28.5% 4.7x 26.3x n/a n/a -8.9%Cerner Corporation CERN $6,927.66 $6,411.58 $1,763.07 83.3% 25.6% 4.7% 3.6x 14.2x 4.0x 13.8x 12.3%Computer Programs and Sys, Inc. CPSI $466.69 $451.68 $136.01 40.4% 18.3% 10.2% 3.3x 18.2x 3.6x 17.5x 2.8%eResearchTechnology, Inc. ERES $365.44 $364.91 $96.83 54.2% 27.4% -13.5% 3.8x 13.8x 3.9x n/a 6.9%MedAssets MDAS $1,214.45 $1,410.07 $366.62 76.9% 27.7% 13.6% 3.8x 13.9x 4.1x 12.6x -6.8%Merge Healthcare MRGE $241.48 $440.52 $85.15 69.3% 16.2% 41.1% 5.2x 31.9x 6.8x 22.1x -29.4%Omnicell, Inc. OMCL $427.56 $242.40 $217.46 51.0% 7.3% -6.0% 1.1x 15.2x 1.1x 12.1x 17.4%Quality Systems, Inc. QSII $1,917.09 $1,816.18 $308.10 62.1% 27.2% 19.9% 5.9x 21.6x 6.1x 20.4x 7.7%Simulations Plus, Inc. SLP $45.03 $36.45 $10.35 75.3% 25.5% 13.2% 3.5x 13.8x 3.4x n/a 81.5%Vital Images, Inc. VTAL $190.00 $72.89 $58.80 73.9% -1.1% -7.1% 1.2x n/a 1.3x 29.9x 5.7%

Median: $447.13 $446.10 $176.74 65.7% 21.9% 11.7% 3.7x 15.2x 3.9x 17.5x 6.3%









Healthcare Software Stock Market Return: Jan-Sep 2010

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Healthcare SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Messaging, Conferencing, and Comms


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


8x8 Inc. EGHT $136.65 $118.56 $64.67 67.6% 8.3% 1.1% 1.8x 22.1x 2.0x 22.6x 144.3%BroadSoft, Inc. BSFT $213.95 $169.35 $75.07 77.0% 1.0% n/a 2.3x 219.4x n/a n/a n/aEvolving Systems, Inc. EVOL $75.81 $66.68 $39.18 66.8% 21.0% 4.4% 1.7x 8.1x 1.8x 7.5x 7.9%Interactive Intelligence, Inc. ININ $308.19 $232.65 $142.88 70.4% 15.3% 15.5% 1.6x 10.6x 1.9x 11.0x -7.9%SeaChange International, Inc. SEAC $232.95 $165.15 $212.51 50.2% 7.6% 5.7% 0.8x 10.2x 0.9x 11.1x -1.2%Synchronoss Technologies, Inc. SNCR $558.66 $473.47 $140.98 49.8% 20.9% 19.8% 3.4x 16.0x 3.8x 13.7x 42.8%Zix Corporation ZIXI $181.96 $164.73 $33.36 76.1% 12.9% 17.0% 4.9x 38.2x 5.4x n/a 29.1%

Median: $213.95 $165.15 $75.07 67.6% 12.9% 10.6% 1.8x 16.0x 1.9x 11.1x 18.5%








Income Statement Analysis (Median) Messaging, Conferencing, & Comms Software Stock Market Return: Jan-Sep 2010

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Messaging, Conferencing, & Comms SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Multimedia, Graphics, and Digital Media


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Adobe Systems Incorporated ADBE $13,734.61 $12,680.78 $3,549.34 89.3% 34.0% 14.4% 3.6x 10.5x 4.3x 10.4x -20.9%Avid Technology, Inc. AVID $499.50 $452.71 $644.91 51.8% -0.2% -11.2% 0.7x n/a 0.8x n/a -7.0%Bitstream Inc. BITS $67.63 $63.55 $21.88 55.2% 1.6% 2.4% 2.9x 181.6x n/a n/a 25.1%DigitalGlobe, Inc. DGI $1,393.29 $1,595.29 $302.80 87.8% 54.2% 9.6% 5.3x 9.7x 5.9x 9.8x 35.9%MediaMind Technologies MDMD $247.05 $214.55 $74.89 95.2% 21.0% 24.7% 2.9x 13.6x 0.0x 0.0x n/aMonotype Imaging Holdings TYPE $320.52 $357.04 $97.04 88.9% 37.9% -3.5% 3.7x 9.7x 4.0x 10.2x 8.8%NICE Systems Ltd. NICE $7,026.71 $5,709.81 $631.96 59.4% 14.4% 4.4% 9.0x 62.7x 2.9x 11.1x 2.8%Nuance Communications, Inc. NUAN $4,596.53 $4,969.16 $1,072.52 67.6% 20.3% 14.0% 4.6x 22.8x 4.8x 15.5x 4.5%RealNetworks, Inc. RNWK $442.18 $128.96 $503.25 62.2% -2.6% -13.4% 0.3x n/a 0.2x 5.9x -12.4%Sonic Solutions SNIC $350.36 $295.62 $104.22 69.6% 3.1% -9.7% 2.8x 90.6x 3.1x 67.2x 91.9%

Median: $470.84 $404.87 $403.03 68.6% 17.4% 3.4% 3.2x 18.2x 3.1x 10.3x 4.5%



Levered FCF Margin 3.0%Cash from Operations Growth (YoY) -8.3%Cash from Investing Growth (YoY) -107.4%Cash from Financing Growth (YoY) 17.6%Levered FCF Growth (YoY) 8.4%






Multimedia, Graphics, & Digital Media Software Stock Market Return: Jan-Sep 2010

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Multimedia, Graphics, & Digital Media SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Networking and Connectivity


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Allot Communications Ltd. ALLT $134.86 $79.50 $48.47 71.5% 1.4% 25.1% 1.6x 117.9x 2.0x n/a 55.7%CA, Inc. CA $10,897.67 $9,981.67 $4,400.00 86.9% 36.9% 4.1% 2.3x 6.2x 2.4x 6.4x -4.0%Cisco Systems, Inc. CSCO $122,310.03 $97,733.03 $40,040.00 64.0% 28.0% 10.9% 2.4x 8.7x 2.5x 7.7x -7.0%Citrix Systems, Inc. CTXS $12,756.79 $11,941.98 $1,724.91 91.2% 23.1% 9.4% 6.9x 30.0x 6.5x 22.4x 73.9%F5 Networks, Inc. FFIV $8,353.38 $7,955.03 $802.83 79.9% 27.1% 23.7% 9.9x 36.6x 11.3x 40.3x 161.9%NetScout Systems Inc. NTCT $859.57 $774.85 $269.09 78.3% 23.1% 1.5% 2.9x 12.5x 3.0x 11.7x 51.8%Novell, Inc. NOVL $2,097.27 $1,054.36 $821.00 78.5% 15.0% -7.9% 1.3x 8.5x 1.2x n/a 32.4%OPNET Technologies, Inc. OPNT $389.86 $278.30 $129.71 77.1% 12.7% 7.6% 2.1x 16.9x 2.3x 21.2x 66.1%Radware Ltd. RDWR $682.36 $612.73 $129.63 78.9% 13.7% 35.1% 4.7x 34.5x 5.3x 57.8x 206.0%SolarWinds, Inc. SWI $1,184.28 $1,084.51 $135.16 95.4% 39.6% 32.3% 8.0x 20.2x 9.1x 17.7x -21.7%

Median: $2,097.27 $1,084.51 $802.83 78.9% 23.1% 9.4% 2.9x 18.6x 2.8x 19.4x 53.8%









Networking & Connectivity Software Stock Market Return: Jan-Sep 2010

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Networking and Connectivity SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Security


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


ActivCard Corp. ACTI $102.57 $25.50 $57.03 70.3% -9.7% -10.1% 0.4x n/a n/a n/a -21.7%ArcSight, Inc. ARST $1,510.01 $1,359.28 $194.97 79.7% 13.0% 36.3% 7.0x 53.7x 7.7x 48.5x 80.9%Blue Coat Systems, Inc. BCSI $1,027.94 $844.19 $502.63 75.6% 18.5% 9.7% 1.7x 9.1x 1.6x 10.3x 6.5%Check Point Software Tech Ltd. CHKP $7,667.44 $6,684.20 $1,011.93 88.1% 53.0% 21.1% 6.6x 12.5x 7.5x 12.9x 30.3%Cogent, Inc. COGT $940.47 $667.72 $116.57 56.1% 27.0% -15.4% 5.7x 21.2x 5.0x 14.2x 5.3%Commtouch Software Ltd. CTCH $88.70 $72.66 $16.10 84.5% 23.5% 11.8% 4.5x 19.2x n/a n/a 18.4%McAfee, Inc. MFE $7,278.70 $6,490.31 $2,002.92 78.0% 21.5% 14.4% 3.2x 15.1x 3.4x 10.4x 7.9%Sourcefire, Inc. FIRE $799.91 $674.49 $119.13 79.6% 14.1% 37.3% 5.7x 40.2x 6.1x 47.2x 34.3%Symantec Corporation SYMC $11,942.74 $11,100.74 $5,986.00 85.3% 29.8% 0.9% 1.9x 6.2x 1.8x 5.0x -8.1%VASCO Data Security International VDSI $244.66 $168.67 $102.72 70.0% 10.9% -11.7% 1.6x 15.1x 1.7x n/a -12.4%VeriSign, Inc. VRSN $5,526.95 $4,817.86 $1,057.81 77.5% 42.3% 33.7% 4.6x 10.8x 4.7x 10.6x 34.0%Websense, Inc. WBSN $753.33 $741.23 $319.95 83.8% 17.2% 3.8% 2.3x 13.5x 2.3x 6.3x 5.6%Zix Corporation ZIXI $181.96 $164.73 $33.36 76.1% 12.9% 17.0% 4.9x 38.2x 5.4x n/a 29.1%

Median: $940.47 $741.23 $194.97 78.0% 18.5% 11.8% 4.5x 15.1x 4.1x 10.6x 7.2%



Levered FCF Margin 10.9%Cash from Operations Growth (YoY) 55.7%Cash from Investing Growth (YoY) 12.9%Cash from Financing Growth (YoY) -22.0%Levered FCF Growth (YoY) 31.1%





Income Statement Analysis (Median) Security Software Stock Market Return: Jan-Sep 2010

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Security SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Storage and Systems Management


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


BMC Software, Inc. BMC $7,230.78 $6,188.88 $1,922.10 78.1% 32.5% 2.0% 3.2x 9.9x 3.4x 7.8x 7.9%CA, Inc. CA $10,897.67 $9,981.67 $4,400.00 86.9% 36.9% 4.1% 2.3x 6.2x 2.4x 6.4x -4.0%CommVault Systems, Inc. CVLT $1,124.08 $943.65 $277.08 86.7% 11.9% 15.6% 3.4x 28.5x 3.4x 18.8x 25.4%Compuware Corporation CPWR $1,902.10 $1,763.43 $884.28 69.4% 20.8% -12.1% 2.0x 9.6x 2.1x 7.8x 16.2%EMC EMC $41,706.93 $38,702.26 $15,531.99 57.3% 19.2% 9.8% 2.5x 13.0x 2.7x 12.2x 19.2%FalconStor Software, Inc. FALC $139.84 $101.63 $81.36 76.2% -16.5% -8.0% 1.2x n/a 1.0x 12.5x -38.4%Network Appliance, Inc. NTAP $17,779.06 $14,971.56 $4,231.30 64.3% 17.7% 20.7% 3.5x 20.0x 3.8x 20.5x 86.6%SupportSoft, Inc. SPRT $214.67 $138.66 $30.19 28.9% -63.5% 146.2% 4.6x n/a 8.5x n/a 90.8%Symantec Corporation SYMC $11,942.74 $11,100.74 $5,986.00 85.3% 29.8% 0.9% 1.9x 6.2x 1.8x 5.0x -8.1%VMWare VMW $34,979.49 $32,649.66 $2,405.39 82.1% 17.6% 25.8% 13.6x 76.9x 15.4x 51.3x 111.5%

Median: $9,064.22 $8,085.27 $2,163.74 77.2% 18.4% 7.0% 2.9x 11.4x 3.0x 12.2x 17.7%









Storage & Systems Management Software Stock Market Return: Jan-Sep 2010

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Storage & Systems Management SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Supply Chain Management and Logistics


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


American Software, Inc. AMSW.A $151.56 $114.86 $76.54 54.7% 12.9% -0.2% 1.5x 11.6x 1.6x 10.8x -9.6%Ariba, Inc. ARBA $1,708.56 $1,521.91 $350.37 62.8% 9.5% 3.0% 4.3x 45.7x 4.4x 20.4x 62.9%Aspen Technology, Inc. AZPN $963.29 $914.48 $166.34 60.3% -62.5% -46.6% 5.5x n/a 5.6x n/a 1.7%CDC Software Corporation CDCS $171.26 $161.06 $206.06 54.9% 16.8% -4.5% 0.8x 4.6x 0.9x 3.5x -34.6%JDA Software Group JDAS $1,060.05 $1,186.32 $492.99 62.3% 23.9% 27.2% 2.4x 10.1x 3.3x 10.7x 15.6%Manhattan Associates, Inc. MANH $647.90 $530.24 $279.02 58.6% 19.5% 0.5% 1.9x 9.7x 2.1x 13.5x 45.3%ModusLink Global Solutions, Inc. MLNK $279.74 $118.18 $924.00 12.6% 4.5% -8.4% 0.1x 2.8x n/a n/a -21.5%Retalix Ltd. RTLX $1,100.88 $701.68 $197.22 39.5% 6.6% -3.4% 3.6x 54.0x n/a n/a 47.6%The Descartes Systems Group Inc. DSG $405.87 $345.54 $84.27 66.8% 21.0% 22.7% 4.1x 19.5x n/a n/a 11.9%XATA Corporation XATA $24.54 $54.22 $69.78 47.2% 8.6% 4.4% 0.8x 9.0x 0.8x n/a 6.2%

Median: $526.89 $437.89 $201.64 56.7% 11.2% 0.2% 2.2x 10.1x 2.1x 10.8x 9.0%

TTM Revenue Growth 0.2%TTM EBITDA Growth -1.6%TTM Earnings Growth 77.6%Gross Profit Margin 56.7%EBITDA Margin 11.2%Net Income Margin 4.4%SG&A Expenses as a % of Total Revenue 30.5%R&D Expenses as a % of Total Revenue 13.0%







Income Statement Analysis (Median) Supply Chain Management & Logistics Software Stock Market Return: Jan-Sep 2010

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Supply Chain Management & Logistics SW S&P 500 NASDAQ SEG SW Index

SEG Software Index Category: Wireless


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Itron, Inc. ITRI $2,472.16 $3,020.10 $1,953.92 31.2% 13.1% 13.6% 1.5x 11.8x 1.9x 15.2x -4.5%Openwave Systems Inc. OPWV $143.24 $37.09 $183.30 60.6% 2.7% -4.4% 0.2x 7.6x 0.2x n/a -34.6%PCTEL, Inc. PCTI $115.68 $46.50 $61.88 46.4% 1.3% -6.1% 0.8x 57.1x 0.8x 10.3x -1.8%Smith Micro Software, Inc. SMSI $340.61 $285.77 $118.72 87.6% 22.1% 15.4% 2.4x 10.9x 2.8x 9.1x -19.6%TeleCommunication Systems, Inc. TSYS $207.52 $294.02 $346.03 36.2% 13.4% 26.5% 0.8x 6.3x 1.2x 7.4x -53.2%Motricity MOTR $480.95 $458.21 $112.90 66.7% -4.8% n/a 4.1x n/a n/a n/a n/a

Median: $274.07 $289.89 $151.01 53.5% 7.9% 13.6% 1.2x 10.9x 1.2x 9.7x -19.6%

TTM Revenue Growth 13.6%TTM EBITDA Growth -5.8%TTM Earnings Growth 57.9%Gross Profit Margin 53.5%EBITDA Margin 7.9%Net Income Margin -0.2%SG&A Expenses as a % of Total Revenue 34.7%R&D Expenses as a % of Total Revenue 20.5%








Wireless Software Stock Market Return: Jan-Sep 2010

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Wireless SW S&P 500 NASDAQ SEG SW Index

Company Performance

SEG SaaS Index


SEG SaaS Index


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Athenahealth ATHN $1,127.43 $1,049.65 $214.88 58.7% 11.2% 34.1% 4.9x 43.6x 5.3x 28.5x -13.9%Concur CNQR $2,566.73 $2,240.02 $280.26 70.4% 23.2% 16.6% 8.0x 34.5x 8.7x 28.8x 24.3%Constant Contact CTCT $621.04 $505.06 $151.92 70.3% 4.7% 41.5% 3.3x 70.8x 3.8x 41.5x 11.3%Convio CNVO $160.78 $108.77 $66.93 62.5% 9.1% n/a 1.6x 17.9x n/a n/a n/aDealerTrack TRAK $689.28 $523.03 $230.75 49.1% 10.2% 0.9% 2.3x 22.3x 2.3x 15.6x -9.7%DemandTec DMAN $282.81 $217.72 $78.14 65.5% -8.8% 0.6% 2.8x n/a 3.1x 50.3x 6.6%IntraLinks Holdings IL $834.15 $1,291.82 $157.55 71.5% 5.8% n/a 8.2x 140.7x n/a n/a n/aKenexa KNXA $396.50 $332.91 $163.90 66.5% 10.5% -7.6% 2.0x 19.3x 2.3x 13.8x 30.0%LivePerson LPSN $428.64 $375.80 $98.74 74.3% 20.3% 24.3% 3.8x 18.7x 4.6x 19.0x 66.7%Medidata Solutions MDSO $456.52 $374.07 $150.73 66.6% 15.5% 19.0% 2.5x 16.0x 2.7x 18.8x 26.7%Netsuite N $1,501.67 $1,403.48 $176.01 65.8% -7.8% 7.5% 8.0x n/a 7.7x 120.8x 54.1%RealPage RP $1,188.78 $1,248.39 $159.98 57.9% 13.5% n/a 7.8x 57.7x n/a n/a n/aRightNow RNOW $631.13 $531.69 $165.87 69.3% 8.6% 14.6% 3.2x 37.1x 3.5x 31.7x 36.4%Salesforce.com CRM $14,522.82 $14,271.24 $1,455.78 80.6% 11.5% 22.6% 9.8x 85.0x 10.4x 56.7x 96.4%SciQuest SQI n/a n/a $39.46 79.2% 21.5% n/a n/a n/a n/a n/a n/aSoundBite Communications SDBT $44.49 $9.30 $40.69 59.9% -3.2% 0.8% 0.2x n/a 0.3x n/a -12.3%SPS Commerce SPSC $148.81 $111.18 $40.80 70.4% 10.7% n/a 2.7x 25.4x n/a n/a n/aSuccessFactors SFSF $1,851.49 $1,508.24 $171.51 76.0% -4.6% 27.1% 8.8x n/a 10.3x n/a 78.5%Taleo TLEO $1,160.01 $915.29 $212.56 67.0% 12.9% 10.8% 4.3x 33.3x 4.6x 17.8x 28.0%The Ultimate Software Group, Inc. ULTI $969.74 $942.65 $210.99 55.3% 5.7% 11.3% 4.5x 78.9x 4.8x 38.9x 34.5%Vocus VOCS $358.97 $263.77 $89.14 81.1% 2.0% 8.6% 3.0x 146.9x 3.1x 14.6x -11.5%

Median: $660.20 $527.36 $159.98 67.0% 10.2% 13.0% 3.6x 35.8x 4.2x 28.7x 27.4%









SEG SaaS Index Stock Market Return: Jan-Sep 2010

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SEG SaaS Index S&P 500 NASDAQ SEG SW Index

Category Performance

SEG Internet Index


SEG Internet Index: All Categories

Category Name Market Cap EV TTM RevenueTTM Gross

Margin

TTM EBITDA Margin

TTM Revenue Growth EV/ Revenue

EV/ EBITDA

Forward EV/ Revenue

Forward EV/

EBITDA


SEG Internet Index $300.27 $268.20 $160.17 59.2% 13.5% 6.6% 1.3x 10.3x 1.4x 8.2x 10.6% Advertising $901.13 $775.35 $312.47 56.8% 16.9% 8.2% 2.4x 12.4x 3.4x 11.6x 11.6% eCommerce & Portals $541.75 $473.93 $238.80 71.6% 12.9% 9.3% 2.3x 20.8x 2.7x 13.6x 29.4% Networking & Connectivity $348.77 $383.91 $207.17 43.3% 13.9% -2.1% 0.9x 6.0x 1.1x 7.5x 26.1% New Media $310.83 $153.16 $111.30 62.2% 4.2% -3.6% 1.7x 27.2x 1.8x 10.4x -7.9% Search Engine $19,105.10 $16,515.81 $5,747.91 63.6% 41.2% 13.0% 3.1x 12.4x 3.6x 11.6x 6.0%




Copyright © 2010 by Software Equity Group, L.L.C., All Rights Reserved October 2010 Monthly Flash Report




SEG Internet Index Stock Market Return: Jan-Sep 2010

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SEG Internet Index S&P 500 NASDAQ SEG SW Index

SEG Internet Index Category: Advertising


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Autobytel Inc. ABTL $39.48 $15.60 $49.55 37.4% -13.4% -15.7% 0.3x n/a n/a n/a 24.3%Baidu.com, Inc. BIDU $35,711.91 $34,840.34 $5,747.91 74.3% 49.1% 54.1% 6.1x 12.3x 52.5x 116.3x 162.4%comScore Inc. SCOR $732.22 $652.41 $143.84 71.0% 13.8% 15.8% 4.5x 32.8x 4.9x 22.4x 30.6%Google Inc. GOOG $167,748.43 $137,689.43 $26,213.56 63.6% 41.3% 17.7% 5.3x 12.7x 6.0x 13.0x 6.0%InfoSpace, Inc. INSP $311.99 $88.63 $245.99 32.8% 8.9% 54.7% 0.4x 4.1x 0.4x 3.4x 12.2%LookSmart, Ltd. LOOK $34.69 $11.73 $51.60 34.5% 0.7% -9.2% 0.2x 33.0x 0.2x n/a 74.1%Marchex Inc. MCHX $192.19 $159.29 $91.00 43.9% 0.3% -23.9% 1.8x 585.4x 1.8x 13.4x 11.0%SINA Corporation SINA $3,093.42 $2,365.56 $378.96 57.4% 20.0% 2.2% 6.2x 31.2x 6.7x 28.7x 33.2%Sohu.com Inc. SOHU $2,179.94 $1,678.33 $547.97 74.7% 41.2% 13.0% 3.1x 7.4x 3.4x 7.5x -16.2%Tucows Inc. TCX $38.20 $36.40 $82.12 26.8% 8.6% 3.4% 0.4x 5.1x 0.4x 4.4x 9.2%ValueClick, Inc. VCLK $1,070.04 $898.29 $410.84 73.2% 27.7% 22.7% 2.2x 7.9x 1.7x 6.5x -0.8%Yahoo! Inc. YHOO $19,105.10 $16,515.81 $6,505.72 56.2% 20.4% -3.6% 2.5x 12.4x 3.6x 10.2x -20.4%

Median: $901.13 $775.35 $312.47 56.8% 16.9% 8.2% 2.4x 12.4x 3.4x 11.6x 11.6%



Levered FCF Margin 5.1%Cash from Operations Growth (YoY) 4.2%Cash from Investing Growth (YoY) -16.2%Cash from Financing Growth (YoY) -137.1%Levered FCF Growth (YoY) -4.2%






SEG Internet: Advertising Stock Market Return: Jan-Sep 2010

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S&P 500 NASDAQ SEG SW Index SEG Internet: Advertising

SEG Internet Index Category: eCommerce and Portals


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


1-800-FLOWERS.COM, Inc. FLWS $120.78 $154.00 $667.71 40.3% 4.3% -6.5% 0.2x 5.4x 0.2x 4.9x -45.2%Amazon.com, Inc. AMZN $70,335.39 $65,359.39 $28,665.00 22.6% 6.0% 39.8% 2.3x 38.0x 2.7x 36.3x 68.2%Bluefly, Inc. BFLY $56.60 $45.02 $82.25 40.4% 0.6% -5.4% 0.5x 93.0x n/a n/a 51.3%Digital River Inc. DRIV $1,349.35 $1,009.62 $384.83 82.6% 15.5% -1.8% 2.6x 17.0x 2.7x 10.1x -15.6%eBay Inc. EBAY $32,016.58 $27,118.70 $9,020.22 71.9% 30.6% 9.0% 3.0x 9.8x 3.2x 9.0x 3.4%Expedia, Inc. EXPE $8,031.27 $7,860.12 $3,101.83 79.3% 24.7% 8.5% 2.5x 10.3x 2.7x 9.3x 17.9%GSI Commerce, Inc. GSIC $1,638.45 $1,729.56 $1,157.38 59.1% 6.8% 20.3% 1.5x 22.0x 1.7x 16.9x 27.9%InsWeb Corp. INSW $27.00 $17.10 $36.31 100.0% 2.2% 9.5% 0.5x 21.8x n/a n/a 127.3%Internet Brands, Inc INET $615.04 $556.34 $107.45 81.7% 37.6% 6.8% 5.2x 13.8x 5.4x 13.6x 66.4%Liquidity Services, Inc. LQDT $429.60 $360.39 $276.77 41.1% 10.3% 13.6% 1.3x 12.7x 1.6x 15.5x 55.1%LiveDeal, Inc. LIVE $2.99 -$1.33 $8.73 42.7% -84.6% -47.3% n/a 0.2x n/a n/a -69.1%LoopNet, Inc. LOOP $468.46 $367.97 $75.32 85.1% 23.4% -9.0% 4.9x 20.8x 5.1x 12.7x 31.0%Market Leader, Inc. LEDR $52.88 $0.96 $23.07 100.0% -45.1% -21.8% 0.0x n/a n/a n/a -0.5%Mercadolibre, Inc. MELI $3,185.23 $3,142.60 $198.07 78.8% 38.0% 34.8% 15.9x 41.7x 15.7x 45.0x 87.7%Move, Inc. MOVE $349.02 $306.71 $200.84 77.6% 1.3% -12.0% 1.5x 113.5x 1.5x 13.5x -17.4%NetEase.com, Inc. NTES $5,121.43 $3,898.79 $4,591.42 68.2% 52.2% 42.3% 0.8x 1.6x 7.0x 12.0x -13.7%OpenTable, Inc. OPEN $1,556.31 $1,475.20 $79.92 71.3% 24.5% 30.8% 18.5x 75.2x 20.1x 94.2x 147.0%Overstock.com, Inc. OSTK $362.50 $337.81 $1,011.73 17.9% 2.1% 26.4% 0.3x 16.1x 0.4x 14.2x 7.2%priceline.com Incorporated PCLN $16,855.13 $16,186.32 $2,624.25 57.6% 23.6% 29.1% 6.2x 26.1x 6.8x 30.3x 110.1%Travelzoo, Inc. TZOO $423.60 $391.53 $103.98 94.0% 18.0% 22.7% 3.8x 21.0x n/a n/a 82.3%

Median: $541.75 $473.93 $238.80 71.6% 12.9% 9.3% 2.3x 20.8x 2.7x 13.6x 29.4%








Income Statement Analysis (Median) SEG Internet: eCommerce & Portals Stock Market Return: Jan-Sep 2010

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SEG Internet: eCommerce and Portals S&P 500 NASDAQ SEG SW Index

SEG Internet Index Category: Networking and Connectivity


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


EarthLink Inc. ELNK $983.03 $657.66 $649.33 48.7% 33.2% -21.9% 1.0x 3.1x 0.9x 2.5x 8.1%Internap Network Services Corp. INAP $254.90 $216.53 $251.85 38.0% 14.2% -2.3% 0.9x 6.0x 0.8x 7.5x 53.0%Internet Gold Golden Lines Ltd. IGLD $442.64 $602.16 $3,237.81 94.2% 23.4% 166.1% 0.2x 0.8x 1.8x n/a 176.5%Internet Initiative Japan Inc. IIJI $536.34 $551.29 $67,985.13 20.6% 13.5% -1.8% 0.0x 0.1x 0.7x 6.1x 15.1%iPass Inc. IPAS $70.48 $37.62 $162.49 36.5% -3.0% -11.2% 0.2x n/a n/a n/a -11.6%Keynote Systems Inc. KEYN $173.51 $113.15 $79.08 48.6% 9.4% -2.9% 1.4x 15.3x 1.4x 7.9x 17.7%LogMeIn, Inc. LOGM $838.59 $692.04 $84.02 90.0% 17.7% 28.1% 8.2x 46.6x 8.9x 41.6x 96.5%Sify Technologies Limited SIFY $126.75 $170.58 $160.17 36.1% 1.2% 17.9% 1.1x 88.9x n/a n/a 34.5%

Median: $348.77 $383.91 $207.17 43.3% 13.9% -2.1% 0.9x 6.0x 1.1x 7.5x 26.1%

TTM Revenue Growth -2.1%TTM EBITDA Growth -15.2%TTM Earnings Growth 90.1%Gross Profit Margin 43.3%EBITDA Margin 13.9%Net Income Margin 0.7%SG&A Expenses as a % of Total Revenue 33.2%R&D Expenses as a % of Total Revenue 8.5%







Income Statement Analysis (Median) SEG Internet: Networking & Connectivity Stock Market Return: Jan-Sep 2010

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SEG Internet: Networking & Connectivity S&P 500 NASDAQ SEG SW Index

SEG Internet Index Category: New Media


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Inuvo, Inc. INUV $25.48 $30.59 $51.38 32.4% -0.1% -4.4% 0.6x n/a n/a n/a 30.0%RealNetworks, Inc. RNWK $442.18 $128.96 $503.25 62.2% -2.6% -13.4% 0.3x n/a 0.2x 5.9x -12.4%TechTarget, Inc. TTGT $223.64 $153.16 $92.40 73.7% 4.2% -1.6% 1.7x 39.1x 1.8x 9.9x -7.9%The Knot, Inc. KNOT $310.83 $186.49 $111.30 78.9% 11.5% 6.4% 1.7x 14.5x 1.7x 11.2x -16.4%TheStreet.com, Inc. TSCM $88.96 $50.80 $59.91 56.4% 2.9% -4.8% 0.8x 29.6x 0.9x 10.6x -3.1%WebMD Health Corp. WBMD $2,905.78 $2,483.48 $480.38 62.9% 19.0% 21.4% 5.2x 27.2x 5.7x 23.7x 96.1%Yahoo! Inc. YHOO $19,105.10 $16,515.81 $6,505.72 56.2% 20.4% -3.6% 2.5x 12.4x 3.6x 10.2x -20.4%

Median: $310.83 $153.16 $111.30 62.2% 4.2% -3.6% 1.7x 27.2x 1.8x 10.4x -7.9%



Levered FCF Margin -2.1%Cash from Operations Growth (YoY) -22.0%Cash from Investing Growth (YoY) 19.9%Cash from Financing Growth (YoY) 46.3%Levered FCF Growth (YoY) -28.9%






SEG Internet: New Media Stock Market Return: Jan-Sep 2010

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SEG Internet: New Media S&P 500 NASDAQ SEG SW Index

SEG Internet Index Category: Search Engine


Margin

TTM EBITDA Margin


Forward EV/ Revenue

Forward EV/ EBITDA


Baidu.com, Inc. BIDU $35,711.91 $34,840.34 $5,747.91 74.3% 49.1% 54.1% 6.1x 12.3x 52.5x 116.3x 162.4%Google Inc. GOOG $167,748.43 $137,689.43 $26,213.56 63.6% 41.3% 17.7% 5.3x 12.7x 6.0x 13.0x 6.0%LookSmart, Ltd. LOOK $34.69 $11.73 $51.60 34.5% 0.7% -9.2% 0.2x 33.0x 0.2x n/a 74.1%Sohu.com Inc. SOHU $2,179.94 $1,678.33 $547.97 74.7% 41.2% 13.0% 3.1x 7.4x 3.4x 7.5x -16.2%Yahoo! Inc. YHOO $19,105.10 $16,515.81 $6,505.72 56.2% 20.4% -3.6% 2.5x 12.4x 3.6x 10.2x -20.4%

Median: $19,105.10 $16,515.81 $5,747.91 63.6% 41.2% 13.0% 3.1x 12.4x 3.6x 11.6x 6.0%








Income Statement Analysis (Median) SEG Internet: Search Engine Stock Market Return: Jan-Sep 2010

-20%

-15%

-10%

-5%

0%

5%

10%

15%

SEG Internet: Search Engine S&P 500 NASDAQ SEG SW Index


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