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Internet & Software September 30, 2009
Top M&A Themes for the Internet Summary M&A activity has been picking up in the Internet sector since Jun '09, and in the coming quarters, we expect to see even more. In our view, this is not only a sign of increasing confidence in economic recovery but also a major reinforcement that the Internet continues to experience high secular growth and is getting more widely adopted. This secular adoption of the Internet creates need among the largest Internet companies and category-leaders to view M&A not only to create a bigger fish net for their suite of offerings but also to develop competitive moats around their core offerings. With the evolving needs in the Internet, the largest Internet companies are taking advantage by acquiring -- top talent, killer applications, geographical/category focused companies, or companies operating in newer categories. After some lag, currently reasonable valuation expectations by Internet start-ups are making acquisitions easier. In our view, all of the top 5 largest Internet Co's (AMZN, EBAY, GOOG, MSFT, and YHOO) will likely be acquisitive during the remainder of '09 and '10 with YHOO and GOOG leading the pack. ■
Top 10 M&A themes for the Internet 1) Cloud computing; 2) Mobile Internet; 3) Social media; 4) Vertical ad networks; 5) Vertical content Sites; 6) eBook reader; 7) International; 8) Web analytics; 9) Interactive agencies including SEM agencies and other marketing servicing companies; and 10) Comparison shopping. ■
Company Amazon.com Inc. comScore Inc. Digital River eBay Inc. Google Inc. GSI Commerce Microsoft Corp. Omniture Inc. TechTarget ValueClick Inc. Yahoo! Inc.
Ticker AMZN SCOR DRIV EBAY GOOG GSIC MSFT OMTR TTGT VCLK YHOO
Price $91.72 $18.12 $39.70 $23.87 $498.53 $19.11 $25.75 $21.47 $5.72 $12.95 $17.45
Please see page 3-5 for price targets, valuation methods, and risks to achieving those targets.
Top likely Internet acquisition targets or IPO candidates Private: Facebook, LinkedIn, Twitter, Coremetrics, Eye Blaster, Eye Wonder, Education Dynamics, Glam Media, eFrontier, JumpTap, Meebo, Zillow, eHarmony, Digg, Exact Target, Rock You, Slide, Foresee, and Yelp. Please refer to page 3 for our top 100 private Internet companies list. As far as public Internet companies are concerned, we believe that: SCOR, TTGT, and VCLK are the likely acquisition targets. Additionally, vertically-focused content/E-Commerce companies and marketing services companies especially web analytics screen very well. ■
Why are Internet M&As picking up? Large public companies' requirements: expand geographically or in adjacent categories; acquire talent; participate in evolving categories; strengthen competitive moats around core offerings; buy traffic; acquire technologies. Small public or private companies' situation: expectations have come down to more reasonable valuation multiples; low visibility into next round of funding (inactivity by VCs); lack of economic viability; and positive cash flow from operations getting delayed. ■
Internet M&A and major deals so far There have been many noticeable M&A deals in the past 3-4 months: Gmarket/EBAY, RATE/Apax Partners, Zappos/AMZN, Mint/Intuit, FriendFeed/Facebook, Skype/PE firms (Silver Lake, Index Ventures, etc.), Omniture/Adobe, Pepperjam/GSIC, etc. ■
Contact Sandeep Aggarwal 415-659-2260 [email protected]
Disclaimers regarding the content of this report as well as full disclosure of Collins Stewart LLC's ratings and information on the firm's position(s) in securities mentioned herein appear on pages 6 - 11 of this report.
Rec. HOLD HOLD HOLD BUY BUY BUY BUY HOLD HOLD BUY BUY
Stan Velikov, CFA 415-659-2241 [email protected]
New York
San Francisco
London
Dublin
Collins Stewart LLC 350 Madison Avenue New York NY 10017 (212) 389 8000
Collins Stewart LLC 22nd Floor 456 Montgomery Street San Francisco, CA 94104 415 659 2222
Collins Stewart Europe Limited 9th Floor 88 Wood Street London EC2V 7QR +44 (0)20 7523 8000
Collins Stewart Europe Limited First Floor South Dock House Hanover Quay, Dublin 2 +353 1 635 0210
Top Internet M&A Themes Below we present the top 10 Internet M&A themes for next 18 months and match them against top 5 Internet companies in terms of our assessment of the requirements by the top 5 Internet Cos. More cross marks means higher requirements relative to others. # 1 2 3 4 5 6 7 8 9 10
Internet M&A Themes & Requirement by Top - 5 Internet M&A Themes AMZN EBAY GOOG MSFT Cloud Computing XX XXX XXX Mobile Internet X X X X Social Media X X XX Vertical Ad Networks X Vertical Content Sites X eBook Reader XXX X X International X XX XX XXX Web Analytics X XXX Interactive Agencies Comparison Shopping XX XX
YHOO X X XXX XX XX XX X
Sources: Collins Stewart LLC estimates
Top Internet Requirements
Private
Companies
and
Top
–
5
Below we present a list of top 20 Internet companies (with a consumer Internet brand bias) and match them with top – 5 largest Internet companies in terms of our assessment on logical match. Though many of these top 20 private Internet companies will very likely go IPO (e.g. Facebook) but we are highlighting logical match with top 5 Internet companies, should the private Internet companies decide M&A as exit. In our view, out of the top 5 Internet companies, YHOO and GOOG will likely be the most acquisitive. # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Leading Private Internet Cos & Requirement by Top - 5 Internet Companies AMZN EBAY GOOG MSFT Core Metrics X XXX Daily Candy X Digg XXX Edmunds XX eHarmony Facebook X XX Fool XX Glam Media XX Hi5 X XX Hulu XX Jumptap XXX XX Kayak X X XX Linkedin XX XX Ning X XX Secondlife XX XXX Techcrunch X Twitter XX XX Yandex XXX XXX Yelp XX XX XX Zillow XXX
YHOO XX XXX XXX XXX XXX XXX XXX XXX XXX XXX XX XXX XXX XX XXX XXX XXX XX
Sources: Collins Stewart LLC estimates
Top 100 Private Internet Companies Below we present our list of top-100 private Internet companies. Majority of them are independent but some are either owned by private equity firms or
Page 2 | Internet & Software | September 30, 2009
by a larger corporation. We expect majority of these companies to be acquisition target but for some we expect IPOs e.g. Facebook. Top 100 Private Internet Companies # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Name 4INFO 56.com AdBrite Adconion Adify AdMob AKQA Audience Science Azoogle Bablegum Become Betfair Burst Media Casale Media Certona Collective Media ContextWeb Coremetrics CPX Interactive Craigslist Daily C andy Demand Media Didit Digg Edmunds Education Dynamics Efficient Frontier eH armony Etsy ExactTarget Eye Blaster Eye Wonder Facebook Federated Media FiftyOne Fool ForeSee Friendster Gawker Media Glam Media Habbo Hakia Hi5 Hulu iCrossing Indeed InterCLICK iProspects Joost Jumptap
Description Mobile Advertising Online Video Ad Network Ad Network Ad Network Mobile Advertising Interactive Agency Ad Network Ad Network Online Video E-Commerce Online gaming Ad Network Ad Network Optimization SaaS Ad Network Ad Network Web Analytics Ad Network Classifieds Content Ad Network SEM Agency Social Media Content - Auto Online Education SEM Agency Online Dating Online Marketplace Email Marketing Marketing Services Marketing Services Social Media Social Media E-Commerce Platform Content - Finance Web Analytics Social Media Social Media Vertical Ad Network Social Networking Search Engine Social Media Online Video SEM Agency Employment W ebsite Ad Network SEM Agency Online Video Mobile Internet
# 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
Name
Description
Kayak Online Travel Linden Lab Virtual World Platform LinkedIn Social Media LinkExperts SEO Agency LoveFilm Online Video Mahalo Search Engine Meebo Widget Metacafe Online Video Mevio Online Video Mozilla C orp Browser NetShelter Technology Media Vertical Ad Network Nextag Comparison Shopping Ning Social Networking Oanda Content - Finance Ozon E-Commerce Pandora Internet Radio Photobox Social Networking Pulse360 Ad Network QlikTech Business Intelligence Software Range Online SEM Agency Rock You Widget Rosetta Interactive Agency Six Apart Social Media Slashdot Widget Slide Widget Specific Media Ad Network Spot Runner Ad Network Stardoll Social Networking Strong Mail Email Marketing TechCrunch Social Media Technorati Social Media TheLadders Employment Website Thumbplay Mobile Content Travel Adnetwork Vertical Ad Network Trialpay Online Payments Tribal Fusion Ad Network Trulia Online Real Estate Tudou Online Video Twitter Social Media Vibrant Media SEM Agency Webkinz Virtual World Platform Whitepages Local Advertising Wikipedia Social Media Yandex Search Engine Ybrant Media Ad Network Yelp Social Media Yes Mail Email Marketing Youku Online Video Zazzle E-Commerce Zillow Online Real Estate
Source: Company Websites; Collins Stewart LLC
Valuation EBAY: We reach our $29 PT by using P/E and P/FCF multiples on our ‘10 estimates. We assign a multiple of 16x to our 2010 EPS of $1.74 to reach $28. We assign a 15x multiple to our 2010 FCF of $1.87 to reach $28. We add $1 per share premium to each of our valuation methods for better-thanexpected Skype deal (rounding up the average). We are giving higher multiple to eBay because in addition to recovery in E-Commerce there are tangible evidences of transformation in EBAY’s Marketplace and the
Page 3 | Internet & Software | September 30, 2009
valuation gap between AMZN and EBAY is just too much. We believe EBAY will continue to experience a multiple expansion. GOOG: We arrive at our $600 PT by using a combination of EV/EBITDA and P/E multiples on our ’10 estimates. We assign a multiple of 14x to our ‘10E EBITDA of $12.5bn (EBITDA per share of $38.40) to reach $610, adjusting for 2009 year-end net cash of $23.01bn or $72.23 per share. This implies EV/EBITDA to Growth of 0.7x based on our LT EBITDA growth rate of 19%. We assign a multiple of 22x to our 2010E PF EPS of $25.06 to reach a $551 price. This implies a PEG of 1.3x based on our LT PF EPS growth rate of 17%. GSIC: We derive our $25 PT by applying a multiple of 10.5x to our 2010E EBITDA of $124.3mm (EBITDA per share of $2.29), adjusted for 2009 yearend net debt of $57.2mm, or $1.13 per share (EV/EBITDA/Growth 0.6x), and $1.63/share in NOLs. MSFT: We arrive at our $29 PT by using P/E and P/FCF multiples on our CY10 estimates. We assign a P/E multiple of 14x to our CY2010 GAAP EPS of $2.01 to reach $28. We assign a P/FCF multiple of 12.0x to our CY2010 FCF/share of $2.38 to reach $29 (rounding-up). Due to stabilization in PC market, we are assigning a modestly higher multiple to MSFT. VCLK: We arrive at our $17 PT by applying a multiple of 8.5x on our 2010E EBITDA of $156.2mm (EBITDA per share of $1.74), adjusting for 2009 year-end net cash of $214.8mm or $2.44 per share. We assign a modestly higher multiple to VCLK, given the overall multiple expansion in the Internet sector, margin improvement and lower risk on revenue downside due to full stabilization in many parts of the business. YHOO: We reach our $21PT by assigning 9x to our 2010E EBITDA per share of $1.57 (assuming $0.25 incremental from MSFT search deal), adjusting for $3.40 per share in net cash for 2009 and $3.53 in off-balance sheet assets (Yahoo! Japan and Alibaba post illiquidity discount and tax and NOLs). We are assigning a higher multiple to YHOO because not only the Internet sector has been experiencing multiple expansion due to recovery in E-Commerce and online advertising but also because Yahoo! screens much better now as a fundamental improvement story.
Investment Risks AMZN: 1) Competition with pure play/multi-channel retailers; 2) Economic weakness/depressed retail environment; 3) Low prices, free shipping and product mix affecting margins; 4) Material FX exposure; 5) Seasonality of the business; 6) Inventory risk; 7) Evolving regulation of E-Commerce; 8) Target contract renewal concerns. DRIV: 1) Revenue concentration; 2) Diverse competition; 3) Cloud computing; 4) Revenue growth dependent on the success of partners’ products; 5) Margin pressure; 6) Exposed to macro-economic slowdown; 7) Consolidation of software vendors. EBAY: 1) Rapidly growing competition; 2) Recession concerns; 3) Marketplaces still under transformation and long way to go; 4) Transitioning business model with long overdue sizeable investments and initiatives; 5) Legal lawsuits – counterfeit and patents; 6) Motors pressurizing GMV; 7) FX headwinds.
Page 4 | Internet & Software | September 30, 2009
GOOG: 1) Google’s competition is getting more intense; 2) Google is still a one-trick pony with nearly 94% revenue coming from search; 3) Execution risk with recent acquisitions; 4) Google is vulnerable to threats from computing platforms, browsing technologies, and ad blocking technologies; 5) Cap-Ex spending continues to be very high; 6) Rising cost of revenue; 7) Privacy issues and click fraud continue to be a nagging problem; 8) Conflict of interest with Checkout and Google Analytics; 9) More experienced search marketers are diverting part of search ad dollars to search engine optimization. GSIC: 1) Multi-dimensional competition; 2) High seasonality of the business; 3) Revenue concentration; 4) Investment mode inhibits margin expansion; 5) New acquisitions integration risk; 6) Revenue growth highly dependent on new customer acquisitions; 7) Exposed to macro-economic slowdown; 8) Limited disclosure of business metrics. MSFT: 1) Competition; 2) Slowing PC market growth; 3) Disappointing ramp-up of the online business so far; 4) Piracy; 5) Investment mode; 6) Cloud Computing/SaaS; 7) Virtualization; 8) Exposed to macro-economic headwinds. OMTR: 1) Increasing competition in a dynamic industry; 2) Vulnerable to macro-economic slowdown; 3) Exposed to bankruptcies and industry consolidation; 4) Web analytics’ dependence on cookies and page tags; 5) Challenges of fast growth; 6) Longer set-up periods for large customers; 7) Integration of recent acquisitions; 8) Revenue concentration with SiteCatalyst. SCOR: 1) Diverse and strong competition; 2) Ongoing concern with the accuracy of data/measurements; 3) Revenue concentration; 4) Lack of cross-platform measurements; 5) Newest technologies making Web measurement challenging and less relevant; 6) Evolving industry standards; 7) Exposed to macro-economic slowdown; and 8) Potential downward pressure on the stock from insiders’ selling. TTGT: 1) Competition with both online and offline companies; 2) Limited international presence; 3) Move to performance-based marketing by some software vendors; 4) Moderating growth in worldwide IT spending; 5) Lower margins in Events; 6) Limited business disclosures. VCLK: 1) Increasing competition, especially from the big four; 2) Dents in media segment from 2007 FTC investigation; 3) Execution risk with recent acquisitions; 4) Slowing growth of innovations; 5) Exposure to economic headwinds; 6) Material deceleration in affiliate marketing segment; 7) Emergence of vertically focused ad networks. YHOO: 1) Increasing competitive pressure from Google and others; 2) Current growth materially lower than overall Internet ad growth; 3) Limited traction internationally; 4) Mass talent attrition; 5) Execution risk with recent acquisitions; 6) Future business strategy not fully firmed up.
Page 5 | Internet & Software | September 30, 2009
Important Disclosure / Disclaimer Information Amazon.com Inc. $120 $100 $80 $60 $40
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
02-2008
10-2007
06-2007
02-2007
11-2006
$20
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
AMZN AMZN AMZN AMZN AMZN
2009-07-24 2009-04-24 2009-04-01 2009-01-30 2009-01-14
Lowering Rating Raising Target Price Raising Target Price Raising Target Price Initiation of Coverage
BUY BUY BUY BUY NA
HOLD BUY BUY BUY BUY
NA $95.00 $85.00 $68.00 $65.00
$86.49 $84.46 $73.50 $58.82 $48.49
Digital River $70 $60 $50 $40 $30 $20
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
02-2008
10-2007
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$10
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
DRIV DRIV DRIV DRIV DRIV
2009-04-30 2009-03-23 2009-01-30 2009-01-27 2008-08-15
Raising Rating Raising Target Price Raising Target Price Lowering Rating Initiation of Coverage
SELL SELL SELL HOLD NA
HOLD SELL SELL SELL HOLD
NA $21.00 $17.00 $16.50 NA
Page 6 | Internet & Software | September 30, 2009
$38.42 $29.98 $24.77 $21.04 $44.71
eBay Inc. $45 $40 $35 $30 $25 $20 $15 $10
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
02-2008
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$5
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
EBAY EBAY EBAY EBAY EBAY EBAY EBAY EBAY
2009-09-21 2009-09-02 2009-07-23 2009-06-03 2009-04-23 2009-04-13 2009-03-02 2009-01-14
Raising Target Price Raising Target Price Raising Target Price Raising Rating Raising Rating Lowering Rating Raising Rating Initiation of Coverage
BUY BUY BUY HOLD SELL HOLD SELL NA
BUY BUY BUY BUY HOLD SELL HOLD SELL
$29.00 $26.00 $25.00 $23.00 NA $12.00 NA $10.00
$24.15 $21.35 $21.52 $17.97 $16.62 $14.63 $10.50 $12.92
Google Inc. $800 $700 $600 $500 $400 $300
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
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$200
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
GOOG GOOG GOOG GOOG GOOG GOOG GOOG GOOG GOOG
2009-09-18 2009-07-17 2009-02-23 2009-01-23 2008-11-12 2008-10-17 2008-10-03 2008-04-18 2008-04-15
Raising Target Price Raising Target Price Lowering Target Price Lowering Target Price Lowering Target Price Lowering Target Price Lowering Target Price Raising Rating Initiation of Coverage
BUY BUY BUY BUY BUY BUY BUY HOLD NA
BUY BUY BUY BUY BUY BUY BUY BUY HOLD
$600.00 $500.00 $435.00 $450.00 $465.00 $525.00 $575.00 $615.00 NA
Page 7 | Internet & Software | September 30, 2009
$491.46 $430.25 $330.06 $324.70 $291.00 $372.54 $386.91 $539.41 $446.84
GSI Commerce $35 $30 $25 $20 $15 $10 $5
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06-2009
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$0
Coverage Transfer Created By BlueMatrix
Ticker
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Action
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Target Price
GSIC GSIC GSIC GSIC GSIC GSIC GSIC GSIC GSIC
2009-09-17 2009-07-30 2009-04-30 2009-02-12 2009-02-11 2008-10-16 2008-10-07 2008-10-03 2008-08-15
Raising Target Price Raising Target Price Raising Target Price Raising Target Price Lowering Target Price Lowering Target Price Raising Target Price Lowering Target Price Initiation of Coverage
BUY BUY BUY BUY BUY BUY BUY BUY NA
BUY BUY BUY BUY BUY BUY BUY BUY BUY
$25.00 $20.00 $17.00 $14.00 $13.00 $15.00 $21.00 $20.00 $21.00
$19.53 $18.31 $14.21 $9.88 $9.73 $10.95 $11.96 $13.96 $15.89
Microsoft Corp. $40 $35 $30 $25 $20 $15
Price
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Price Target
09-2009
06-2009
02-2009
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06-2008
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$10
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
MSFT MSFT MSFT MSFT MSFT MSFT MSFT MSFT
2009-07-24 2009-06-29 2009-02-12 2009-01-23 2008-11-24 2008-10-24 2008-10-03 2008-07-28
Lowering Target Price Raising Target Price Raising Target Price Lowering Target Price Lowering Target Price Lowering Target Price Lowering Target Price Initiation of Coverage
BUY BUY BUY BUY BUY BUY BUY NA
BUY BUY BUY BUY BUY BUY BUY BUY
$29.00 $30.00 $26.00 $23.00 $28.00 $30.00 $32.00 $33.00
Page 8 | Internet & Software | September 30, 2009
$23.32 $23.73 $18.90 $16.88 $20.31 $21.41 $25.66 $24.76
Omniture Inc. $40 $35 $30 $25 $20 $15 $10
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$5
Drop Coverage Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
OMTR OMTR OMTR OMTR OMTR OMTR
2009-09-17 2009-04-24 2009-04-20 2009-01-15 2008-07-03 2008-04-25
Lowering Rating Lowering Target Price Raising Target Price Initiation of Coverage Drop of Coverage Initiation of Coverage
BUY BUY BUY NR HOLD NA
HOLD BUY BUY BUY NR HOLD
NA $16.00 $18.00 $15.00 NA NA
$21.90 $11.49 $14.31 $9.73 $19.04 $22.92
comScore Inc. $50 $40 $30 $20 $10
Price
Recommendation Change
Price Target
09-2009
05-2009
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$0
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
SCOR SCOR SCOR SCOR SCOR SCOR
2009-02-12 2008-10-31 2008-10-03 2008-06-24 2008-06-02 2008-05-16
Lowering Rating Lowering Target Price Lowering Target Price Lowering Target Price Raising Target Price Initiation of Coverage
BUY BUY BUY BUY BUY NA
HOLD BUY BUY BUY BUY BUY
NA $20.00 $24.00 $27.00 $30.00 $28.00
Page 9 | Internet & Software | September 30, 2009
$9.50 $12.20 $15.43 $21.45 $24.44 $22.79
TechTarget $20
$15
$10
$5
Price
Recommendation Change
Price Target
09-2009
05-2009
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10-2006
$0
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
TTGT TTGT TTGT
2009-02-24 2009-02-13 2008-05-16
Raising Rating Lowering Rating Initiation of Coverage
SELL HOLD NA
HOLD SELL HOLD
NA $2.75 NA
$2.97 $3.33 $12.45
ValueClick Inc. $40 $35 $30 $25 $20 $15 $10 $5
Price
Recommendation Change
Price Target
09-2009
06-2009
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$0
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
VCLK VCLK VCLK VCLK VCLK VCLK VCLK VCLK
2009-09-21 2009-08-05 2009-05-06 2009-02-13 2008-11-24 2008-10-30 2008-07-17 2008-05-16
Raising Target Price Raising Target Price Raising Target Price Raising Target Price Lowering Target Price Raising Rating Lowering Rating Initiation of Coverage
BUY BUY BUY BUY BUY HOLD BUY NA
BUY BUY BUY BUY BUY BUY HOLD BUY
$17.00 $16.00 $15.00 $10.00 $9.00 $10.00 NA $27.00
Page 10 | Internet & Software | September 30, 2009
$12.73 $10.61 $10.24 $7.13 $5.73 $7.22 $11.01 $20.30
Yahoo! Inc. $40 $35 $30 $25 $20 $15 $10
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
02-2008
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06-2007
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$5
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
YHOO YHOO YHOO YHOO YHOO YHOO YHOO
2009-09-21 2009-07-30 2009-04-22 2008-11-04 2008-05-15 2008-05-05 2008-04-16
Raising Target Price Lowering Target Price Raising Target Price Raising Rating Raising Rating Lowering Rating & TP Initiation of Coverage
BUY BUY BUY HOLD SELL BUY NA
BUY BUY BUY BUY HOLD SELL BUY
$21.00 $18.50 $20.00 $18.00 NA $23.00 $33.50
$17.04 $14.60 $14.48 $13.35 $27.75 $24.37 $28.31
Collins Stewart LLC Ratings Collins Stewart LLC assigns research equity ratings of Buy, Hold or Sell. For Buys, we will publish a 12-month price target for any stock with an estimated appreciation potential of 20% or more. For Sells, we also publish a 12-month price target for any stock with an estimated underperformance potential of 20% or more. Buy: 12 months, estimated 20% or more appreciation Hold: 12 months, between 20% appreciation and 20% decline expected. Sell: 12 months, estimated 20% or more decline. US Disclaimers This report is for informational purposes only, and the information herein is obtained from sources that we believe to be reliable, but its accuracy and completeness, and that of the opinions based thereon, are not guaranteed. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Further, this report is not intended as an offer or solicitation to buy or sell any securities or related instruments. The investments discussed or recommended in this report may not be suitable for the specific investment objectives, financial situation or needs of the reader, and should not be relied upon without consultation with an investment professional. Opinions expressed in this report are subject to change without notice. Collins Stewart LLC accepts no liability whatsoever for any loss or damage of any kind arising out of the use of any part, or all, of this report. This report is for distribution only under such circumstances as may be permitted by applicable law, and may not be reproduced or distributed in any form without the specific consent of Collins Stewart LLC. Redistribution of this, via the Internet or otherwise, report without permission is specifically prohibited, and Collins Stewart LLC accepts no liability for the actions of third parties in this regard.
From time to time, Collins Stewart LLC or its employees may have a long or short position in the securities of company (ies) discussed herein and, at any time, may make purchases and/or sales as principal or agent.
Buy Hold Sell
% of CSTI Universe with this rating 45% 50% 5%
% of rating tier for which CSTI provided IB services 0% 0% 0%
The research analyst who is primarily responsible for the research contained in this research report and whose name is listed first on this report: (1) attests that all of the views expressed in this research report accurately reflect that research analyst's personal views about any and all of the securities and issuers that are the subject of this research report; and (2) attests that no part of that research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst in this research report. All Collins Stewart LLC ("CSTI") employees, including research associates, receive compensation that is based in part upon the overall performance of the firm, including revenues generated by CSTI's investment banking department. Footnotes for CSTI, a member of SIPC and NASD CSTI makes a market in AMZN, DRIV, EBAY, GOOG, GSIC, MSFT, OMTR, SCOR, TTGT, VCLK and YHOO securities. CSTI, in its market making capacity, sells to or buys from customers the securities of these companies in the past 12 months on a principal basis.
Page 11 | Internet & Software | September 30, 2009
Top M&A Themes for the Internet Summary M&A activity has been picking up in the Internet sector since Jun '09, and in the coming quarters, we expect to see even more. In our view, this is not only a sign of increasing confidence in economic recovery but also a major reinforcement that the Internet continues to experience high secular growth and is getting more widely adopted. This secular adoption of the Internet creates need among the largest Internet companies and category-leaders to view M&A not only to create a bigger fish net for their suite of offerings but also to develop competitive moats around their core offerings. With the evolving needs in the Internet, the largest Internet companies are taking advantage by acquiring -- top talent, killer applications, geographical/category focused companies, or companies operating in newer categories. After some lag, currently reasonable valuation expectations by Internet start-ups are making acquisitions easier. In our view, all of the top 5 largest Internet Co's (AMZN, EBAY, GOOG, MSFT, and YHOO) will likely be acquisitive during the remainder of '09 and '10 with YHOO and GOOG leading the pack. ■
Top 10 M&A themes for the Internet 1) Cloud computing; 2) Mobile Internet; 3) Social media; 4) Vertical ad networks; 5) Vertical content Sites; 6) eBook reader; 7) International; 8) Web analytics; 9) Interactive agencies including SEM agencies and other marketing servicing companies; and 10) Comparison shopping. ■
Company Amazon.com Inc. comScore Inc. Digital River eBay Inc. Google Inc. GSI Commerce Microsoft Corp. Omniture Inc. TechTarget ValueClick Inc. Yahoo! Inc.
Ticker AMZN SCOR DRIV EBAY GOOG GSIC MSFT OMTR TTGT VCLK YHOO
Price $91.72 $18.12 $39.70 $23.87 $498.53 $19.11 $25.75 $21.47 $5.72 $12.95 $17.45
Please see page 3-5 for price targets, valuation methods, and risks to achieving those targets.
Top likely Internet acquisition targets or IPO candidates Private: Facebook, LinkedIn, Twitter, Coremetrics, Eye Blaster, Eye Wonder, Education Dynamics, Glam Media, eFrontier, JumpTap, Meebo, Zillow, eHarmony, Digg, Exact Target, Rock You, Slide, Foresee, and Yelp. Please refer to page 3 for our top 100 private Internet companies list. As far as public Internet companies are concerned, we believe that: SCOR, TTGT, and VCLK are the likely acquisition targets. Additionally, vertically-focused content/E-Commerce companies and marketing services companies especially web analytics screen very well. ■
Why are Internet M&As picking up? Large public companies' requirements: expand geographically or in adjacent categories; acquire talent; participate in evolving categories; strengthen competitive moats around core offerings; buy traffic; acquire technologies. Small public or private companies' situation: expectations have come down to more reasonable valuation multiples; low visibility into next round of funding (inactivity by VCs); lack of economic viability; and positive cash flow from operations getting delayed. ■
Internet M&A and major deals so far There have been many noticeable M&A deals in the past 3-4 months: Gmarket/EBAY, RATE/Apax Partners, Zappos/AMZN, Mint/Intuit, FriendFeed/Facebook, Skype/PE firms (Silver Lake, Index Ventures, etc.), Omniture/Adobe, Pepperjam/GSIC, etc. ■
Contact Sandeep Aggarwal 415-659-2260 [email protected]
Disclaimers regarding the content of this report as well as full disclosure of Collins Stewart LLC's ratings and information on the firm's position(s) in securities mentioned herein appear on pages 6 - 11 of this report.
Rec. HOLD HOLD HOLD BUY BUY BUY BUY HOLD HOLD BUY BUY
Stan Velikov, CFA 415-659-2241 [email protected]
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London
Dublin
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Top Internet M&A Themes Below we present the top 10 Internet M&A themes for next 18 months and match them against top 5 Internet companies in terms of our assessment of the requirements by the top 5 Internet Cos. More cross marks means higher requirements relative to others. # 1 2 3 4 5 6 7 8 9 10
Internet M&A Themes & Requirement by Top - 5 Internet M&A Themes AMZN EBAY GOOG MSFT Cloud Computing XX XXX XXX Mobile Internet X X X X Social Media X X XX Vertical Ad Networks X Vertical Content Sites X eBook Reader XXX X X International X XX XX XXX Web Analytics X XXX Interactive Agencies Comparison Shopping XX XX
YHOO X X XXX XX XX XX X
Sources: Collins Stewart LLC estimates
Top Internet Requirements
Private
Companies
and
Top
–
5
Below we present a list of top 20 Internet companies (with a consumer Internet brand bias) and match them with top – 5 largest Internet companies in terms of our assessment on logical match. Though many of these top 20 private Internet companies will very likely go IPO (e.g. Facebook) but we are highlighting logical match with top 5 Internet companies, should the private Internet companies decide M&A as exit. In our view, out of the top 5 Internet companies, YHOO and GOOG will likely be the most acquisitive. # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20
Leading Private Internet Cos & Requirement by Top - 5 Internet Companies AMZN EBAY GOOG MSFT Core Metrics X XXX Daily Candy X Digg XXX Edmunds XX eHarmony Facebook X XX Fool XX Glam Media XX Hi5 X XX Hulu XX Jumptap XXX XX Kayak X X XX Linkedin XX XX Ning X XX Secondlife XX XXX Techcrunch X Twitter XX XX Yandex XXX XXX Yelp XX XX XX Zillow XXX
YHOO XX XXX XXX XXX XXX XXX XXX XXX XXX XXX XX XXX XXX XX XXX XXX XXX XX
Sources: Collins Stewart LLC estimates
Top 100 Private Internet Companies Below we present our list of top-100 private Internet companies. Majority of them are independent but some are either owned by private equity firms or
Page 2 | Internet & Software | September 30, 2009
by a larger corporation. We expect majority of these companies to be acquisition target but for some we expect IPOs e.g. Facebook. Top 100 Private Internet Companies # 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50
Name 4INFO 56.com AdBrite Adconion Adify AdMob AKQA Audience Science Azoogle Bablegum Become Betfair Burst Media Casale Media Certona Collective Media ContextWeb Coremetrics CPX Interactive Craigslist Daily C andy Demand Media Didit Digg Edmunds Education Dynamics Efficient Frontier eH armony Etsy ExactTarget Eye Blaster Eye Wonder Facebook Federated Media FiftyOne Fool ForeSee Friendster Gawker Media Glam Media Habbo Hakia Hi5 Hulu iCrossing Indeed InterCLICK iProspects Joost Jumptap
Description Mobile Advertising Online Video Ad Network Ad Network Ad Network Mobile Advertising Interactive Agency Ad Network Ad Network Online Video E-Commerce Online gaming Ad Network Ad Network Optimization SaaS Ad Network Ad Network Web Analytics Ad Network Classifieds Content Ad Network SEM Agency Social Media Content - Auto Online Education SEM Agency Online Dating Online Marketplace Email Marketing Marketing Services Marketing Services Social Media Social Media E-Commerce Platform Content - Finance Web Analytics Social Media Social Media Vertical Ad Network Social Networking Search Engine Social Media Online Video SEM Agency Employment W ebsite Ad Network SEM Agency Online Video Mobile Internet
# 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100
Name
Description
Kayak Online Travel Linden Lab Virtual World Platform LinkedIn Social Media LinkExperts SEO Agency LoveFilm Online Video Mahalo Search Engine Meebo Widget Metacafe Online Video Mevio Online Video Mozilla C orp Browser NetShelter Technology Media Vertical Ad Network Nextag Comparison Shopping Ning Social Networking Oanda Content - Finance Ozon E-Commerce Pandora Internet Radio Photobox Social Networking Pulse360 Ad Network QlikTech Business Intelligence Software Range Online SEM Agency Rock You Widget Rosetta Interactive Agency Six Apart Social Media Slashdot Widget Slide Widget Specific Media Ad Network Spot Runner Ad Network Stardoll Social Networking Strong Mail Email Marketing TechCrunch Social Media Technorati Social Media TheLadders Employment Website Thumbplay Mobile Content Travel Adnetwork Vertical Ad Network Trialpay Online Payments Tribal Fusion Ad Network Trulia Online Real Estate Tudou Online Video Twitter Social Media Vibrant Media SEM Agency Webkinz Virtual World Platform Whitepages Local Advertising Wikipedia Social Media Yandex Search Engine Ybrant Media Ad Network Yelp Social Media Yes Mail Email Marketing Youku Online Video Zazzle E-Commerce Zillow Online Real Estate
Source: Company Websites; Collins Stewart LLC
Valuation EBAY: We reach our $29 PT by using P/E and P/FCF multiples on our ‘10 estimates. We assign a multiple of 16x to our 2010 EPS of $1.74 to reach $28. We assign a 15x multiple to our 2010 FCF of $1.87 to reach $28. We add $1 per share premium to each of our valuation methods for better-thanexpected Skype deal (rounding up the average). We are giving higher multiple to eBay because in addition to recovery in E-Commerce there are tangible evidences of transformation in EBAY’s Marketplace and the
Page 3 | Internet & Software | September 30, 2009
valuation gap between AMZN and EBAY is just too much. We believe EBAY will continue to experience a multiple expansion. GOOG: We arrive at our $600 PT by using a combination of EV/EBITDA and P/E multiples on our ’10 estimates. We assign a multiple of 14x to our ‘10E EBITDA of $12.5bn (EBITDA per share of $38.40) to reach $610, adjusting for 2009 year-end net cash of $23.01bn or $72.23 per share. This implies EV/EBITDA to Growth of 0.7x based on our LT EBITDA growth rate of 19%. We assign a multiple of 22x to our 2010E PF EPS of $25.06 to reach a $551 price. This implies a PEG of 1.3x based on our LT PF EPS growth rate of 17%. GSIC: We derive our $25 PT by applying a multiple of 10.5x to our 2010E EBITDA of $124.3mm (EBITDA per share of $2.29), adjusted for 2009 yearend net debt of $57.2mm, or $1.13 per share (EV/EBITDA/Growth 0.6x), and $1.63/share in NOLs. MSFT: We arrive at our $29 PT by using P/E and P/FCF multiples on our CY10 estimates. We assign a P/E multiple of 14x to our CY2010 GAAP EPS of $2.01 to reach $28. We assign a P/FCF multiple of 12.0x to our CY2010 FCF/share of $2.38 to reach $29 (rounding-up). Due to stabilization in PC market, we are assigning a modestly higher multiple to MSFT. VCLK: We arrive at our $17 PT by applying a multiple of 8.5x on our 2010E EBITDA of $156.2mm (EBITDA per share of $1.74), adjusting for 2009 year-end net cash of $214.8mm or $2.44 per share. We assign a modestly higher multiple to VCLK, given the overall multiple expansion in the Internet sector, margin improvement and lower risk on revenue downside due to full stabilization in many parts of the business. YHOO: We reach our $21PT by assigning 9x to our 2010E EBITDA per share of $1.57 (assuming $0.25 incremental from MSFT search deal), adjusting for $3.40 per share in net cash for 2009 and $3.53 in off-balance sheet assets (Yahoo! Japan and Alibaba post illiquidity discount and tax and NOLs). We are assigning a higher multiple to YHOO because not only the Internet sector has been experiencing multiple expansion due to recovery in E-Commerce and online advertising but also because Yahoo! screens much better now as a fundamental improvement story.
Investment Risks AMZN: 1) Competition with pure play/multi-channel retailers; 2) Economic weakness/depressed retail environment; 3) Low prices, free shipping and product mix affecting margins; 4) Material FX exposure; 5) Seasonality of the business; 6) Inventory risk; 7) Evolving regulation of E-Commerce; 8) Target contract renewal concerns. DRIV: 1) Revenue concentration; 2) Diverse competition; 3) Cloud computing; 4) Revenue growth dependent on the success of partners’ products; 5) Margin pressure; 6) Exposed to macro-economic slowdown; 7) Consolidation of software vendors. EBAY: 1) Rapidly growing competition; 2) Recession concerns; 3) Marketplaces still under transformation and long way to go; 4) Transitioning business model with long overdue sizeable investments and initiatives; 5) Legal lawsuits – counterfeit and patents; 6) Motors pressurizing GMV; 7) FX headwinds.
Page 4 | Internet & Software | September 30, 2009
GOOG: 1) Google’s competition is getting more intense; 2) Google is still a one-trick pony with nearly 94% revenue coming from search; 3) Execution risk with recent acquisitions; 4) Google is vulnerable to threats from computing platforms, browsing technologies, and ad blocking technologies; 5) Cap-Ex spending continues to be very high; 6) Rising cost of revenue; 7) Privacy issues and click fraud continue to be a nagging problem; 8) Conflict of interest with Checkout and Google Analytics; 9) More experienced search marketers are diverting part of search ad dollars to search engine optimization. GSIC: 1) Multi-dimensional competition; 2) High seasonality of the business; 3) Revenue concentration; 4) Investment mode inhibits margin expansion; 5) New acquisitions integration risk; 6) Revenue growth highly dependent on new customer acquisitions; 7) Exposed to macro-economic slowdown; 8) Limited disclosure of business metrics. MSFT: 1) Competition; 2) Slowing PC market growth; 3) Disappointing ramp-up of the online business so far; 4) Piracy; 5) Investment mode; 6) Cloud Computing/SaaS; 7) Virtualization; 8) Exposed to macro-economic headwinds. OMTR: 1) Increasing competition in a dynamic industry; 2) Vulnerable to macro-economic slowdown; 3) Exposed to bankruptcies and industry consolidation; 4) Web analytics’ dependence on cookies and page tags; 5) Challenges of fast growth; 6) Longer set-up periods for large customers; 7) Integration of recent acquisitions; 8) Revenue concentration with SiteCatalyst. SCOR: 1) Diverse and strong competition; 2) Ongoing concern with the accuracy of data/measurements; 3) Revenue concentration; 4) Lack of cross-platform measurements; 5) Newest technologies making Web measurement challenging and less relevant; 6) Evolving industry standards; 7) Exposed to macro-economic slowdown; and 8) Potential downward pressure on the stock from insiders’ selling. TTGT: 1) Competition with both online and offline companies; 2) Limited international presence; 3) Move to performance-based marketing by some software vendors; 4) Moderating growth in worldwide IT spending; 5) Lower margins in Events; 6) Limited business disclosures. VCLK: 1) Increasing competition, especially from the big four; 2) Dents in media segment from 2007 FTC investigation; 3) Execution risk with recent acquisitions; 4) Slowing growth of innovations; 5) Exposure to economic headwinds; 6) Material deceleration in affiliate marketing segment; 7) Emergence of vertically focused ad networks. YHOO: 1) Increasing competitive pressure from Google and others; 2) Current growth materially lower than overall Internet ad growth; 3) Limited traction internationally; 4) Mass talent attrition; 5) Execution risk with recent acquisitions; 6) Future business strategy not fully firmed up.
Page 5 | Internet & Software | September 30, 2009
Important Disclosure / Disclaimer Information Amazon.com Inc. $120 $100 $80 $60 $40
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
02-2008
10-2007
06-2007
02-2007
11-2006
$20
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
AMZN AMZN AMZN AMZN AMZN
2009-07-24 2009-04-24 2009-04-01 2009-01-30 2009-01-14
Lowering Rating Raising Target Price Raising Target Price Raising Target Price Initiation of Coverage
BUY BUY BUY BUY NA
HOLD BUY BUY BUY BUY
NA $95.00 $85.00 $68.00 $65.00
$86.49 $84.46 $73.50 $58.82 $48.49
Digital River $70 $60 $50 $40 $30 $20
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
02-2008
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06-2007
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$10
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
DRIV DRIV DRIV DRIV DRIV
2009-04-30 2009-03-23 2009-01-30 2009-01-27 2008-08-15
Raising Rating Raising Target Price Raising Target Price Lowering Rating Initiation of Coverage
SELL SELL SELL HOLD NA
HOLD SELL SELL SELL HOLD
NA $21.00 $17.00 $16.50 NA
Page 6 | Internet & Software | September 30, 2009
$38.42 $29.98 $24.77 $21.04 $44.71
eBay Inc. $45 $40 $35 $30 $25 $20 $15 $10
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
02-2008
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02-2007
11-2006
$5
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
EBAY EBAY EBAY EBAY EBAY EBAY EBAY EBAY
2009-09-21 2009-09-02 2009-07-23 2009-06-03 2009-04-23 2009-04-13 2009-03-02 2009-01-14
Raising Target Price Raising Target Price Raising Target Price Raising Rating Raising Rating Lowering Rating Raising Rating Initiation of Coverage
BUY BUY BUY HOLD SELL HOLD SELL NA
BUY BUY BUY BUY HOLD SELL HOLD SELL
$29.00 $26.00 $25.00 $23.00 NA $12.00 NA $10.00
$24.15 $21.35 $21.52 $17.97 $16.62 $14.63 $10.50 $12.92
Google Inc. $800 $700 $600 $500 $400 $300
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
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06-2008
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$200
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
GOOG GOOG GOOG GOOG GOOG GOOG GOOG GOOG GOOG
2009-09-18 2009-07-17 2009-02-23 2009-01-23 2008-11-12 2008-10-17 2008-10-03 2008-04-18 2008-04-15
Raising Target Price Raising Target Price Lowering Target Price Lowering Target Price Lowering Target Price Lowering Target Price Lowering Target Price Raising Rating Initiation of Coverage
BUY BUY BUY BUY BUY BUY BUY HOLD NA
BUY BUY BUY BUY BUY BUY BUY BUY HOLD
$600.00 $500.00 $435.00 $450.00 $465.00 $525.00 $575.00 $615.00 NA
Page 7 | Internet & Software | September 30, 2009
$491.46 $430.25 $330.06 $324.70 $291.00 $372.54 $386.91 $539.41 $446.84
GSI Commerce $35 $30 $25 $20 $15 $10 $5
Price
Recommendation Change
Price Target
09-2009
06-2009
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$0
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
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Target Price
GSIC GSIC GSIC GSIC GSIC GSIC GSIC GSIC GSIC
2009-09-17 2009-07-30 2009-04-30 2009-02-12 2009-02-11 2008-10-16 2008-10-07 2008-10-03 2008-08-15
Raising Target Price Raising Target Price Raising Target Price Raising Target Price Lowering Target Price Lowering Target Price Raising Target Price Lowering Target Price Initiation of Coverage
BUY BUY BUY BUY BUY BUY BUY BUY NA
BUY BUY BUY BUY BUY BUY BUY BUY BUY
$25.00 $20.00 $17.00 $14.00 $13.00 $15.00 $21.00 $20.00 $21.00
$19.53 $18.31 $14.21 $9.88 $9.73 $10.95 $11.96 $13.96 $15.89
Microsoft Corp. $40 $35 $30 $25 $20 $15
Price
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Price Target
09-2009
06-2009
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$10
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
MSFT MSFT MSFT MSFT MSFT MSFT MSFT MSFT
2009-07-24 2009-06-29 2009-02-12 2009-01-23 2008-11-24 2008-10-24 2008-10-03 2008-07-28
Lowering Target Price Raising Target Price Raising Target Price Lowering Target Price Lowering Target Price Lowering Target Price Lowering Target Price Initiation of Coverage
BUY BUY BUY BUY BUY BUY BUY NA
BUY BUY BUY BUY BUY BUY BUY BUY
$29.00 $30.00 $26.00 $23.00 $28.00 $30.00 $32.00 $33.00
Page 8 | Internet & Software | September 30, 2009
$23.32 $23.73 $18.90 $16.88 $20.31 $21.41 $25.66 $24.76
Omniture Inc. $40 $35 $30 $25 $20 $15 $10
Price
Recommendation Change
Price Target
09-2009
06-2009
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06-2008
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$5
Drop Coverage Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
OMTR OMTR OMTR OMTR OMTR OMTR
2009-09-17 2009-04-24 2009-04-20 2009-01-15 2008-07-03 2008-04-25
Lowering Rating Lowering Target Price Raising Target Price Initiation of Coverage Drop of Coverage Initiation of Coverage
BUY BUY BUY NR HOLD NA
HOLD BUY BUY BUY NR HOLD
NA $16.00 $18.00 $15.00 NA NA
$21.90 $11.49 $14.31 $9.73 $19.04 $22.92
comScore Inc. $50 $40 $30 $20 $10
Price
Recommendation Change
Price Target
09-2009
05-2009
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$0
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
SCOR SCOR SCOR SCOR SCOR SCOR
2009-02-12 2008-10-31 2008-10-03 2008-06-24 2008-06-02 2008-05-16
Lowering Rating Lowering Target Price Lowering Target Price Lowering Target Price Raising Target Price Initiation of Coverage
BUY BUY BUY BUY BUY NA
HOLD BUY BUY BUY BUY BUY
NA $20.00 $24.00 $27.00 $30.00 $28.00
Page 9 | Internet & Software | September 30, 2009
$9.50 $12.20 $15.43 $21.45 $24.44 $22.79
TechTarget $20
$15
$10
$5
Price
Recommendation Change
Price Target
09-2009
05-2009
01-2009
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01-2008
09-2007
05-2007
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$0
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
TTGT TTGT TTGT
2009-02-24 2009-02-13 2008-05-16
Raising Rating Lowering Rating Initiation of Coverage
SELL HOLD NA
HOLD SELL HOLD
NA $2.75 NA
$2.97 $3.33 $12.45
ValueClick Inc. $40 $35 $30 $25 $20 $15 $10 $5
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
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$0
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
VCLK VCLK VCLK VCLK VCLK VCLK VCLK VCLK
2009-09-21 2009-08-05 2009-05-06 2009-02-13 2008-11-24 2008-10-30 2008-07-17 2008-05-16
Raising Target Price Raising Target Price Raising Target Price Raising Target Price Lowering Target Price Raising Rating Lowering Rating Initiation of Coverage
BUY BUY BUY BUY BUY HOLD BUY NA
BUY BUY BUY BUY BUY BUY HOLD BUY
$17.00 $16.00 $15.00 $10.00 $9.00 $10.00 NA $27.00
Page 10 | Internet & Software | September 30, 2009
$12.73 $10.61 $10.24 $7.13 $5.73 $7.22 $11.01 $20.30
Yahoo! Inc. $40 $35 $30 $25 $20 $15 $10
Price
Recommendation Change
Price Target
09-2009
06-2009
02-2009
10-2008
06-2008
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$5
Coverage Transfer Created By BlueMatrix
Ticker
Date
Action
Prior Rating
Current Rating Price
Target Price
YHOO YHOO YHOO YHOO YHOO YHOO YHOO
2009-09-21 2009-07-30 2009-04-22 2008-11-04 2008-05-15 2008-05-05 2008-04-16
Raising Target Price Lowering Target Price Raising Target Price Raising Rating Raising Rating Lowering Rating & TP Initiation of Coverage
BUY BUY BUY HOLD SELL BUY NA
BUY BUY BUY BUY HOLD SELL BUY
$21.00 $18.50 $20.00 $18.00 NA $23.00 $33.50
$17.04 $14.60 $14.48 $13.35 $27.75 $24.37 $28.31
Collins Stewart LLC Ratings Collins Stewart LLC assigns research equity ratings of Buy, Hold or Sell. For Buys, we will publish a 12-month price target for any stock with an estimated appreciation potential of 20% or more. For Sells, we also publish a 12-month price target for any stock with an estimated underperformance potential of 20% or more. Buy: 12 months, estimated 20% or more appreciation Hold: 12 months, between 20% appreciation and 20% decline expected. Sell: 12 months, estimated 20% or more decline. US Disclaimers This report is for informational purposes only, and the information herein is obtained from sources that we believe to be reliable, but its accuracy and completeness, and that of the opinions based thereon, are not guaranteed. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Further, this report is not intended as an offer or solicitation to buy or sell any securities or related instruments. The investments discussed or recommended in this report may not be suitable for the specific investment objectives, financial situation or needs of the reader, and should not be relied upon without consultation with an investment professional. Opinions expressed in this report are subject to change without notice. Collins Stewart LLC accepts no liability whatsoever for any loss or damage of any kind arising out of the use of any part, or all, of this report. This report is for distribution only under such circumstances as may be permitted by applicable law, and may not be reproduced or distributed in any form without the specific consent of Collins Stewart LLC. Redistribution of this, via the Internet or otherwise, report without permission is specifically prohibited, and Collins Stewart LLC accepts no liability for the actions of third parties in this regard.
From time to time, Collins Stewart LLC or its employees may have a long or short position in the securities of company (ies) discussed herein and, at any time, may make purchases and/or sales as principal or agent.
Buy Hold Sell
% of CSTI Universe with this rating 45% 50% 5%
% of rating tier for which CSTI provided IB services 0% 0% 0%
The research analyst who is primarily responsible for the research contained in this research report and whose name is listed first on this report: (1) attests that all of the views expressed in this research report accurately reflect that research analyst's personal views about any and all of the securities and issuers that are the subject of this research report; and (2) attests that no part of that research analyst's compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by the research analyst in this research report. All Collins Stewart LLC ("CSTI") employees, including research associates, receive compensation that is based in part upon the overall performance of the firm, including revenues generated by CSTI's investment banking department. Footnotes for CSTI, a member of SIPC and NASD CSTI makes a market in AMZN, DRIV, EBAY, GOOG, GSIC, MSFT, OMTR, SCOR, TTGT, VCLK and YHOO securities. CSTI, in its market making capacity, sells to or buys from customers the securities of these companies in the past 12 months on a principal basis.
Page 11 | Internet & Software | September 30, 2009
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