Internet Data Book, April 2008

GLOBAL EQUITY RESEARCH

INTERNET & MEDIA Internet

SECTOR VIEW Rating:

2 - NEUTRAL

NORTH AMERICA

Lehman Brothers Internet Data Book April 2008 Monthly U.S. Internet Research Product

Douglas Anmuth 1.212.526.0879 [email protected] LBI, New York

Brian A. Fenske, CFA 1.212.526.7827 [email protected] LBI, New York

The Lehman Brothers Internet Data Book provides up-to-date statistics on the Internet industry overall, and more specifically on the 14 companies in our coverage universe. The Data Book contains more than 160 figures and charts, with an emphasis on valuation and financial metrics, broadband penetration and user data, online advertising, e-commerce, and company-specific information and models.

Ronald V. Josey 1.212.526.4008 [email protected] LBI, New York

The ratings within our Internet coverage universe are: 1-Overweight: 2-Equal weight: Rating Suspended:

Google, IAC, Greenfield Online, Orbitz, Harris Interactive eBay, Amazon.com, Expedia, Blue Nile, Netflix TechTarget, Dice, Alloy Yahoo!

We highlight the following charts on pages:

Analyst Certification I, Douglas Anmuth, hereby certify (1) that the views expressed in this research Industry Report accurately reflect my personal views about any or all of the subject securities or issuers referred to in this Industry Report and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this Industry Report.

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Cross-Media and Cross-Retail Valuation Comps Historical Average Multiples (P/E, P/FCF, EV/EBITDA) ROIC and ROE Metrics for Internet Coverage Universe Media Consumption Time Breakdown Lehman Brothers Online Advertising Forecasts U.S. Media Advertising by Category & Medium U.S. and Global Search Market Share and Growth Lehman Brothers Site Partnership Matrix Detailing Ad Relationships Select Internet Advertising & Usage Statistics in the U.S. and U.K. U.S. E-Commerce by Category, 2003-11E

Lehman Brothers does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Customers of Lehman Brothers in the United States can receive independent, third-party research on the company or companies covered in this report, at no cost to them, where such research is available. Customers can access this independent research at www.lehmanlive.com or can call 1-800-2LEHMAN to request a copy of this research. Investors should consider this report as only a single factor in making their investment decision.

April 07, 2008 http://www.lehman.com

PLEASE SEE IMPORTANT DISCLOSURES BEGINNING ON PAGE 146

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Table of Contents Introduction to the Lehman Brothers Internet Data Book .............................................. 7 Introduction....................................................................................................... 9 Broadband and Internet Usage........................................................................... 29 Online Advertising ........................................................................................... 39 e-Commerce ................................................................................................... 57 Company Information and Models ...................................................................... 77

Table of Figures Figure 1: Coverage Universe Comparative Valuation – Large Cap......................... 10 Figure 2: Coverage Universe Comparative Valuation – Small Cap......................... 11 Figure 3: Overall Internet Industry Comparative Valuation ..................................... 12 Figure 4: Cross-Media Comparative Valuation ................................................... 13 Figure 5: Retail and Internet Retail Comparative Valuation .................................... 13 Figure 6: Preview of Upcoming Quarter and 2008E ........................................... 14 Figure 7: Internet Coverage Universe, Year-to-Date Stock Performance, 2008 .......... 15 Figure 8: Historical Annual Stock Performance.................................................... 15 Figure 9: Stock Performance Seasonality – Large Cap ......................................... 16 Figure 10: Stock Performance Seasonality – Small Cap ....................................... 17 Figure 11: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA .... 18 Figure 12: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA .... 19 Figure 13: Short Interest by Company, 2001–08 Year to Date ............................. 20 Figure 14: Short Interest by Company, 2001–08 Year to Date ............................. 21 Figure 15: Annual Revenue and Growth, 1998–2008E ...................................... 22 Figure 16: Quarterly Revenue and Sequential Growth, 2003–07 .......................... 22 Figure 17: Annual EBITDA and Growth, 1998–2008E ....................................... 23 Figure 18: Annual EBITDA Margins, 1998–2008E............................................. 23 Figure 19: Free Cash Flow and Growth, 1998–2008E....................................... 24 Figure 20: Free Cash Flow Conversion of EBITDA, 1998–2008E ......................... 24 Figure 21: Capital Expenditures and Growth, 1998–2008E ................................ 25 Figure 22: Capital Expenditures as a Percentage of Revenue, 1998–2008E ........... 25 Figure 23: Return on Invested Capital (ROIC), 2001–2008E ................................ 26 Figure 24: Return on Equity (ROE), 2001–2008E ............................................... 26 Figure 25: Share Repurchases, 1998–2008 ..................................................... 27 Figure 26: Select Recent Internet M&A .............................................................. 28 Figure 27: U.S. Households Broadband & Broadband Penetration, 2001–10E ....... 30 Figure 28: U.S. Broadband Penetration, 2000–12E ........................................... 30 Figure 29: Top 23 U.S. ISPs by Subscribers, as of 3Q 2007 ............................... 31 Figure 30: Global Internet Penetration – Top 20 Countries with Most Internet Users ... 31

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Figure 31: International Broadband Penetration – Top 20 Countries ....................... 32 Figure 32: U.S. Household Technology Adoption Forecast, 2000–12E ................... 32 Figure 33: Media Consumption Time Breakdown ............................................... 33 Figure 34: Share of Time Spent Online, Dec. '05, Dec. '06 & Jan. '07–Feb. '08 ..... 33 Figure 35: ACSI Customer Satisfaction Scores, 2000–07 ..................................... 33 Figure 36: Top 50 U.S. Web Properties by Unique Visitors, Feb. 2007–Feb. '08 .... 34 Figure 37: Top 50 U.S. Web Properties by Page Views, Feb. 2007–Feb. '08 ........ 35 Figure 38: Top 50 Global Properties by Unique Visitors, Feb. 2007–Feb. '08......... 36 Figure 39: Top 50 Global Properties by Page Views, Feb. 2007–Feb '08.............. 37 Figure 40: Online Subscription Revenue by Category ($ in millions) ....................... 38 Figure 41: Online Subscription Revenue by Subscription Period and Category ......... 38 Figure 42: Lehman Brothers U.S. Online Advertising Forecast, 2001–11E............... 40 Figure 43: Lehman Brothers Online Video Advertising Forecast .............................. 40 Figure 44: Top 10 U.S. Online Advertising Sites, 2000–10E ............................... 41 Figure 45: Total U.S. Advertising Spend by Medium, 2000–09E .......................... 42 Figure 46: Share of Total U.S. Advertising Spending by Medium, 2000–09E ......... 43 Figure 47: Total U.S. Advertising Growth by Medium, 2000–09E ........................ 43 Figure 48: Contribution to Total U.S. Advertising Growth by Medium, 2000–09E .... 44 Figure 49: Growth Comparisons – Internet Advertising vs. Broadcast & Cable TV ..... 44 Figure 50: U.S. Online Advertising Revenue by Quarter, 1996–2010E.................. 44 Figure 51: U.S. Online Advertising Revenue by Format, 2000–2006..................... 45 Figure 52: U.S. Online Advertising Revenue by Pricing Model, 1998–2006........... 45 Figure 53: Total U.S. Measured Media Advertising by Category and Medium......... 46 Figure 54: Total U.S. Measured Media Adv. by Category and Medium – % Mix .... 46 Figure 55: Top U.S. Advertisers (1–50) Total Spend & Internet Spend..................... 47 Figure 56: Top U.S. Advertisers (51–100) –Total Spend & Internet Spend ............... 48 Figure 57: Domestic Search Share Comparison by Data Source, Oct. '07–Feb. '08 .. 48 Figure 58: Domestic Search Share, February 2008 ............................................ 49 Figure 59: Global Search Share, February 2008 ............................................... 49 Figure 60: Domestic Search Share – Google and Yahoo! .................................... 50 Figure 61: Domestic Search Share – Microsoft, Ask.com, and AOL........................ 50 Figure 62: U.S. Search Market Share and Growth, January 2007–February 2008... 51 Figure 63: Global Search Market Share and Growth, January '07–February '08...... 52 Figure 64: Lehman Brothers Partnership Matrix, Part 1: ........................................ 53 Figure 65: Lehman Brothers Partnership Matrix, Part 2: ....................................... 54 Figure 66: Help Wanted Advertising Market Share Analysis, U.S. 1998–2011E..... 55 Figure 67: Auto Classified Advertising Market Share, U.S. 1998–2011E ............... 55 Figure 68: Real Estate Advertising Market Share Analysis, U.S. 1998–2011E ......... 55 Figure 69: Select Internet Advertising & Usage Statistics in the U.S. and U.K. ............ 56 Figure 70: U.S. E-Commerce by Category, 2003–11 Forecast............................. 58 Figure 71: U.S. E-Commerce Growth Rates by Category, 2004–11E .................... 59 Figure 72: U.S. E-Commerce as a % of Total U.S. Retail, 2003–11E .................... 60

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Figure 73: U.S. Department of Commerce E-Commerce Data, by Quarter, '00–'07 .. 61 Figure 74: U.S. Department of Commerce E-Commerce Chart, by Quarter, '00–'07 . 61 Figure 75: U.S. E-Commerce as a % of Total U.S. Retail, by Quarter, 2000–4Q07 . 61 Figure 76: Top U.S. Online Retailers by Revenue (1–50)...................................... 62 Figure 77: Top U.S. Online Retailers by Revenue (51–100).................................. 63 Figure 78: Top U.S. Online Retailers’ Revenue Growth Rates (1–50) ...................... 64 Figure 79: Top U.S. Online Retailers’ Revenue Growth Rates (51–100) .................. 65 Figure 80: Top U.S. Online Retailers – Online Revenue as a % of Total Rev. (1–50) .. 66 Figure 81: Top U.S. Online Retailers – Online Revenue as % of Tot. Rev. (51-100) .. 67 Figure 82: Top U.S. Online Retailers – Apparel/Accessories ................................ 68 Figure 83: Top U.S. Online Retailers – Computers/Electronics .............................. 69 Figure 84: Top U.S. Online Retailers – Media (Books/CDs/DVDs) ........................ 69 Figure 85: Top U.S. Online Retailers – Flowers/Gifts .......................................... 70 Figure 86: Top U.S. Online Retailers – Food/Drugs ............................................ 70 Figure 87: Top U.S. Online Retailers – Hardware/Home Improvement ................... 70 Figure 88: Top U.S. Online Retailers – Health/Beauty ......................................... 71 Figure 89: Top U.S. Online Retailers – Housewares/Home Furnishings................... 71 Figure 90: Top U.S. Online Retailers – Jewelry ................................................... 71 Figure 91: Top U.S. Online Retailers – Mass Merchant/Department Store............... 72 Figure 92: Top U.S. Online Retailers – Office Supplies ........................................ 72 Figure 93: Top U.S. Online Retailers – Specialty/Non-Apparel ............................. 73 Figure 94: Top U.S. Online Retailers – Sporting Goods ....................................... 73 Figure 95: Top U.S. Online Retailers – Toys-Hobbies .......................................... 73 Figure 96: Top 100 Online Retail Satisfaction Index (1–50) .................................. 74 Figure 97: Top 100 Online Retail Satisfaction Index (51–94) ................................ 75 Figure 98: Yahoo! Snapshot ............................................................................ 78 Figure 99: Yahoo! Income Statement, 2005–09E............................................... 79 Figure 100: Yahoo! Revenue Analysis, 2005–09E ............................................. 80 Figure 101: Yahoo! Cash Flow Statement, 2005–09E........................................ 81 Figure 102: Yahoo! Discounted Cash Flow Analysis ........................................... 82 Figure 103: Google Snapshot ......................................................................... 83 Figure 104: Google Income Statement, 2005–09E ............................................ 84 Figure 105: Google Revenue Analysis, 2005–09E ............................................ 85 Figure 106: Google Cash Flow Statement, 2005–09E ....................................... 86 Figure 107: Google Discounted Cash Flow Analysis ........................................... 87 Figure 108: eBay Snapshot ............................................................................. 88 Figure 109: eBay Income Statement, 2005–09E ............................................... 89 Figure 110: eBay Segment Breakdown, 2005–09E ........................................... 90 Figure 111: eBay Cash Flow Statement, 2005–09E........................................... 91 Figure 112: eBay Discounted Cash Flow Analysis .............................................. 92 Figure 113: eBay Sum-of-the-Parts Analysis ......................................................... 92 Figure 114: eBay Fee Changes—Auction-Style and Fixed Price, U.S. Only .............. 93

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Figure 115: Amazon Snapshot......................................................................... 94 Figure 116: Amazon Income Statement, 2005–09E ........................................... 95 Figure 117: Amazon Segment Analysis, 2005–09E ........................................... 96 Figure 118: Amazon Cash Flow Statement, 2005–09E ...................................... 97 Figure 119: Amazon Discounted Cash Flow Analysis .......................................... 98 Figure 120: IAC/InterActiveCorp Snapshot ........................................................ 99 Figure 121: IAC/InterActiveCorp Income Statement, 2005–09E.......................... 100 Figure 122: IAC/InterActiveCorp Segment Breakdown – Revenue and EBITA ......... 101 Figure 123: IAC/InterActiveCorp Segment Breakdown – Growth Rates & Margins .. 102 Figure 124: IAC/InterActiveCorp Segment Breakdown – Share of Rev. & EBITA .... 103 Figure 125: IAC/InterActiveCorp Breakdown – Retailing, 2005–09E ................... 104 Figure 126: IAC/InterActiveCorp Breakdown – Transactions, 2005–09E .............. 105 Figure 127: IAC/InterActiveCorp Breakdown – Media & Advertising, 2005–09E... 106 Figure 128: IAC/InterActiveCorp Breakdown – Membership & Subs, '05–09E....... 107 Figure 129: IAC/InterActiveCorp Cash Flow Statement, 2005–09E ..................... 108 Figure 130: IAC/InterActiveCorp Sum-of-the-Parts Analysis .................................. 109 Figure 131: Expedia Snapshot....................................................................... 110 Figure 132: Expedia Income Statement, 2005–09E ......................................... 111 Figure 133: Expedia Segment Breakdown, 2005–09E ..................................... 112 Figure 134: Expedia Cash Flow Statement, 2005–09E..................................... 113 Figure 135: Orbitz Snapshot ......................................................................... 114 Figure 136: Orbitz Income Statement, 2005–09E............................................. 115 Figure 137: Orbitz Segment Breakdown, 2005–09E......................................... 116 Figure 138: Orbitz Base Financials, 2005–09E................................................ 117 Figure 139: Netflix Snapshot ......................................................................... 118 Figure 140: Netflix Income Statement, 2005–09E............................................ 119 Figure 141: Netflix Subscriber and Revenue Analysis, 2005–09E ....................... 120 Figure 142: Netflix Cash Flow Statement, 2005–09E ....................................... 121 Figure 143: Blue Nile Snapshot ..................................................................... 122 Figure 144: Blue Nile Income Statement, 2005–09E ........................................ 123 Figure 145: Blue Nile Cash Flow Statement, 2005–09E ................................... 124 Figure 146: Greenfield Online Snapshot.......................................................... 125 Figure 147: Greenfield Online Income Statement, 2005–09E ............................ 126 Figure 148: Greenfield Online Sum-of-the-Parts Analysis ...................................... 126 Figure 149: Greenfield Online Segment Breakdown, 2005–09E ....................... 127 Figure 150: Greenfield Online Cash Flow Statement, 2005–09E........................ 128 Figure 151: Harris Interactive Snapshot............................................................ 129 Figure 152: Harris Interactive Income Statement, Fiscal 2005–09E...................... 130 Figure 153: Harris Interactive Segment Breakdown, Fiscal 2005–09E ................. 131 Figure 154: Harris Interactive Cash Flow Statement, Fiscal 2005–09E ................. 132 Figure 155: Alloy Snapshot ........................................................................... 133 Figure 156: Alloy Revenue and EBITDA Estimates, Fiscal 2005–09E.................... 133

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Figure 157: TechTarget Snapshot ................................................................... 134 Figure 158: TechTarget Income Statement, 2005–09E...................................... 135 Figure 159: TechTarget Segment Breakdown, 2005–09E ................................. 136 Figure 160: TechTarget Cash Flow Statement, 2005–09E ................................. 137 Figure 161: Dice Holdings Snapshot............................................................... 138 Figure 162: Dice Holdings Income Statement, 2005–09E .................................. 139 Figure 163: Dice Holdings Segment Breakdown, 2005–09E .............................. 140 Figure 164: Dice Holdings Pro Forma Analysis, 2005–08E ................................ 141 Figure 165: AOL Quarterly Advertising Forecast, 2005–08E .............................. 142 Figure 166: AOL Annual Advertising Forecast, 2005–11E .................................. 143 Figure 167: AOL Quarterly Income Statement, 2005–08E .................................. 144 Figure 168: AOL Annual Income Statement, 2005–11E ..................................... 145

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Introduction to the Lehman Brothers Internet Data Book The Lehman Brothers Internet Data Book provides up-to-date statistics on the Internet industry overall, and more specifically on the 14 companies in our coverage universe. The Data Book contains more than 160 figures and charts that are broken down into five key areas: 1. Introduction includes Internet and cross-industry comparative valuation charts in addition to key financial metrics for our covered companies, among other things; 2. Broadband and Internet Usage features U.S. and global data on broadband penetration and relevant unique visitor and page view information for leading sites; 3. Online Advertising includes our projections for domestic online ad spending through 2011, data on overall U.S. advertising spending, and a closer look at search industry statistics, among other metrics; 4. e-Commerce features overall online retail projections by category and data on top sites by category; and 5. Company Information and Models includes key company-specific data for our coverage universe. The Data Book is intended to be a primary resource for investors looking at the Internet space. Each month, we update the Data Book as appropriate, and add charts that we believe are increasingly relevant. We highlight the following charts on pages:

13 18–19 26 33 40 46 51–52 53–54 56 58

Cross-Media and Cross-Retail Valuation Comps Historical Average Multiples (P/E, P/FCF, EV/EBITDA) ROIC and ROE Metrics for Internet Coverage Universe Media Consumption Time Breakdown Lehman Brothers Online Advertising Forecasts U.S. Media Advertising by Category & Medium U.S. and Global Search Market Share and Growth Lehman Brothers Site Partnership Matrix Detailing Ad Relationships Select Internet Advertising & Usage Statistics in the U.S. and U.K. U.S. E-Commerce by Category, 2003–11E

Please let us know if there is particular information you would like us to include in future editions of the Data Book.

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The ratings within our Internet coverage universe are: 1-Overweight:

Google, IAC, Greenfield Online, Orbitz, Harris Interactive

2-Equal weight:

eBay, Amazon.com, Expedia, Blue Nile, Netflix TechTarget, Dice, Alloy

Rating Suspended:

Yahoo! * *Lehman Brothers is acting as financial advisor to Yahoo! Inc. in connection with its evaluation of alternatives. The ratings and targets on Yahoo! Inc. and Microsoft Corporation have been temporarily suspended due to Lehman Brothers' role. The estimates for Yahoo! do not incorporate this potential transaction.

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Introduction

April 07, 2008

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Figure 1: Coverage Universe Comparative Valuation – Large Cap Google GOOG 1-Overweight

Yahoo! YHOO* RS

eBay EBAY 2-Equal weight

Amazon AMZN 2-Equal weight

IAC IACI 1-Overweight

Expedia EXPE 2-Equal weight

$465.70 316 322 329

$27.82 1,395 1,415 1,422

$31.76 1,368 1,368 1,375

$77.37 427 430 432

$21.39 300 291 290

$25.13 320 312 314

Market Capitalization Net Debt 2007 Net Debt 2008 Net Debt 2009 Less: Non-Consolidated Assets & Investments Plus: Minority Interest

$147,259 (14,219) (15,407) (21,194) 1,000

$38,799 (1,614) (2,549) (3,598) 10,290

$43,450 (5,036) (6,516) (8,816) 532

$33,037 (1,830) (3,492) (5,429)

$6,413 (989) (921) (1,604) 718

$8,053 (134) (810) (1,561)

Total Enterprise Value 2007 Total Enterprise Value 2008 Total Enterprise Value 2009

132,040 133,688 131,161

26,896 26,517 25,675

37,882 36,403 34,324

31,207 29,777 27,985

4,706 4,593 3,883

8,207 7,319 6,618

EPS 2007 EPS 2008 EPS 2009 2007-2010 EPS CAGR

$15.59 $18.92 $22.29 18%

$0.76 $0.64 $0.70 1%

$1.53 $1.65 $1.88 12%

$1.32 $1.80 $2.35 31%

16%

$1.46 $1.59 $1.81 13%

$1.22 $1.52 $1.74 18%

P/E 2007 P/E 2008 P/E-to-Growth P/E 2009

29.9x 24.6x 1.3x 20.9x

36.6x 43.3x 52.6x 39.5x

20.8x 19.2x 1.6x 16.9x

58.6x 43.1x 1.4x 32.9x

36.4x 32.5x 2.1x 27.6x

14.7x 13.5x 1.1x 11.8x

20.6x 16.6x 0.9x 14.4x

FCF 2007 FCF 2008 FCF 2009 2007-2010 FCF CAGR

3,373 4,317 5,446 25%

1,337 935 1,049 NA

2,187 2,338 2,709 13%

1,183 1,437 1,687 16%

18%

428 550 659 22%

625 676 751 9%

FCF/Share 2007 FCF/Share 2008 FCF/Share 2009

$10.67 $13.40 $16.54

$0.96 $0.66 $0.74

$1.60 $1.71 $1.97

$2.77 $3.34 $3.91

$1.43 $1.89 $2.27

$1.95 $2.17 $2.39

Price/FCF 2007 Price/FCF 2008 P/FCF-to-Growth Price/FCF 2009

43.7x 34.8x 1.4x 28.2x

29.0x 42.1x NA 37.7x

19.9x 18.6x 1.4x 16.1x

27.9x 23.1x 1.5x 19.8x

30.1x 29.6x 1.7x 25.5x

15.0x 11.3x NA 9.4x

12.9x 11.6x 1.3x 10.5x

FCF Yield 2007 FCF Yield 2008 FCF Yield 2009

2.3% 2.9% 3.6%

3.4% 2.4% 2.7%

5.0% 5.4% 6.2%

3.6% 4.3% 5.0%

3.6% 3.7% 4.4%

6.7% 8.8% 10.6%

7.8% 8.6% 9.5%

EBITDA 2007 EBITDA 2008 EBITDA 2009 2007-2010 EBITDA CAGR

6,921 9,027 11,162 24%

1,927 1,850 2,009 5%

2,924 3,135 3,543 11%

1,095 1,383 1,704 24%

16%

816 870 950 9%

729 800 888 11%

EV/EBITDA 2007 EV/EBITDA 2008 EV/EBITDA-to-Growth EV/EBITDA 2009

19.1x 14.8x 0.6x 11.8x

14.0x 14.3x 3.0x 12.8x

13.0x 11.6x 1.0x 9.7x

28.5x 21.5x 0.9x 16.4x

18.6x 15.6x 1.0x 12.7x

5.8x 5.3x 0.6x 4.1x

11.3x 9.2x 0.9x 7.4x

Revenue 2007 Revenue 2008 Revenue 2009 2007-2010 Revenue CAGR

11,660 15,703 19,984 28%

5,113 5,645 6,415 12%

7,672 8,674 9,963 14%

14,836 19,303 23,875 24%

19%

6,373 6,558 6,650 3%

2,665 3,022 3,389 12%

Market Cap/Revenue 2007 Market Cap/Revenue 2008 Market Cap/Revenue 2009

12.6x 9.6x 7.7x

7.6x 7.0x 6.2x

5.7x 5.0x 4.4x

2.2x 1.7x 1.4x

7.0x 5.8x 4.9x

1.0x 1.0x 0.9x

3.0x 2.6x 2.3x

Company Symbol LB Rating Price as of Shares Outstanding 2007 Shares Outstanding 2008 Shares Outstanding 2009

4/7/2008

Large Cap Average

$262,545

288

EARNINGS PER SHARE (EPS) 1,2

FREE CASH FLOW (FCF)

EBITDA

REVENUE

* Yahoo! estimates do not incorporate any potential transactions with Microsoft going forward. Notes: 1) EPS for YHOO, GOOG, IACI, EXPE, EBAY, AMZN, NFLX, NILE, TTGT, OWW, DHX are all pro forma 2) P/E and P/FCF for Yahoo! does not adjust for Yahoo! Japan

Source: Company reports, Lehman Brothers estimates Lehman Brothers is acting as financial advisor to Yahoo! Inc. in connection with its evaluation of alternatives. The ratings and targets on Yahoo! Inc. and Microsoft Corporation have been temporarily suspended due to Lehman Brothers' role. The estimates for Yahoo! do not incorporate this potential transaction.

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Figure 2: Coverage Universe Comparative Valuation – Small Cap Orbitz OWW 1-Overweight

Netflix NFLX 2-Equal weight

Blue Nile NILE 2-Equal weight

Dice Holdings DHX 2-Equal weight

TechTarget TTGT 2-Equal weight

Greenfield Online SRVY 1-Overweight

Harris Interactive HPOL 1-Overweight

Alloy ALOY 2-Equal weight

$7.67 84 85 86

$36.35 67 64 63

$50.67 17 17 17

$8.84 66 69 68

$15.11 41 46 47

$11.29 27 27 27

$2.77 55 53 53

$7.40 14 14 14

Market Capitalization Net Debt 2007 Net Debt 2008 Net Debt 2009 Less: Non-Consolidated Assets & Investments Plus: Minority Interest

$647 574 494 384

$2,437 (385) (378) (498)

$852 (122) (110) (125)

$581 67 (3) (71)

$617 (56) (77) (104)

$305 (57) (66) (83)

$152 (38) (66) (103)

$106 (37) (55) (76)

Total Enterprise Value 2007 Total Enterprise Value 2008 Total Enterprise Value 2009

1,221 1,144 1,047

2,052 1,932 1,794

730 740 732

648 605 527

561 616 603

248 242 227

113 81 44

69 51 29

EPS 2007 EPS 2008 EPS 2009 2007-2010 EPS CAGR

$0.66 $0.55 $0.65 9%

$1.02 $1.39 $1.92 35%

$1.26 $1.35 $1.52 11%

$0.47 $0.52 $0.65 21%

$0.34 $0.45 $0.52 21%

$0.48 $0.65 $0.75 24%

$0.16 $0.21 $0.26 16%

NA NA NA NA

P/E 2007 P/E 2008 P/E-to-Growth P/E 2009

11.7x 13.8x 1.6x 11.8x

35.8x 26.2x 0.7x 19.0x

40.2x 37.5x 3.5x 33.4x

18.9x 16.9x 0.8x 13.5x

44.1x 33.9x 1.6x 28.9x

23.6x 17.4x 0.7x 15.0x

17.7x 13.3x 0.9x 10.5x

NA NA NA NA

FCF 2007 FCF 2008 FCF 2009 2007-2010 FCF CAGR

49 65 110 41%

46 69 96 37%

37 47 53 17%

56 70 68 11%

16 24 27 26%

12 23 31 45%

22 36 34 14%

NA NA NA NA

FCF/Share 2007 FCF/Share 2008 FCF/Share 2009

$0.58 $0.77 $1.27

$0.69 $1.08 $1.52

$2.17 $2.78 $3.15

$0.85 $1.01 $1.00

$0.39 $0.51 $0.58

$0.45 $0.86 $1.11

$0.40 $0.68 $0.64

NA NA NA

Price/FCF 2007 Price/FCF 2008 P/FCF-to-Growth Price/FCF 2009

13.2x 10.0x 0.2x 6.0x

52.9x 33.5x 0.9x 23.9x

23.3x 18.2x 1.1x 16.1x

10.4x 8.7x 0.8x 8.8x

38.9x 29.5x 1.1x 25.9x

25.2x 13.1x 0.3x 10.2x

7.0x 4.1x 0.3x 4.3x

NA NA NA NA

FCF Yield 2007 FCF Yield 2008 FCF Yield 2009

7.6% 10.0% 16.6%

1.9% 3.0% 4.2%

4.3% 5.5% 6.2%

9.6% 11.4% 11.4%

2.6% 3.4% 3.9%

4.0% 7.6% 9.8%

14.3% 24.6% 23.0%

NA NA NA

EBITDA 2007 EBITDA 2008 EBITDA 2009 2007-2010 EBITDA CAGR

144 151 171 10%

125 157 212 29%

30 33 38 12%

63 73 85 17%

25 34 40 25%

35 41 49 17%

22 28 33 15%

10 21 25 NA

EV/EBITDA 2007 EV/EBITDA 2008 EV/EBITDA-to-Growth EV/EBITDA 2009

8.5x 7.6x 0.8x 6.1x

16.5x 12.3x 0.4x 8.5x

24.4x 22.2x 1.8x 19.3x

10.4x 8.3x 0.5x 6.2x

22.9x 18.1x 0.7x 15.0x

7.0x 5.8x 0.3x 4.6x

5.2x 2.9x 0.2x 1.3x

6.8x 2.4x NA 1.2x

Revenue 2007 Revenue 2008 Revenue 2009 2007-2010 Revenue CAGR

859 887 953 6%

1,205 1,376 1,640 16%

319 354 396 11%

142 169 198 17%

95 120 136 17%

129 150 172 15%

234 267 278 9%

202 231 258 NA

Market Cap/Revenue 2007 Market Cap/Revenue 2008 Market Cap/Revenue 2009

0.8x 0.7x 0.7x

2.0x 1.7x 1.4x

2.7x 2.4x 2.2x

4.1x 3.6x 3.0x

6.5x 5.8x 5.2x

2.4x 2.0x 1.8x

0.6x 0.6x 0.5x

0.5x 0.5x NA

(US$, millions except per share) Company Symbol LB Rating Price as of Shares Outstanding 2007 Shares Outstanding 2008 Shares Outstanding 2009

4/7/2008

EARNINGS PER SHARE (EPS) 1,2, 3, 4

FREE CASH FLOW (FCF)

EBITDA

REVENUE

1) EPS for NFLX is fully-taxed 2) EPS for HPOL is operational, fully-taxed, and based on calendar year; CAGRs are 2007-2010 Calendarized. 3) EPS for SRVY is GAAP, fully-taxed, and excludes one-time benefits 4) No EPS projections for ALOY until company provides more historical financial data

Source: Company reports, Lehman Brothers estimates

April 07, 2008

11

Lehman Brothers

Internet Data Book

April 2008

Figure 3: Overall Internet Industry Comparative Valuation Company

Ticker

Lehman Rating

Price 4/2/2008

Market Cap ($M)

2007 2008E EV/EBITDA EV/EBITDA

2007 P/E

2008E P/E

2007 P/FCF

2008E P/FCF

Online Media & Search Yahoo! Google TechTarget Dice Holdings Monster Worldwide CNET Networks The Knot RealNetworks Bankrate Travelzoo WebMD Marchex Miva Audible TheStreet.com Looksmart

YHOO GOOG TTGT DHX MNST CNET KNOT RNWK RATE TZOO WBMD MCHX MIVA ADBL TSCM LOOK

RS 1-OW 2-EW 2-EW -------------

$27.82 $465.70 $15.11 $8.84 $25.74 $7.67 $11.40 $6.06 $53.04 $11.57 $23.84 $10.89 $1.81 $11.46 $9.13 $3.38

38,799 147,259 617 581 3,239 1,160 357 935 969 176 213 328 60 278 256 77

14.6x 19.4x 18.1x 8.7x 16.3x 13.7x 20.4x 15.1x 16.1x 11.0x 34.3x 11.1x -29.6x 16.6x --

15.0x 14.2x 14.2x 6.9x 12.7x 11.1x 14.3x 11.4x 12.7x 9.0x 24.3x 8.9x 8.5x 17.1x 12.7x 11.3x

37.3x 30.3x 35.8x 15.6x 17.0x 5.5x 30.8x 24.2x 40.5x 10.0x 46.7x 20.5x --17.6x --

44.1x 23.6x 27.5x 13.9x 13.3x 34.9x 21.1x 46.6x 33.8x 8.2x 31.0x 16.5x 30.2x 88.2x 13.8x --

29.6x 44.3x 31.5x 8.6x 13.8x 24.0x -12.4x ----12.9x ----

42.9x 33.7x 23.9x 7.2x 11.1x 18.3x ------5.8x ----

EBAY AMZN IACI OSTK NILE NFLX FLWS FTD GSIC BFLY DSCM REDE

2-EW 2-EW 1-OW 2-EW 2-EW 2-EW -------

$31.76 $77.37 $21.39 $12.02 $50.67 $36.35 $8.78 $13.92 $13.67 $0.47 $2.25 $0.28

43,450 33,037 6,413 285 852 2,437 223 403 634 62 214 3

11.0x 26.0x 6.2x 22.6x 20.9x 14.3x 12.1x 8.9x 16.8x -35.0x 13.0x

9.8x 19.5x 5.7x 5.8x 19.0x 11.3x 8.9x 8.8x 11.9x -12.0x 5.1x

18.0x 53.7x 15.1x NA 35.2x 31.9x 36.6x 14.1x 18.2x ----

16.7x 39.4x 13.8x NA 32.9x 24.9x 27.4x 12.5x 20.1x ----

17.3x 25.6x 15.4x 142.9x 20.4x 47.2x 17.6x 11.5x 14.1x ----

16.2x 21.2x 11.9x 57.8x 16.0x 33.2x 17.6x 10.7x 11.4x ----

EXPE OWW PCLN

2-EW 1-OW --

$25.13 $7.67 $127.50

8,053 648 4,830

10.9x 7.7x 14.3x

8.8x 5.9x 11.6x

19.9x 10.0x 42.1x

16.0x 9.5x 35.9x

12.4x 8.1x 56.9x

11.2x 5.6x 42.9x

VCLK OMTR

-2-EW

$18.33 $24.26

1,830 1,191

13.9x 42.3x

11.7x 21.3x

22.4x 303.3x

18.3x 80.9x

17.8x 81.7x

-29.7x

SRVY HPOL ALOY ABTL NAPS ELNK UNTD VRSN AKAM DRIV INSP JUPM SOLD MOVE VPRT SFLY GYI

1-OW 1-OW 2-EW ----1-OW --------2-EW

$11.29 $2.77 $7.40 $1.80 $1.61 $7.95 $11.35 $34.39 $31.04 $33.28 $12.41 $2.11 $2.50 $3.24 $38.14 $15.45 $32.15

305 152 106 78 72 980 757 8,353 5,097 1,376 409 76 61 502 1,645 371 1,922

8.8x 5.4x 7.5x 8.0x 8.0x 8.0x 6.2x 14.3x 26.6x 13.3x 13.3x 9.5x 8.2x 18.3x 30.4x 11.3x 8.8x

7.3x 3.0x 2.7x 6.4x 6.4x 7.2x 6.4x 14.1x 19.4x 10.2x 9.3x 8.1x 9.5x 12.9x 18.8x 8.1x 7.9x

28.4x 18.1x NA ---10.1x 35.8x 24.3x 15.3x -16.2x -108.0x 48.3x 44.1x 12.8x

20.9x 13.6x NA ---10.8x 31.8x 18.2x 12.4x 103.4x 8.8x -21.6x 33.2x 35.1x 11.3x

30.4x 7.2x NA -3.9x ---22.2x 25.1x 9.4x --27.8x ---9.1x

15.8x 4.2x NA -7.5x ---18.1x 15.6x 8.7x --25.0x ---8.0x

E-Commerce eBay Amazon.com IAC/InterActiveCorp Overstock.com Blue Nile Netflix 1-800-FLOWERS.COM FTD Group, Inc. GSI Commerce Bluefly Drugstore.com Redenvelope

Travel Expedia Orbitz Priceline

Advertising Services Valueclick Omniture

Internet Services Greenfield Online Harris Interactive Alloy Autobytel Napster Earthlink United Online Verisign Akamai Digital River Infospace Jupiter Media House Values Move Vista Print Shutterfly Getty Images

Source: FactSet, company reports, Lehman Brothers estimates Note: Ratings for OMTR (2-Equal weight/1-Positive), VRSN (1Overweight/1-Positive), and GYI (2-Equal weight/2Neutral) are from Lehman Brothers analysts Vikram Churamani, Israel Hernandez, and Caroline Sabbagha, respectively. FactSet consensus estimates are used for all companies not under our Internet coverage universe.

12

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 4: Cross-Media Comparative Valuation Ticker YHOO GOOG EBAY AMZN

LB Stock Rating RS 1-OW 2-EW 2-EW

LB Sector Rating 2-Neutral 2-Neutral 2-Neutral 2-Neutral

Price 4/2/08 $27.82 $465.70 $31.76 $77.37

Market Cap ($M) $38,799 $147,259 $43,450 $33,037

TWX DIS NWS VIA

1-OW 2-EW 1-OW 2-EW

2-Neutral 2-Neutral 2-Neutral 2-Neutral

$14.64 $31.56 $20.00 $40.78

$55,124 $64,901 $61,693 $27,561

7.3x 8.7x 9.6x 10.5x 9.0x

6.7x 7.8x 8.0x 9.6x 8.0x

CMCSK LBTYA

2-EW 1-OW

2-Neutral 2-Neutral

$20.06 $35.15

$62,416 $13,733

7.4x 9.4x 8.4x

Broadcasting*** CBS Corp Clear Channel Broadcasting Average

CBS CCU

2-EW 2-EW

3-Negative 3-Negative

$22.79 $28.24

$16,458 $14,001

Newspapers**** Gannett New York Times Newspapers Average

GCI NYT

3-UW 3-UW

3-Negative 3-Negative

$30.75 $19.43

CCO LAMR

2-EW 2-EW

3-Negative 3-Negative

$19.92 $36.71

Internet Yahoo! Google eBay Amazon.com Internet Average Entertainment* Time Warner Disney News Corp Viacom Entertainment Average Cable** Comcast Liberty Global Cable Average

Outdoor*** Clear Channel Outdoor Lamar

2007 36.6x 29.9x 20.8x 58.6x 36.4x

P/E Multiple 2008E 43.3x 24.6x 19.2x 43.1x 32.5x

2009E 39.5x 20.9x 16.9x 32.9x 27.6x

2007 29.0x 43.7x 19.9x 27.9x 30.1x

FCF Multiple 2008E 42.1x 34.8x 18.6x 23.1x 29.6x

2009E 37.7x 28.2x 16.1x 19.8x 25.5x

6.1x 7.0x 7.1x 8.9x 7.3x

15.2x 15.8x 17.3x 17.2x 16.4x

13.6x 13.9x 15.1x 15.3x 14.5x

11.7x 12.3x 12.8x 13.7x 12.6x

11.1x 18.1x 22.4x 16.9x 17.1x

13.9x 19.3x 17.7x 16.7x 16.9x

11.1x 14.3x 14.1x 12.9x 13.1x

6.7x 6.7x 6.7x

6.2x 5.8x 6.0x

28.0x NM 28.0x

24.6x NM 24.6x

19.8x 29.1x 24.5x

31.1x 30.4x 30.7x

20.9x 12.9x 16.9x

14.9x 11.8x 13.4x

7.6x 9.2x 8.4x

7.1x 9.4x 8.3x

7.2x 9.4x 8.3x

12.3x 15.0x 13.7x

11.7x 20.3x 16.0x

11.6x 19.8x 15.7x

10.0x 11.8x 10.9x

9.3x 15.6x 12.5x

9.7x 15.3x 12.5x

$7,079 $2,793

4.9x 7.2x 6.1x

5.5x 8.4x 6.9x

6.1x 8.7x 7.4x

7.0x 17.2x 12.1x

7.6x 21.4x 14.5x

8.3x 22.3x 15.3x

6.3x 9.6x 8.0x

6.8x 14.1x 10.4x

7.4x 14.6x 11.0x

$7,091 $3,365

9.8x 11.3x

9.4x 11.2x

8.9x 10.7x

28.8x 95.2x

33.2x 107.5x

28.6x 96.3x

21.0x 26.5x

25.0x 22.4x

25.0x 22.4x

2007 14.0x 19.1x 13.0x 28.5x 18.6x

EV/EBITDA Multiple 2008E 2009E 14.3x 12.8x 14.8x 11.8x 11.6x 9.7x 21.5x 16.4x 15.6x 12.7x

*Covered by Lehman Brothers Entertainment Analyst Anthony DiClemente. **Covered by Lehman Brothers Cable and Satellite Communications Analyst Vijay Jayant. ***Covered by Lehman Brothers Broadcasting Analyst Anthony DiClemente. ****Covered by Lehman Brothers Publishing and Advertising Services Analyst Craig Huber. Source: Company reports, Lehman Brothers estimates

Figure 5: Retail and Internet Retail Comparative Valuation Internet Ticker Bed Bath & Beyond BBBY Williams-Sonoma WSM Best Buy BBY Circuit City CC Tiffany TIF Specialty Retailing Average

LB Stock Rating ------

LB Sector Rating ------

Price 4/2/08 $31.50 $26.10 $43.94 $4.65 $43.51

Market Cap ($M) $8,348 $2,821 $18,956 $767 $5,769

EV/EBITDA Multiple 2007 2008E 10.1x 9.3x 8.1x 7.3x 8.3x 7.3x 7.3x 5.9x 10.4x 9.4x 8.8x 7.8x

GAAP P/E Multiple 2007 2008E 14.7x 13.2x 14.5x 12.7x 15.9x 13.8x 7.4x 5.2x 20.7x 18.2x 14.6x 12.6x

FCF Multiple 2007 2008E 12.2x 10.9x 8.9x 7.8x 11.5x 9.8x 2.5x 1.9x 14.4x 12.9x 9.9x 8.6x

Wal-Mart Target Costco Broadlines Average

WMT TGT COST

1-OW 1-OW 2-EW

2-Neutral 2-Neutral 2-Neutral

$54.46 $53.45 $66.25

$217,731 $44,593 $29,475

8.0x 8.3x 9.7x 8.6x

7.3x 7.4x 8.9x 7.9x

17.0x 14.8x 25.9x 19.2x

15.3x 13.0x 22.8x 17.0x

11.1x 7.4x 16.8x 11.8x

10.1x 6.7x 15.3x 10.7x

Amazon.com eBay Blue Nile Internet Average

AMZN EBAY NILE

2-EW 2-EW 2-EW

2-Neutral 2-Neutral 2-Neutral

$77.37 $31.76 $50.67

$33,037 $43,450 $852

26.0x 11.0x 20.9x 20.1x

19.5x 9.8x 19.0x 13.5x

68.2x 149.4x 48.4x 88.7x

42.7x 22.8x 35.3x 40.0x

25.6x 17.3x 20.4x 51.6x

21.2x 16.2x 16.0x 27.8x

Note: All retail estimates are from FactSet. Lehman Brothers ratings for Wal-Mart, Target, and Costco ratings are from Department Stores/Broadlines Analyst Robert Drbul. Source: FactSet, company reports, Lehman Brothers estimates

April 07, 2008

13

Lehman Brothers

Internet Data Book

April 2008

Figure 6: Preview of Upcoming Quarter and 2008E ($ millions, except per share data) Revenue Qtr Ending Mar-08

Lehman Brothers Estimate $1,329

eBay

Mar-08

$2,028

Google

Mar-08

Amazon.com

EPS

First Call - 04/02/2008 Low Mean High $1,320 $1,287 $1,364

Lehman Brothers Estimate $0.08

$2,025

$2,064

$2,131

$0.38

$3,580

$3,301

$3,607

$3,777

Mar-08

$4,075

$4,036

$4,084

IAC/InterActiveCorp

Mar-08

$1,487

$1,462

Expedia

Mar-08

$650

$627

Orbitz

Mar-08

$213

Blue Nile

Mar-08

Netflix

EBITDA

First Call - 04/02/2008 Low Mean High $0.09 $0.06 $0.13

Lehman Brothers Estimate $426

$0.38

$0.39

$0.41

$737

$654

$758

$789

$4.46

$3.88

$4.54

$4.94

$2,084

$2,015

$2,144

$2,396

$4,154

$0.31

$0.29

$0.32

$0.38

$304

$250

$304

$327

$1,536

$1,700

$79.67

$0.26

$0.31

$0.41

$0

$154

$169

$181

$656

$690

$0.18

$0.12

$0.16

$0.18

$136

$133

$138

$148

$224

$238

$259

$0.07

$0.05

$0.12

$0.19

$29

$30

$36

$39

$70

$67

$68

$70

$0.13

$0.13

$0.14

$0.16

$5

$3

$5

$5

Mar-08

$326

$323

$326

$329

$0.22

$0.18

$0.21

$0.24

$96

$27

$77

$96

Harris Interactive

Mar-08

$63

$56

$61

$63

$0.03

($0.01)

$0.01

$0.03

$6

$4

$4

$6

Yahoo!

First Call - 04/02/2008 Low Mean High $434 $415 $536

Greenfield Online

Mar-08

$32

$31

$32

$33

$0.09

$0.01

$0.08

$0.11

$7

$6

$7

$8

Alloy

Apr-08

-

-

-

-

-

-

-

-

-

-

-

-

TechTarget

Mar-08

$24

$23

$23

$24

$0.05

$0.02

$0.03

$0.05

$4

$4

$4

$4

Dice Holdings

Mar-08

$39

$39

$40

$40

$0.05

$0.05

$0.06

$0.07

$16

$15

$16

$16

Year Ending 2008

Lehman Brothers Estimate $5,645

eBay

2008

$8,674

$8,514

$8,745

$9,013

$1.65

$1.60

$1.66

$1.72

$3,135

$2,757

$3,195

$3,471

Google

2008

$15,703

$15,310

$16,190

$17,210

$18.92

$18.06

$19.55

$21.16

$9,027

$8,790

$9,312

$10,118

Amazon.com

2008

$19,303

$19,032

$19,326

$19,700

$1.53

$1.38

$1.54

$1.70

$1,383

$935

$1,357

$1,476

IAC/InterActiveCorp

2008

$6,558

$6,346

$6,690

$6,900

$464.29

$1.47

$1.62

$1.88

$0

$803

$961

$1,099

Expedia

2008

$3,022

$2,978

$3,038

$3,105

$1.30

$1.08

$1.18

$1.30

$800

$635

$796

$828

Orbitz

2008

$887

$870

$968

$1,053

$0.55

$0.34

$0.67

$0.89

$151

$156

$164

$172

Blue Nile

2008

$354

$350

$353

$360

$1.06

$1.03

$1.06

$1.10

$33

$26

$31

$34

Netflix

2008

$1,376

$1,283

$1,355

$1,389

$1.28

$1.00

$1.22

$1.32

$416

$152

$338

$417

Harris Interactive

2008

$262

$238

$246

$262

$0.18

$0.09

$0.13

$0.18

$30

$20

$23

$26

Greenfield Online

2008

$150

$148

$149

$152

$0.65

$0.55

$0.62

$0.68

$41

$35

$39

$42

Alloy

2009

$231

$258

$258

$258

N/A

-

-

-

$21

$26

$26

$26

TechTarget

2008

$120

$118

$120

$121

$0.45

$0.28

$0.37

$0.45

$34

$33

$34

$34

Dice Holdings

2008

$169

$167

$169

$171

$0.31

$0.30

$0.31

$0.33

$73

$67

$72

$74

Revenue

Yahoo!

EPS

First Call - 04/02/2008 Low Mean High $5,626 $5,500 $6,000

Lehman Brothers Estimate $0.35

(1) EPS estimates are Pro Forma for stock option expense for EBAY, GOOG, EXPE, OWW, IACI, and TTGT. (2) EPS estimates are GAAP for YHOO, AMZN, NFLX, NILE, OSTK, HPOL, SRVY and DHX.

Source: Reuters, company reports, Lehman Brothers estimates

14

April 07, 2008

EBITDA

First Call - 04/02/2008 Low Mean High $0.43 $0.29 $0.55

Lehman Brothers Estimate $1,850

First Call - 04/02/2008 Low Mean High $1,877 $1,800 $2,180

Lehman Brothers

Internet Data Book

April 2008

Figure 7: Internet Coverage Universe, Year-to-Date Stock Performance, 2008 Company Yahoo! Google eBay Amazon.com Large Cap Average

Price as of 4/2/2008 $27.82 $465.70 $31.76 $77.37

Market Cap. (mil) $38,799 $147,259 $43,450 $33,037

QTD Return -4% 6% 6% 9% 4%

YTD Return 20% -33% -4% -16% -8%

$21.39 $25.13 $7.67 $36.35 $50.67 $2.77 $11.29 $7.40 $15.11 $8.84

$6,413 $8,053 $648 $2,437 $852 $152 $305 $106 $617 $581

3% 15% 11% 5% -6% 1% -5% 1% 7% -1%

-21% -21% -10% 37% -26% -35% -23% -21% 2% 11%

3%

-11%

4% 3%

-11% -7%

IAC/InterActiveCorp Expedia Orbitz Netflix Blue Nile Harris Interactive Greenfield Online Alloy TechTarget Dice Holdings Total Universe Average NASDAQ S&P 500

2,361.40 1,367.53

Source: FactSet

Figure 8: Historical Annual Stock Performance Company Yahoo! Google eBay Amazon.com Large Cap Average InterActiveCorp Expedia Orbitz Netflix Blue Nile Overstock.com Harris Interactive Greenfield Online Alloy TechTarget Dice Holdings

Price as of 4/2/2008 $27.82 $465.70 $31.76 $77.37

Market Cap ($ mil.) $38,799 $147,259 $43,450 $33,037

YTD Return 20% -33% -4% -16% -8%

2007 -9% 50% 10% 135% 47%

2006 -35% 11% -30% -16% -18%

2005 4% 115% -26% 6% 25%

2004 67% 92% 80% -16% 44%

2003 175% N/A 91% 179% 148%

2002 -8% N/A 1% 75% 23%

2001 -41% N/A 103% -30% 10%

2000 -86% N/A -47% -80% -71%

1999 265% N/A 56% 42% 121%

1998 584% N/A 410% 967% 654%

1997 510% N/A N/A 190% N/A

1996 -49% N/A N/A N/A N/A

1995 N/A N/A N/A N/A N/A

$21.39 $25.13 $7.67 $36.35 $50.67 $12.02 $2.77 $11.29 $7.40 $15.11 $8.84

$6,413 $8,053 $648 $2,437 $852 $285 $152 $305 $106 $617 $581

-21% -21% -10% 37% -26% -23% -35% -23% -21% 2% 11%

-28% 51% -41% 3% 84% -2% -15% 2% -18% 15% -40%

31% -12% N/A -4% -8% -44% 17% 144% 0% N/A N/A

-49% 0% N/A 119% 46% -59% -45% -73% -12% N/A N/A

-19% N/A N/A -55% -3% 247% -5% 18% 55% N/A N/A

48% N/A N/A 396% N/A 53% 181% N/A -52% N/A N/A

-16% N/A N/A -29% N/A -1% 2% N/A -49% N/A N/A

81% N/A N/A N/A N/A N/A -21% N/A 180% N/A N/A

-30% N/A N/A N/A N/A N/A -72% N/A -51% N/A N/A

67% N/A N/A N/A N/A N/A -27% N/A 19% N/A N/A

29% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

117% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

-32% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

223% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Total Universe Average NASDAQ S&P 500

2,361.40 1,367.53

-11%

13%

4%

2%

44%

134%

-3%

45%

-61%

70%

497%

272%

-40%

223%

-11% -7%

10% 4%

10% 14%

1% 3%

9% 9%

50% 26%

-32% -23%

-21% -13%

-39% -10%

86% 20%

40% 27%

22% 31%

23% 20%

40% 34%

Source: FactSet

April 07, 2008

15

Lehman Brothers

Internet Data Book

April 2008

Figure 9: Stock Performance Seasonality – Large Cap Yahoo! 1Q 2Q 3Q 4Q Full Year

2008 24% NA NA NA 24%

2007 23% -13% -1% -13% -9%

2006 -18% 2% -23% 1% -35%

2005 -10% 2% -2% 16% 4%

2004 8% 50% -7% 11% 67%

2003 47% 36% 8% 27% 175%

2002 4% -20% -35% 71% -8%

2001 -48% 27% -56% 101% -41%

2000 -21% -28% -27% -67% -86%

1999 42% 2% 4% 141% 265%

1998 33% 70% 65% 83% 584%

1997 65% 26% 113% 38% 510%

1996 N/A -36% 1% -20% -49%

Average Return 12% 10% 3% 32% 115%

2008 -36% NA NA NA -36%

2007 -1% 14% 9% 22% 50%

2006 -6% 8% -4% 15% 11%

2005 -6% 63% 8% 31% 115%

2004 N/A N/A 29% 49% 92%

2003 N/A N/A N/A N/A N/A

2002 N/A N/A N/A N/A N/A

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return -12% 28% 10% 29% 67%

2008 -10% NA NA NA -10%

2007 10% -3% 21% -15% 10%

2006 -9% -25% -3% 6% -30%

2005 -36% -11% 25% 5% -26%

2004 7% 33% 0% 27% 80%

2003 26% 22% 3% 20% 91%

2002 -15% 9% -14% 28% 1%

2001 10% 89% -33% 46% 103%

2000 41% -38% 26% -52% -47%

1999 71% 10% -7% -11% 56%

1998 N/A N/A -5% 435% 410%

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return 9% 9% 1% 49% 65%

2008 -23% NA NA NA -23%

2007 1% 72% 36% -1% 135%

2006 -23% 6% -17% 23% -16%

2005 -23% -3% 37% 4% 6%

2004 -18% 26% -25% 8% -16%

2003 38% 40% 33% 9% 179%

2002 32% 14% -2% 19% 75%

2001 -34% 38% -58% 81% -30%

2000 -12% -46% 6% -60% -80%

1999 61% -27% 28% -5% 42%

1998 42% 133% 12% 188% 967%

1997 N/A -11% 182% 16% 190%

1996 N/A N/A N/A N/A N/A

Average Return 4% 22% 21% 26% 132%

2007 1% -8% -14% -9% -28%

2006 4% -10% 9% 29% 31%

2005 -19% 8% -32% 12% -34%

2004 -7% -5% -27% 25% -19%

2003 17% 47% -16% 2% 48%

2002 16% -26% -17% 18% -16%

2001 23% 17% -36% 52% 40%

2000 -18% -4% 1% -11% -30%

1999 8% 12% -3% 43% 67%

1998 6% -8% -23% 70% 29%

1997 7% 23% 30% 27% 117%

1996 -11% -3% -22% 1% -32%

Average Return 0% 4% -12% 22% 15%

2008 -31% NA NA NA -31%

2007 10% 26% 9% -1% 51%

2006 -15% -26% 5% 34% -12%

2005 N/A N/A -18% 21% 0%

2004 N/A N/A N/A N/A N/A

2003 N/A N/A N/A N/A N/A

2002 N/A N/A N/A N/A N/A

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return -12% 0% -2% 18% 13%

2008 -10% NA NA NA -10%

2007 0% 6% 2% -4% 4%

2006 4% -2% 5% 6% 14%

2005 -3% 1% 3% 2% 3%

2004 1% 1% -2% 9% 9%

2003 -4% 15% 2% 12% 26%

2002 0% -14% -18% 8% -23%

2001 -12% 6% -15% 10% -13%

2000 2% -3% -1% -8% -10%

1999 5% 7% -7% 15% 20%

1998 14% 3% -10% 21% 27%

1997 2% 17% 7% 2% 31%

1996 5% -36% 2% 8% -49%

Average Return 0% 0% -3% 7% 3%

Google 1Q 2Q 3Q 4Q Full Year eBay 1Q 2Q 3Q 4Q Full Year Amazon.com 1Q 2Q 3Q 4Q Full Year

IAC/InterActiveCorp 2008 1Q -23% 2Q NA 3Q NA 4Q NA Full Year -23% Expedia 1Q 2Q 3Q 4Q Full Year S&P 500 1Q 2Q 3Q 4Q Full Year

Source: FactSet

16

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 10: Stock Performance Seasonality – Small Cap Orbitz 2008 -19% NA NA NA -19%

2007 N/A N/A N/A -25% NA

2006 N/A N/A N/A N/A N/A

2005 N/A N/A N/A N/A N/A

2004 N/A N/A N/A N/A N/A

2003 N/A N/A N/A N/A N/A

2002 N/A N/A N/A N/A N/A

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return -19% N/A N/A -25% N/A

2008 30% NA NA NA 30%

2007 -10% -16% 7% 28% 3%

2006 7% -6% -16% 14% -4%

2005 -12% 51% 58% 4% 119%

2004 25% 6% -57% -20% -55%

2003 85% 25% 31% 63% 396%

2002 N/A -9% -31% 14% -29%

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return 21% 8% -1% 17% 72%

2008 -20% NA NA NA -20%

2007 10% 49% 56% -28% 84%

2006 -13% -9% 13% 1% -8%

2005 0% 18% -3% 27% 46%

2004 N/A 32% -10% -18% -3%

2003 N/A N/A N/A N/A N/A

2002 N/A N/A N/A N/A N/A

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return -6% 23% 14% -4% 30%

1Q 2Q 3Q 4Q Total

Harris Interactive 2008 -36% NA NA NA -36%

2007 20% -11% -19% -1% -15%

2006 30% 1% 7% -17% 17%

2005 -42% 6% -12% 1% -45%

2004 0% -19% -2% 20% -5%

2003 86% 18% 9% 18% 181%

2002 18% -2% -32% 28% 2%

2001 3% -34% -12% 32% -21%

2000 -50% -26% -7% -18% -72%

1999 N/A N/A N/A -27% 27%

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return 3% -8% -9% 4% 8%

Greenfield Online 2008 1Q -19% 2Q NA 3Q NA 4Q NA Full Year -19%

2007 11% 0% -4% -4% 2%

2006 2% 24% 40% 38% 144%

2005 -11% -38% -55% 8% -73%

2004 N/A N/A 9% 8% 18%

2003 N/A N/A N/A N/A N/A

2002 N/A N/A N/A N/A N/A

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return -4% -5% -3% 12% 23%

2008 -22% NA NA NA -22%

2007 3% -16% -6% 0% -18%

2006 16% -22% 13% -3% 0%

2005 -27% -13% -6% 46% -12%

2004 -12% 35% -38% 113% 55%

2003 -54% 29% -13% -7% -52%

2002 -30% -4% -42% 32% 0%

2001 14% 64% -14% 74% 180%

2000 6% -33% -24% -10% -51%

1999 N/A -14% 14% 21% 19%

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return -12% 3% -13% 30% 13%

2008 -4% NA NA NA -4%

2007 N/A N/A 32% -13% NA

2006 N/A N/A N/A N/A N/A

2005 N/A N/A N/A N/A N/A

2004 N/A N/A N/A N/A N/A

2003 N/A N/A N/A N/A N/A

2002 N/A N/A N/A N/A N/A

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return -4% N/A 32% -13% N/A

Dice Holdings 2008 1Q 12% 2Q NA 3Q NA 4Q NA Full Year 12%

2007 N/A N/A N/A -22% NA

2006 N/A N/A N/A N/A N/A

2005 N/A N/A N/A N/A N/A

2004 N/A N/A N/A N/A N/A

2003 N/A N/A N/A N/A N/A

2002 N/A N/A N/A N/A N/A

2001 N/A N/A N/A N/A N/A

2000 N/A N/A N/A N/A N/A

1999 N/A N/A N/A N/A N/A

1998 N/A N/A N/A N/A N/A

1997 N/A N/A N/A N/A N/A

1996 N/A N/A N/A N/A N/A

Average Return 12% N/A N/A -22% N/A

Large-Cap Average Return (YHOO, GOOG, EBAY, AMZN) 2008 2007 2006 2005 2004 1Q -11% 8% -14% -19% -1% 2Q NA 17% -2% 13% 36% 3Q NA 16% -12% 17% -11% 4Q NA -2% 11% 14% 24% Full Year -11% 47% -18% 25% 44%

2003 37% 33% 15% 19% 148%

2002 7% 1% -17% 39% 23%

2001 -24% 51% -49% 76% 10%

2000 3% -37% 2% -59% -71%

1999 58% -5% 8% 42% 121%

1998 38% 102% 38% 235% 775%

1997 65% 26% 147% 27% 510%

1996 N/A N/A 1% -20% N/A

Average Return 12% 21% 13% 34% 147%

2003 -4% 15% 2% 12% 26%

2002 0% -14% -18% 8% -23%

2001 -12% 6% -15% 10% -13%

2000 2% -3% -1% -8% -10%

1999 5% 7% -7% 15% 20%

1998 14% 3% -10% 21% 27%

1997 2% 17% 7% 2% 31%

1996 5% -36% 2% 8% -49%

Average Return 0% 0% -3% 7% 3%

1Q 2Q 3Q 4Q Full Year Netflix 1Q 2Q 3Q 4Q Full Year Blue Nile 1Q 2Q 3Q 4Q Full Year

Alloy 1Q 2Q 3Q 4Q Full Year TechTarget 1Q 2Q 3Q 4Q Full Year

S&P 500 1Q 2Q 3Q 4Q Full Year

2008 -10% NA NA NA -10%

2007 0% 6% 2% -4% 4%

2006 4% -2% 5% 6% 14%

2005 -3% 1% 3% 2% 3%

2004 1% 1% -2% 9% 9%

Source: FactSet

April 07, 2008

17

Lehman Brothers

Internet Data Book

April 2008

Figure 11: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA Average Quarterly P/E - Forward Year Quarter 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08

Yahoo! 70.2x 71.4x 66.1x 78.4x 52.2x 47.5x 45.9x 51.8x 34.7x 34.0x 32.6x 33.2x 30.7x 29.8x 30.2x 33.9x 34.6x

Google ---52.6x 36.6x 34.0x 39.6x 44.9x 33.6x 30.7x 30.1x 33.8x 26.4x 25.9x 25.9x 32.5x 21.3x

eBay 48.8x 53.0x 53.1x 66.2x 40.2x 33.2x 36.7x 41.8x 30.9x 24.6x 21.1x 25.5x 21.4x 21.3x 21.6x 20.9x 14.6x

Amazon.com 41.0x 34.8x 30.3x 31.6x 34.7x 35.2x 40.4x 43.4x 34.0x 32.9x 29.1x 34.2x 29.3x 39.3x 44.0x 45.5x 30.4x

Large Cap Average 53.3x 53.0x 49.9x 57.2x 40.9x 37.5x 40.7x 45.5x 33.3x 30.6x 28.2x 31.7x 26.9x 29.0x 30.4x 33.2x 25.2x

IAC/InterActiveCorp 26.7x 26.5x 22.3x 23.9x 20.3x 18.6x 17.7x 18.4x 17.0x 15.9x 15.1x 18.2x 18.3x 18.1x 16.1x 15.8x 11.8x

Expedia ------16.5x 17.6x 16.3x 15.7x 13.9x 15.8x 15.7x 18.5x 21.1x 22.4x 13.5x

IAC/InterActiveCorp 16.6x 16.1x 12.8x 14.6x 14.0x 13.8x 18.4x 27.0x 23.3x 18.1x 15.0x 16.6x 16.7x 17.3x 14.9x 14.4x 10.1x

Expedia ------8.7x 9.2x 9.0x 8.5x 7.8x 9.1x 11.0x 13.4x 14.7x 15.4x 10.0x

IAC/InterActiveCorp 11.4x 10.9x 7.8x 8.7x 7.4x 7.0x 7.4x 7.0x 7.0x 6.3x 6.1x 7.9x 8.4x 8.8x 7.1x 6.9x 4.4x

Expedia ------9.2x 9.6x 8.0x 7.7x 7.4x 8.9x 8.8x 10.5x 11.6x 12.2x 6.9x

Average Quarterly P/FCF - Forward Year Quarter 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08

Yahoo! 44.7x 48.8x 45.8x 58.1x 42.3x 37.7x 36.9x 50.0x 33.0x 29.2x 30.8x 28.3x 27.6x 26.7x 25.1x 28.9x 32.9x

Google ---83.8x 45.0x 40.6x 47.8x 52.4x 33.5x 34.5x 39.3x 55.4x 44.1x 40.5x 37.9x 46.1x 29.1x

eBay 47.7x 51.5x 49.7x 57.4x 34.8x 29.0x 31.7x 32.1x 26.4x 20.9x 19.6x 24.4x 20.4x 21.3x 21.4x 20.5x 13.9x

Amazon.com 36.3x 30.3x 26.2x 28.9x 25.3x 22.8x 27.3x 27.7x 23.1x 22.4x 20.0x 25.0x 22.2x 28.7x 31.3x 30.1x 19.1x

Large Cap Average 42.9x 43.6x 40.6x 57.0x 36.8x 32.5x 35.9x 40.5x 29.0x 26.7x 28.0x 33.3x 28.6x 29.3x 28.9x 31.4x 23.8x

Average Quarterly EV/EBITDA - Forward Year Quarter 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07 1Q08

Yahoo! 23.7x 24.0x 25.3x 32.5x 21.9x 21.1x 20.4x 23.0x 14.5x 13.2x 11.9x 11.6x 10.9x 10.9x 10.6x 11.2x 11.1x

Google ---29.9x 20.7x 21.3x 24.9x 26.8x 19.3x 17.4x 16.9x 20.2x 15.1x 15.1x 15.4x 20.1x 12.0x

Source: Company reports, Lehman Brothers estimates

18

April 07, 2008

eBay 29.7x 32.8x 32.0x 40.1x 22.9x 18.7x 21.2x 26.0x 18.6x 14.3x 11.7x 15.3x 12.1x 12.2x 12.7x 12.4x 12.0x

Amazon.com 31.8x 27.6x 24.0x 24.6x 20.3x 17.4x 20.2x 21.7x 16.7x 16.0x 13.8x 16.3x 13.2x 18.8x 22.7x 24.0x 15.3x

Large Cap Average 28.4x 28.1x 27.1x 31.8x 21.5x 19.6x 21.7x 24.4x 17.3x 15.2x 13.7x 15.8x 12.8x 14.2x 15.4x 16.9x 11.6x

Lehman Brothers

Internet Data Book

April 2008

Figure 12: Historical Average Multiples – Forward Year P/E, P/FCF, EV/EBITDA

Average Quarterly P/E - Forward Year

90.0x 80.0x 70.0x 60.0x 50.0x 40.0x

Yahoo! Amazon Google eBay Expedia IACI

30.0x 20.0x 10.0x

08

07

1Q

07

4Q

3Q

2Q

07

07

06

1Q

4Q

06

06

3Q

2Q

06

05

1Q

4Q

05

05

3Q

2Q

1Q

05

04

04

4Q

3Q

1Q

2Q

04

04

0.0x

Average Quarterly P/FCF - Forward Year 90.0x 80.0x 70.0x 60.0x 50.0x 40.0x

Yahoo! Google Amazon eBay IACI Expedia

30.0x 20.0x 10.0x

08

07

1Q

07

4Q

07

3Q

2Q

07

06

1Q

06

4Q

3Q

06

06

2Q

1Q

05

4Q

05 3Q

05

2Q

05 1Q

04

4Q

04

3Q

04 2Q

1Q

04

0.0x

Average Quarterly EV/EBITDA - Forward Year

45.0x 40.0x 35.0x 30.0x 25.0x

Amazon

20.0x

Google eBay Yahoo! Expedia IACI

15.0x 10.0x 5.0x

07

07

08 1Q

4Q

3Q

07

06

07 2Q

1Q

4Q

06

06

06 3Q

2Q

1Q

05

05

4Q

3Q

05 2Q

04

05 1Q

4Q

04

04 3Q

2Q

1Q

04

0.0x

Source: Company reports, Lehman Brothers estimates

April 07, 2008

19

Lehman Brothers

Internet Data Book

April 2008

Figure 13: Short Interest by Company, 2001–08 Year to Date (shares in millions) Shares Short

2008

Yahoo! Shares Out. % Short

Shares Short

Google Shares Out.

% Short

Shares Short

eBay Shares Out.

% Short

Amazon.com Shares Shares Short Out. % Short

IAC/InterActiveCorp Shares Shares Short Out. % Short

Shares Short

Expedia Shares Out.

% Short

Mar-08 Feb-08 Jan-08

49.8 55.3 42.6

1337.2 1337.2 1336.4

4% 4% 3%

4.9 4.3 4.3

319.9 319.9 319.9

2% 1% 1%

29.2 28.4 26.3

1327.9 1353.5 1353.5

2% 2% 2%

36.4 31.8 30.8

416.8 416.8 416.0

9% 8% 7%

8.8 9.6 9.7

252.4 258.0 258.0

3% 4% 4%

18.3 16.2 15.5

260.0 260.0 258.9

7% 6% 6%

Dec-07 Nov-07 Oct-07 Sep-07 Aug-07 Jul-07 Jun-07 May-07 Apr-07 Mar-07 Feb-07 Jan-07

39.1 58.3 66.1 51.8 62.3 70.8 72.6 79.3 79.0 82.3 79.9 84.1

1336.4 1336.4 1339.6 1339.6 1339.6 1343.9 1343.9 1343.9 1356.5 1356.5 1356.5 1360.2

3% 4% 5% 4% 5% 5% 5% 6% 6% 6% 6% 6%

4.1 5.5 5.0 6.6 5.4 6.4 6.2 4.0 4.4 5.0 5.1 5.8

317.9 317.9 317.9 316.6 316.6 316.6 315.5 315.5 315.5 314.9 314.9 314.9

1% 2% 2% 2% 2% 2% 2% 1% 1% 2% 2% 2%

22.7 24.9 24.9 32.0 35.6 30.1 32.5 34.0 35.4 36.7 32.8 34.5

1353.5 1353.5 1353.5 1358.5 1358.5 1358.5 1363.8 1363.8 1363.8 1369.0 1369.0 1394.1

2% 2% 2% 2% 3% 2% 2% 2% 3% 3% 2% 2%

30.9 33.3 32.4 36.8 35.8 40.6 46.2 53.9 48.5 46.6 46.1 44.9

415.2 415.2 415.2 413.4 413.4 413.4 409.7 409.7 409.7 414.7 414.7 411.9

7% 8% 8% 9% 9% 10% 11% 13% 12% 11% 11% 11%

10.0 11.8 11.9 12.4 13.5 13.5 14.7 16.1 16.4 15.7 14.4 13.8

258.0 258.0 262.6 262.6 262.6 261.0 261.0 261.0 260.1 260.1 268.1 268.1

4% 5% 5% 5% 5% 5% 6% 6% 6% 6% 5% 5%

15.7 17.2 19.7 18.4 22.7 13.5 14.6 15.0 14.8 13.8 12.2 13.6

258.9 258.9 254.4 254.4 279.3 277.5 277.5 277.5 276.6 276.6 275.5 305.5

6% 7% 8% 7% 8% 5% 5% 5% 5% 5% 4% 4%

Dec-06 Nov-06 Oct-06 Sep-06 Aug-06 Jul-06 Jun-06 May-06 Apr-06 Mar-06 Feb-06 Jan-06

78.1 84.3 77.9 87.2 92.3 87.7 81.3 78.3 75.8 73.5 77.7 82.4

1360.2 1360.2 1381.2 1381.2 1381.2 1408.8 1408.8 1408.8 1414.5 1417.9 1414.5 1417.9

6% 6% 6% 6% 7% 6% 6% 6% 5% 5% 5% 6%

6.2 7.4 7.1 6.6 5.8 5.8 6.3 4.2 7.2 4.3 4.9 7.9

313.5 313.5 313.5 310.6 310.6 310.6 310.0 310.0 310.0 304.1 304.1 304.1

2% 2% 2% 2% 2% 2% 2% 1% 2% 1% 2% 3%

37.2 40.6 47.3 49.0 51.4 50.0 46.4 46.3 40.7 42.9 43.0 49.9

1394.1 1394.1 1394.1 1415.4 1415.4 1415.4 1410.1 1410.1 1410.1 1393.8 1410.1 1393.8

3% 3% 3% 3% 4% 4% 3% 3% 3% 3% 3% 4%

42.8 42.8 44.3 43.6 40.2 36.5 36.9 34.4 30.5 35.1 34.7 34.8

411.9 411.9 411.9 418.9 418.9 418.9 417.9 417.9 417.9 416.9 417.9 416.9

10% 10% 11% 10% 10% 9% 9% 8% 7% 8% 8% 8%

14.6 13.7 12.5 14.5 13.2 14.0 14.7 14.1 13.7 12.1 11.0 16.4

268.1 268.1 272.7 272.7 272.7 290.5 290.5 290.5 294.7 294.7 294.7 294.7

5% 5% 5% 5% 5% 5% 5% 5% 5% 4% 4% 6%

12.9 12.8 13.7 14.8 15.9 16.3 18.4 18.0 18.5 18.1 17.3 20.2

305.5 305.5 304.6 304.6 304.6 324.0 324.0 324.0 323.1 323.1 317.4 317.4

4% 4% 4% 5% 5% 5% 6% 6% 6% 6% 5% 6%

Dec-05 Nov-05 Oct-05 Sep-05 Aug-05 Jul-05 Jun-05 May-05 Apr-05 Mar-05 Feb-05 Jan-05

80.0 86.7 79.2 79.5 83.3 75.7 76.9 78.7 77.1 75.1 76.8 76.0

1418.7 1418.7 1409.0 1409.0 1409.0 1396.5 1396.5 1396.5 1388.0 1387.2 1374.8 1374.8

6% 6% 6% 6% 6% 5% 6% 6% 6% 5% 6% 6%

8.2 9.2 7.4 8.4 8.3 7.8 9.5 9.6 8.7 9.8 13.8 11.7

304.0 304.0 304.0 289.7 289.7 289.7 287.2 287.2 287.2 286.6 286.6 286.6

3% 3% 2% 3% 3% 3% 3% 3% 3% 3% 5% 4%

51.9 45.7 38.2 38.7 40.7 36.7 39.5 38.4 28.3 35.2 34.4 39.6

1393.8 1393.8 1393.8 1353.9 1353.9 1353.9 1349.1 1349.1 1349.1 1344.8 1344.8 1325.8

4% 3% 3% 3% 3% 3% 3% 3% 2% 3% 3% 3%

37.9 29.6 29.4 34.8 37.8 36.8 36.9 40.6 31.0 31.8 29.4 27.0

414.5 414.5 414.5 411.9 411.9 411.9 410.9 410.9 410.9 410.6 408.1 408.1

9% 7% 7% 8% 9% 9% 9% 10% 8% 8% 7% 7%

14.8 14.9 12.5 10.1 15.3 27.6 29.4 33.3 25.7 20.0 20.6 21.0

293.8 293.8 309.0 309.0 309.0 337.2 299.8 299.8 317.1 317.1 314.0 314.0

5% 5% 4% 3% 5% 8% 10% 11% 8% 6% 7% 7%

17.9 16.7 16.7 17.7 22.1 0.0 -------

317.4 317.4 309.0 309.0 309.0 357.2 -------

6% 5% 5% 6% 7% 0% -------

Dec-04 Nov-04 Oct-04 Sep-04 Aug-04 Jul-04 Jun-04 May-04 Apr-04 Mar-04 Feb-04 Jan-04

82.3 85.3 90.5 91.0 88.2 90.1 95.4 100.8 103.5 96.0 56.0 63.0

1374.8 1374.8 1360.6 1360.6 1360.6 1346.7 1346.7 1346.7 1332.0 1330.3 1314.7 1314.7

6% 6% 7% 7% 6% 7% 7% 7% 8% 7% 4% 5%

12.1 12.4 9.2 4.1 0.0 --------

4% 4% 3% 1% 0% --------

47.4 48.8 53.0 61.7 50.7 55.1 59.6 55.4 59.2 59.4 53.2 67.4

1325.8 1325.8 1325.8 1322.0 1322.0 1314.7 1314.7 1314.7 1308.0 1308.0 1292.0 1292.0

4% 4% 4% 5% 4% 4% 5% 4% 5% 5% 4% 5%

29.1 29.6 29.0 26.5 24.4 29.3 30.9 32.2 35.3 28.1 26.6 34.1

408.1 408.1 408.1 406.9 406.9 406.9 405.0 405.0 405.0 404.3 404.3 401.1

7% 7% 7% 7% 6% 7% 8% 8% 9% 7% 7% 9%

22.7 22.2 22.1 24.3 20.6 22.3 24.6 26.0 24.6 24.5 24.8 23.9

314.0 314.0 315.7 315.7 315.7 318.4 318.4 318.4 318.4 316.1 323.5 323.5

7% 7% 7% 8% 7% 7% 8% 8% 8% 8% 8% 7%

-------------

-------------

-------------

Dec-03 Nov-03 Oct-03 Sep-03 Aug-03 Jul-03 Jun-03 May-03 Apr-03 Mar-03 Feb-03 Jan-03

63.7 63.0 77.3 78.5 61.2 61.8 54.4 67.9 72.5 63.6 58.3 64.4

1314.7 1314.7 1225.5 1220.2 1220.2 1206.4 1206.4 1206.4 1196.7 1195.0 1181.8 1181.8

5% 5% 6% 6% 5% 5% 5% 6% 6% 5% 5% 5%

-------------

-------------

-------------

68.4 65.4 72.3 69.4 72.8 81.7 72.5 79.9 83.8 91.8 82.9 82.8

1292.0 1292.0 1284.2 1284.2 1284.2 1270.0 1270.0 1270.0 1258.2 1258.2 1234.9 1234.9

5% 5% 6% 5% 6% 6% 6% 6% 7% 7% 7% 7%

33.7 36.1 43.1 43.2 43.5 43.7 45.3 51.4 48.9 54.2 53.5 50.7

401.1 401.1 401.1 397.0 397.0 397.0 391.7 391.7 391.7 388.2 388.2 387.9

8% 9% 11% 11% 11% 11% 12% 13% 12% 14% 14% 13%

22.8 22.9 22.9 21.6 25.0 30.9 27.6 23.3 18.6 13.1 8.9 12.3

323.5 323.5 330.7 330.7 330.7 247.7 247.7 225.6 218.4 215.6 214.6 214.6

7% 7% 7% 7% 8% 12% 11% 10% 9% 6% 4% 6%

-------------

-------------

-------------

Dec-02 Nov-02 Oct-02 Sep-02 Aug-02 Jul-02 Jun-02 May-02 Apr-02 Mar-02 Feb-02 Jan-02

54.6 64.1 73.2 76.7 84.3 66.1 49.3 53.3 54.5 54.7 66.4 88.4

1181.8 1181.8 1201.1 1201.1 1201.1 1201.1 1195.8 1195.8 1189.9 1189.9 1143.5 1143.5

5% 5% 6% 6% 7% 6% 4% 4% 5% 5% 6% 8%

-------------

-------------

-------------

77.8 82.3 87.6 94.8 98.5 65.5 60.2 51.1 51.0 55.1 53.4 61.7

1234.9 1234.9 1222.2 1127.3 1127.3 1120.8 1120.8 1120.8 1117.9 1117.9 1100.5 1100.5

6% 7% 7% 8% 9% 6% 5% 5% 5% 5% 5% 6%

51.3 55.5 52.3 47.3 43.7 41.3 42.3 43.3 41.1 43.8 48.3 58.2

381.5 381.5 381.5 380.5 380.5 380.5 375.1 375.1 375.1 373.3 373.3 373.3

13% 15% 14% 12% 11% 11% 11% 12% 11% 12% 13% 16%

11.8 12.5 10.1 11.0 10.4 8.2 16.7 5.2 4.2 2.1 2.0 1.6

191.9 191.9 191.8 191.8 191.8 175.1 175.1 175.1 170.3 169.6 169.6 157.0

6% 6% 5% 6% 5% 5% 10% 3% 2% 1% 1% 1%

-------------

-------------

-------------

Dec-01 Nov-01 Oct-01 Sep-01 Aug-01 Jul-01 Jun-01 May-01 Apr-01 Mar-01 Feb-01 Jan-01

85.8 75.4 81.1 87.9 86.3 84.2 80.6 79.1 75.0 61.9 57.3 69.7

1139.2 1139.2 1143.5 1145.7 1145.7 1139.5 1133.8 1133.8 1130.9 1128.4 1116.8 1116.8

8% 7% 7% 8% 8% 7% 7% 7% 7% 5% 5% 6%

-------------

-------------

-------------

72.1 74.4 83.7 62.4 52.9 56.9 56.7 52.6 59.6 48.8 43.5 41.6

1100.5 1100.5 1093.1 1093.1 1093.1 1068.3 1080.7 1080.7 1077.2 1071.6 1071.6 1071.6

7% 7% 8% 6% 5% 5% 5% 5% 6% 5% 4% 4%

64.0 51.9 48.7 50.0 51.8 47.9 51.1 51.3 50.3 49.9 44.3 43.3

371.8 371.8 371.8 371.0 371.0 362.7 359.2 359.2 359.2 358.6 357.1 357.1

17% 14% 13% 13% 14% 13% 14% 14% 14% 14% 12% 12%

1.9 1.8 2.2 2.3 1.7 2.0 1.3 1.5 1.4 1.6 1.7 1.0

157.0 157.0 156.3 156.3 156.3 154.7 154.7 154.7 152.8 152.5 152.5 152.5

1% 1% 1% 2% 1% 1% 1% 1% 1% 1% 1% 1%

-------------

-------------

-------------

2007

2006

2005

2004 285.9 285.9 285.9 274.7 274.7 --------

2003

2002

2001

Source: Bloomberg, FactSet, Lehman Brothers estimates

20

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 14: Short Interest by Company, 2001–08 Year to Date (continued) (shares in millions) Shares Short

Netflix Shares Out.

% Short

Shares Short

Mar-08 Feb-08 Jan-08

21.0 21.9 21.1

61.5 61.2 65.8

34% 36% 32%

5.8 4.8 4.5

15.8 16.1 16.1

37% 30% 28%

4.2 3.6 3.3

53.3 53.3 53.1

8% 7% 6%

1.7 1.6 1.5

26.3 26.3 26.2

Dec-07 Nov-07 Oct-07 Sep-07 Aug-07 Jul-07 Jun-07 May-07 Apr-07 Mar-07 Feb-07 Jan-07

15.0 16.0 15.3 14.9 19.7 14.7 14.6 12.7 12.3 12.5 11.5 9.1

65.8 65.8 67.3 67.3 67.3 68.3 68.3 68.3 68.8 68.8 68.5 68.5

23% 24% 23% 22% 29% 22% 21% 19% 18% 18% 17% 13%

4.3 4.2 3.3 3.5 2.8 2.7 2.5 3.1 4.0 3.6 4.1 4.1

16.1 16.1 15.9 15.9 15.9 15.7 15.7 15.7 15.8 15.8 16.0 16.0

27% 26% 21% 22% 18% 17% 16% 20% 26% 23% 26% 26%

3.2 3.5 3.1 3.5 4.1 3.9 4.2 4.8 3.5 3.0 2.3 1.7

53.1 53.1 53.1 53.1 52.7 52.7 52.7 52.7 58.8 58.8 58.8 59.1

6% 7% 6% 7% 8% 7% 8% 9% 6% 5% 4% 3%

1.1 1.2 1.2 1.3 1.7 1.6 0.2 0.2 0.2 0.4 0.3 0.4

Dec-06 Nov-06 Oct-06 Sep-06 Aug-06 Jul-06 Jun-06 May-06 Apr-06 Mar-06 Feb-06 Jan-06

8.5 8.7 11.1 12.0 11.3 13.5 12.9 12.3 14.0 15.2 15.5 13.9

68.5 68.5 68.2 68.1 68.1 59.5 59.5 59.5 55.4 55.4 54.4 54.4

12% 13% 16% 18% 17% 23% 22% 21% 25% 27% 28% 26%

3.9 3.8 4.2 4.3 4.1 4.0 4.3 4.6 4.8 5.0 4.6 3.3

16.0 16.0 16.0 16.0 16.0 17.4 17.4 17.4 17.3 17.3 17.3 17.3

25% 24% 27% 27% 26% 23% 25% 26% 28% 29% 27% 19%

1.9 2.1 2.4 2.7 2.3 2.3 2.3 1.9 1.8 1.8 1.6 1.6

59.1 59.1 58.8 58.8 61.8 61.8 61.8 61.8 61.6 61.6 61.6 61.6

3% 4% 4% 5% 4% 4% 4% 3% 3% 3% 3% 3%

Dec-05 Nov-05 Oct-05 Sep-05 Aug-05 Jul-05 Jun-05 May-05 Apr-05 Mar-05 Feb-05 Jan-05

12.8 13.6 12.9 14.9 15.2 14.8 14.8 14.0 14.6 15.1 15.5 16.8

54.4 54.4 53.6 53.6 53.6 53.2 53.2 53.2 52.9 52.9 52.4 52.4

23% 25% 24% 28% 28% 28% 28% 26% 28% 29% 30% 32%

3.1 3.9 4.3 4.5 4.4 4.6 4.2 3.7 2.9 2.7 2.5 2.0

17.3 17.3 17.5 17.5 17.5 17.6 17.6 17.6 17.7 17.7 17.7 17.7

18% 22% 25% 26% 25% 26% 24% 21% 16% 15% 14% 11%

1.5 1.6 1.7 1.4 1.4 1.6 2.3 2.4 2.3 2.3 2.1 1.8

61.5 61.5 61.4 61.4 61.4 61.4 61.4 61.4 61.5 61.5 61.5 60.6

Dec-04 Nov-04 Oct-04 Sep-04 Aug-04 Jul-04 Jun-04 May-04 Apr-04 Mar-04 Feb-04 Jan-04

19.1 19.5 21.9 18.8 18.2 19.8 20.2 20.0 19.1 18.7 12.0 19.0

52.4 52.4 52.2 52.2 52.2 51.6 51.6 51.6 51.5 51.5 49.5 49.5

36% 37% 42% 36% 35% 38% 39% 39% 37% 36% 24% 38%

1.6 1.8 1.1 1.2 1.0 0.5 0.2 0.0 -----

17.7 17.7 17.7 17.7 17.7 17.3 17.3 17.3 -----

9% 10% 6% 7% 6% 3% 1% 0% -----

1.1 1.1 1.3 1.3 1.2 1.2 1.2 1.1 0.9 0.8 1.0 1.2

Dec-03 Nov-03 Oct-03 Sep-03 Aug-03 Jul-03 Jun-03 May-03 Apr-03 Mar-03 Feb-03 Jan-03

15.5 0.0 17.7 19.2 16.5 18.0 16.2 16.0 14.6 11.6 8.8 7.6

49.5 49.5 49.5 48.0 48.0 48.0 47.5 47.5 46.0 44.9 44.9 44.9

31% 0% 36% 40% 34% 37% 34% 34% 32% 26% 20% 17%

-------------

-------------

-------------

Dec-02 Nov-02 Oct-02 Sep-02 Aug-02 Jul-02 Jun-02 May-02 Apr-02 Mar-02 Feb-02 Jan-02

6.7 7.7 7.6 7.2 5.1 3.4 1.2 0.0 -----

44.3 44.3 44.1 44.1 44.1 42.9 42.9 41.2 -----

15% 17% 17% 16% 12% 8% 3% 0% -----

-------------

-------------

Dec-01 Nov-01 Oct-01 Sep-01 Aug-01 Jul-01 Jun-01 May-01 Apr-01 Mar-01 Feb-01 Jan-01

-------------

-------------

-------------

-------------

-------------

2008

Blue Nile Shares Out. % Short

Harris Interactive Shares Shares Short Out. % Short

Greenfield Online Shares Shares Short Out. % Short

Shares Short

Alloy Shares Out.

% Short

Shares Short

TechTarget Shares Out. % Short

Shares Short

Orbitz Shares Out.

6% 6% 6%

0.0 0.1 0.1

15.4 14.1 14.1

0% 1% 1%

1.3 1.1 1.0

41.9 40.4 40.4

% Short

3% 3% 2%

3.8 2.6 2.4

83.2 83.0 83.0

5% 3% 3%

26.2 26.2 25.9 25.9 25.9 25.6 25.6 25.6 25.6 25.6 25.4 25.4

4% 5% 5% 5% 6% 6% 1% 1% 1% 1% 1% 1%

0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

14.1 14.0 14.0 14.0 14.0 14.0 14.0 13.6 13.6 14.2 14.2 14.2

0% 1% 1% 1% 1% 1% 1% 1% 0% 1% 1% 1%

0.7 0.7 0.6 0.7 0.8 0.7 0.1 0.0 -----

40.4 40.4 40.3 40.3 40.3 39.1 39.1 39.1 -----

2% 2% 2% 2% 2% 2% 0% 0% -----

2.1 2.1 2.2 0.5 0.6 --------

83.0 83.0 82.9 82.9 82.9 --------

3% 3% 3% 1% 1% --------

0.4 0.5 0.4 0.5 0.6 0.9 1.7 1.7 1.3 1.2 1.3 1.1

25.4 25.4 25.4 25.4 25.4 25.3 25.3 25.3 25.3 25.3 25.3 25.3

2% 2% 2% 2% 2% 4% 7% 7% 5% 5% 5% 4%

0.1 0.3 0.3 0.7 0.8 0.9 1.3 1.2 1.1 0.9 0.9 0.9

14.2 12.4 12.4 12.4 12.4 12.4 12.4 12.4 11.7 11.7 11.7 11.7

1% 2% 2% 5% 7% 7% 11% 10% 9% 8% 8% 7%

-------------

-------------

-------------

-------------

-------------

-------------

2% 3% 3% 2% 2% 3% 4% 4% 4% 4% 3% 3%

1.3 1.4 1.6 1.8 2.0 2.6 2.0 2.1 1.9 1.7 1.7 1.3

25.3 25.3 25.3 25.3 25.3 25.2 25.2 25.2 21.3 21.3 21.9 21.9

5% 6% 6% 7% 8% 10% 8% 8% 9% 8% 8% 6%

0.9 1.1 1.0 1.0 0.9 0.9 0.9 1.0 1.4 1.5 1.4 1.4

11.7 11.7 11.7 11.7 10.8 10.8 10.8 10.8 10.8 10.8 10.8 10.8

8% 9% 9% 9% 8% 8% 9% 10% 13% 14% 13% 13%

-------------

-------------

-------------

-------------

-------------

-------------

60.6 60.6 57.0 57.0 56.9 56.9 56.9 56.9 56.4 56.4 56.4 56.1

2% 2% 2% 2% 2% 2% 2% 2% 2% 1% 2% 2%

1.1 0.5 0.4 0.2 0.2 0.0 -------

21.9 21.0 16.5 16.5 16.5 16.5 -------

5% 2% 2% 1% 1% 0% -------

1.2 1.4 1.5 1.5 1.5 1.6 1.7 1.6 1.4 1.4 1.4 1.2

10.8 10.8 10.8 10.8 10.7 10.7 10.7 10.7 10.5 10.5 10.5 10.5

11% 13% 14% 14% 14% 15% 16% 15% 14% 14% 13% 11%

-------------

-------------

-------------

-------------

-------------

-------------

1.4 1.5 1.2 0.7 0.6 0.5 0.4 0.2 0.3 0.3 0.1 0.0

56.1 56.1 55.4 55.4 63.3 53.6 53.6 53.6 52.5 52.5 52.5 52.5

3% 3% 2% 1% 1% 1% 1% 0% 0% 1% 0% 0%

-------------

-------------

-------------

1.3 1.2 1.4 1.2 1.3 1.4 1.4 1.5 1.6 1.7 1.5 1.6

10.5 10.3 10.3 10.3 10.3 10.3 10.3 10.3 9.9 9.9 9.9 9.9

12% 11% 13% 12% 12% 13% 14% 15% 16% 17% 15% 16%

-------------

-------------

-------------

-------------

-------------

-------------

-------------

0.1 0.2 0.4 0.7 0.8 0.7 0.5 0.3 0.3 0.2 0.2 0.2

52.5 52.5 52.5 52.4 52.8 52.1 52.1 52.8 51.7 51.7 51.7 35.0

0% 0% 1% 1% 1% 1% 1% 1% 0% 0% 0% 1%

-------------

-------------

-------------

1.6 1.7 1.8 1.6 1.6 1.7 1.6 1.6 1.3 1.4 0.7 0.4

9.9 9.8 9.8 9.8 9.8 9.8 9.8 9.8 9.7 9.7 9.7 8.2

17% 18% 18% 16% 16% 18% 17% 16% 14% 15% 7% 5%

-------------

-------------

-------------

-------------

-------------

-------------

-------------

0.2 0.3 0.8 0.4 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.0

35.0 35.0 34.4 34.4 34.4 34.2 34.2 34.3 34.3 34.3 34.3 34.3

1% 1% 2% 1% 0% 0% 0% 0% 0% 0% 0% 0%

-------------

-------------

-------------

0.4 0.5 0.3 0.3 0.4 0.4 0.4 0.2 0.2 0.2 0.2 0.1

8.2 6.3 6.3 6.3 5.8 5.8 5.8 5.4 5.2 5.2 5.2 5.2

4% 8% 5% 5% 7% 6% 6% 3% 3% 4% 5% 2%

-------------

-------------

-------------

-------------

-------------

-------------

2007

2006

2005

2004

2003

2002

2001

2008 Mar-08 Feb-08 Jan-08

Dice Holdings Shares Shares Short Out. % Short 2.0 62.2 0.0 1.8 62.0 3% 1.8 62.0 3%

2007 Dec-07 Nov-07 Oct-07 Sep-07 Aug-07 Jul-07 Jun-07 May-07 Apr-07 Mar-07 Feb-07 Jan-07

1.2 1.0 1.4 0.5 0.3 --------

62.0 62.0 62.0 62.0 62.0 --------

2% 2% 2% 1% 1% --------

Source: Bloomberg, FactSet, Lehman Brothers estimates

April 07, 2008

21

Lehman Brothers

Internet Data Book

April 2008

Figure 15: Annual Revenue and Growth, 1998–2008E ($ in millions) Yahoo! Y/Y Growth

1998 245 --

1999 592 141%

2000 1,110 88%

2001 717 -35%

2002 953 33%

2003 1,473 55%

2004 2,590 76%

2005 3,696 43%

2006 4,560 23%

2007 5,113 12%

2008E 5,645 10%

Google Y/Y Growth

---

0 NA

19 8585%

86 352%

345 299%

939 172%

1,961 109%

4,024 105%

7,296 81%

11,660 60%

15,703 35%

eBay Y/Y Growth

86 --

225 161%

431 92%

749 74%

1,214 62%

2,165 78%

3,271 51%

4,552 39%

5,970 31%

7,672 29%

8,674 13%

Amazon.com Y/Y Growth

610 --

1,640 169%

2,762 68%

3,122 13%

3,933 26%

5,264 34%

6,921 31%

8,490 23%

10,711 26%

14,836 39%

19,303 30%

IAC/InterActiveCorp Y/Y Growth

---

---

---

---

3,029 --

3,823 26%

4,182 9%

5,417 30%

5,909 9%

6,373 8%

6,558 3%

Expedia Y/Y Growth

---

---

---

---

---

1,401 --

1,843 32%

2,119 15%

2,238 6%

2,665 19%

3,022 13%

Orbitz Y/Y Growth

---

---

---

---

---

---

---

---

759 --

850 12%

887 4%

Netflix Y/Y Growth

---

---

---

---

153 --

272 78%

506 86%

682 35%

997 46%

1,205 21%

1,376 14%

Blue Nile Y/Y Growth

---

14 --

44 216%

49 10%

72 48%

129 79%

169 31%

203 20%

252 24%

319 27%

354 11%

Harris Interactive Y/Y Growth

---

37 --

56 50%

75 35%

121 60%

137 13%

164 20%

209 27%

214 3%

234 9%

267 14%

Greenfield Online Y/Y Growth

---

7 --

15 107%

14 -9%

15 8%

26 74%

44 72%

89 101%

100 13%

129 29%

150 16%

Alloy Y/Y Growth

---

---

---

---

---

---

184 --

195 6%

196 0%

202 3%

231 14%

TechTarget Y/Y Growth

---

---

---

---

27 --

32 22%

47 44%

67 43%

79 18%

95 20%

120 26%

Dice Holdings Y/Y Growth

---

---

---

---

---

---

39 --

67 73%

104 56%

144 38%

169 17%

Source: Company reports, Lehman Brothers estimates

Figure 16: Quarterly Revenue and Sequential Growth, 2003–07 ($ in millions) Yahoo! Q/Q Growth

1Q03 283 -1.0%

2Q03 321 13.6%

3Q03 357 11.0%

4Q03 511 43.3%

1Q04 540 5.7%

2Q04 609 12.7%

3Q04 655 7.6%

4Q04 785 19.8%

1Q05 821 4.6%

2Q05 875 6.6%

3Q05 932 6.5%

4Q05 1,068 14.6%

1Q06 1,088 1.8%

2Q06 1,123 3.2%

3Q06 1,121 -0.1%

4Q06 1,228 9.5%

1Q07 1,183 -3.7%

2Q07 1,244 5.1%

3Q07 1,283 3.1%

4Q07 1,403 9.4%

Google Q/Q Growth

178 30.8%

215 20.3%

250 16.7%

296 18.1%

381 28.7%

423 11.2%

503 18.9%

654 30.0%

795 21.6%

890 12.0%

1,049 17.8%

1,290 23.0%

1,531 18.7%

1,671 9.1%

1,864 11.6%

2,230 19.6%

2,539 13.9%

2,724 7.3%

3,010 10.5%

3,387 12.5%

eBay Q/Q Growth

476 15.1%

509 6.9%

531 4.3%

648 22.1%

756 16.6%

773 2.3%

806 4.2%

936 16.1%

1,032 10.3%

1,086 5.3%

1,106 1.8%

1,329 20.2%

1,390 4.6%

1,411 1.5%

1,449 2.7%

1,720 18.7%

1,768 2.8%

1,834 3.8%

1,889 3.0%

2,181 15.4%

Amazon.com Q/Q Growth

1,084 -24.2%

1,100 1.5%

1,134 3.1%

1,946 71.5%

1,530 -21.4%

1,387 -9.3%

1,462 5.4%

2,541 73.7%

1,902 -25.1%

1,753 -7.8%

1,858 6.0%

2,977 60.2%

2,279 -23.4%

2,139 -6.1%

2,307 7.9%

3,986 72.8%

3,015 -24.4%

2,886 -4.3%

3,262 13.0%

5,673 73.9%

IAC/InterActiveCorp Q/Q Growth

---

---

---

---

1,019 NA

976 -4.2%

957 -2.0%

1,235 29.0%

1,063 -13.9%

1,302 22.4%

1,360 4.4%

1,691 24.4%

1,351 -20.1%

1,429 5.8%

1,409 -1.4%

1,720 22.1%

1,490 -13.4%

1,510 1.3%

1,513 0.2%

1,860 22.9%

Expedia Q/Q Growth

---

---

---

---

413 NA

487 17.8%

504 3.5%

439 -12.9%

485 10.5%

555 14.4%

585 5.3%

495 -15.4%

494 -0.2%

598 21.2%

614 2.6%

531 -13.5%

551 3.6%

690 25.3%

760 10.1%

665 -12.4%

Orbitz Q/Q Growth

---

---

---

---

---

---

---

---

---

---

---

---

174 --

199 14.4%

197 -1.0%

189 -4.1%

211 11.6%

223 5.7%

219 -1.8%

197

Netflix Q/Q Growth

56 23.2%

63 13.5%

72 14.3%

81 12.4%

100 23.6%

120 19.9%

142 17.7%

144 1.6%

152 5.9%

164 7.6%

173 5.3%

193 11.7%

224 16.1%

239 6.8%

256 6.9%

277 8.3%

305 10.1%

304 -0.5%

294 -3.2%

302 2.9%

Blue Nile Q/Q Growth

25 -18.7%

27 10.7%

27 0.7%

50 80.5%

36 -27.8%

35 -2.1%

34 -3.2%

65 90.5%

44 -31.7%

44 -0.7%

42 -4.2%

73 74.4%

51 -30.8%

57 12.3%

53 -6.4%

91 70.4%

68 -25.2%

72 6.2%

67 -6.6%

112 66.1%

Harris Interactive Q/Q Growth

32 -1.2%

36 11.2%

32 -11.4%

34 7.2%

33 -1.4%

40 18.4%

39 -0.6%

53 33.7%

51 -3.3%

54 6.6%

49 -9.7%

55 12.0%

52 -4.7%

59 12.5%

48 -18.3%

57 17.8%

53 -7.1%

57 8.7%

55 -3.3%

63 13.6%

Greenfield Online Q/Q Growth

5 3.4%

6 29.5%

7 18.5%

8 17.5%

9 4.1%

10 18.6%

12 17.5%

14 12.9%

15 12.5%

26 72.3%

23 -11.9%

24 5.8%

22 -12.1%

24 13.6%

25 0.0%

29 18.5%

27 -6.8%

31 12.2%

32 4.9%

38 18.8%

Alloy Q/Q Growth

---

---

---

---

44 NA

43 -1.7%

56 30.6%

42 -25.2%

43 3.3%

46 6.6%

63 36.4%

43 -31.2%

45 3.8%

47 4.2%

64 36.3%

41 -35.8%

38 -7.5%

52 36.7%

67 28.7%

43 -35.2%

TechTarget Q/Q Growth

---

---

---

---

---

---

---

---

13.2 NA

19.0 44.4%

16 -14.2%

18 12.1%

15 -18.4%

21 38.9%

20 -2.2%

23 14.1%

18 -20.6%

25 34.1%

23 -5.3%

28 21.9%

Dice Holdings Q/Q Growth

---

---

---

---

---

---

---

---

---

---

---

---

22 NA

25 15.7%

28 10.2%

30 6.3%

31 5.4%

35 12.0%

38 9.9%

40 3.1%

Source: Company reports, Lehman Brothers estimates

22

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 17: Annual EBITDA and Growth, 1998–2008E ($ in millions) Yahoo! Y/Y Growth

1998 ---

1999 96 --

2000 388 306%

2001 (19) --

2002 206 --

2003 477 132%

2004 1,022 114%

2005 1,557 52%

2006 1,906 22%

2007 1,927 1%

2008E 1,850 -4%

Google Y/Y Growth

---

---

---

38 --

237 532%

638 169%

1,280 100%

2,624 105%

4,621 76%

6,921 50%

9,027 30%

eBay Y/Y Growth

18 --

28 56%

84 205%

232 175%

440 90%

803 82%

1,336 66%

1,865 40%

2,290 23%

2,924 28%

3,135 7%

Amazon.com Y/Y Growth

(52) --

(316) --

(233) --

40 --

262 561%

437 66%

566 30%

686 21%

706 3%

1,095 55%

1,383 26%

IAC/InterActiveCorp Y/Y Growth

---

---

---

---

314 --

575 83%

631 10%

873 38%

960 10%

816 -15%

870 7%

Expedia Y/Y Growth

---

---

---

---

---

497 --

598 20%

678 13%

648 -4%

729 13%

800 10%

Orbitz Y/Y Growth

---

---

---

---

---

---

---

---

107 --

144 35%

151 5%

Netflix Y/Y Growth

---

---

---

---

---

23 --

44 90%

31 -30%

93 204%

125 34%

157 26%

Blue Nile Y/Y Growth

---

---

---

(3) --

5 --

13 134%

16 30%

20 21%

23 15%

30 31%

33 12%

Harris Interactive Y/Y Growth

---

(13) --

(25) --

(20) --

7 --

15 111%

19 31%

18 -10%

22 23%

22 0%

28 30%

Greenfield Online Y/Y Growth

---

---

(39) --

(10) --

2 --

4 165%

10 135%

22 112%

28 28%

35 26%

41 18%

Alloy Y/Y Growth

---

---

---

---

---

---

5 --

17 259%

19 10%

10 -47%

21 110%

TechTarget Y/Y Growth

---

---

---

---

1 --

1 45%

5 385%

13 148%

20 51%

25 22%

34 39%

Dice Holdings Y/Y Growth

---

---

---

---

---

---

8 --

22 189%

41 86%

63 54%

73 16%

Source: Company reports, Lehman Brothers estimates

Figure 18: Annual EBITDA Margins, 1998–2008E Yahoo!

1998 --

1999 16.1%

2000 34.9%

2001 -2.6%

2002 21.6%

2003 32.4%

2004 39.5%

2005 42.1%

2006 41.8%

2007 37.7%

2008E 32.8%

Google

--

--

--

43.4%

68.7%

68.0%

65.3%

65.2%

63.3%

59.4%

57.5% 31.5%

eBay

16.2%

3.5%

11.0%

24.2%

31.3%

32.1%

35.1%

35.5%

32.8%

33.1%

Amazon.com

-8.5%

-19.2%

-8.4%

1.3%

6.7%

8.3%

8.2%

8.1%

6.6%

7.4%

7.2%

IAC/InterActiveCorp

--

--

--

--

3.5%

9.6%

10.0%

12.2%

12.6%

10.3%

10.7%

Expedia

--

--

--

--

--

35.4%

32.4%

32.0%

29.0%

27.4%

26.5%

Orbitz

--

--

--

--

--

--

--

--

14.1%

16.9%

17.0%

Netflix

--

--

--

--

--

8.5%

8.7%

4.5%

9.3%

10.3%

11.4%

Blue Nile

--

--

--

-7.0%

7.5%

9.8%

9.7%

9.7%

9.0%

9.4%

9.4%

Harris Interactive

--

-35.7%

-45.2%

-26.4%

5.8%

10.9%

11.8%

8.4%

10.1%

9.3%

10.6%

Greenfield Online

--

--

-258.2%

-69.4%

11.1%

16.9%

23.2%

24.5%

27.8%

27.3%

27.6%

Alloy

--

--

--

--

--

--

2.6%

8.8%

9.7%

5.0%

9.2%

TechTarget

--

--

--

--

2.9%

3.4%

11.5%

19.9%

25.4%

25.9%

28.5%

Dice Holdings

--

--

--

--

--

--

19.6%

32.7%

39.0%

43.5%

43.0%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

23

Lehman Brothers

Internet Data Book

April 2008

Figure 19: Free Cash Flow and Growth, 1998–2008E ($ in millions) Yahoo! Y/Y Growth

1998 ---

1999 ---

2000 ---

2001 57 --

2002 226 294%

2003 382 69%

2004 850 122%

2005 1,292 52%

2006 1,267 -2%

2007 1,337 6%

2008E 935 -30%

Google Y/Y Growth

---

---

---

18 --

118 555%

219 85%

658 201%

1,621 146%

1,678 3%

3,373 101%

4,317 28%

eBay Y/Y Growth

(7) --

(24) --

50 --

193 282%

341 77%

509 49%

992 95%

1,574 59%

1,732 10%

2,187 26%

2,338 7%

Amazon.com Y/Y Growth

3 --

(378) --

(265) --

(170) --

135 -179%

346 156%

477 38%

570 19%

485 -15%

1,183 144%

1,437 22%

IAC/InterActiveCorp Y/Y Growth

---

---

---

---

---

---

348 --

702 102%

564 -20%

428 -24%

550 29%

Expedia Y/Y Growth

---

---

---

---

404 --

598 48%

749 25%

807 8%

525 -35%

625 19%

676 8%

Orbitz Y/Y Growth

---

---

---

---

---

---

(48) --

(4) --

82 --

49 -40%

65 33%

Netflix Y/Y Growth

---

---

---

---

---

25 --

35 41%

25 -29%

63 153%

46 -26%

69 50%

Blue Nile Y/Y Growth

---

---

---

3 --

16 380%

16 4%

28 71%

30 8%

39 28%

37 -5%

47 27%

Harris Interactive Y/Y Growth

---

---

---

---

---

12 --

12 -4%

17 43%

23 37%

22 -6%

36 67%

Greenfield Online Y/Y Growth

---

---

---

(13) --

(0) --

3 --

3 -3%

17 511%

18 10%

12 -34%

23 94%

Alloy Y/Y Growth

---

---

---

---

---

---

---

---

---

---

---

TechTarget Y/Y Growth

---

---

---

---

---

---

7 --

11 65%

12 9%

19 53%

27 41%

Dice Holdings Y/Y Growth

---

---

---

---

---

---

13 --

21 65%

36 69%

56 55%

70 24%

Source: Company reports, Lehman Brothers estimates

Figure 20: Free Cash Flow Conversion of EBITDA, 1998–2008E Yahoo!

1998 --

1999 --

2000 --

2001 --

2002 110%

2003 80%

2004 83%

2005 83%

2006 66%

2007 69%

2008E 51%

Google

--

--

--

48%

50%

34%

51%

62%

36%

49%

48%

eBay

--

--

60%

83%

78%

63%

74%

84%

76%

75%

75%

Amazon.com

--

--

--

--

52%

79%

84%

83%

69%

108%

104%

IAC/InterActiveCorp

--

--

--

--

--

--

55%

80%

59%

52%

63%

Expedia

--

--

--

--

--

120%

125%

119%

81%

86%

85%

Orbitz

--

--

--

--

--

--

--

--

77%

34%

43%

Netflix

--

--

--

--

--

107%

79%

81%

67%

37%

44%

Blue Nile

--

--

--

--

292%

130%

171%

153%

170%

122%

140%

Harris Interactive

--

--

--

--

--

83%

61%

96%

107%

100%

127%

Greenfield Online

--

--

--

--

--

64%

26%

76%

65%

34%

57%

Alloy

--

--

--

--

--

--

--

--

--

--

--

TechTarget

--

--

--

--

--

--

96%

69%

55%

65%

69%

Dice Holdings

--

--

--

--

--

--

171%

131%

98%

90%

96%

Source: Company reports, Lehman Brothers estimates

24

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 21: Capital Expenditures and Growth, 1998–2008E ($ in millions) Yahoo! Y/Y Growth

1998 ---

1999 ---

2000 94 --

2001 86 -9%

2002 52 -40%

2003 117 128%

2004 246 109%

2005 409 67%

2006 689 69%

2007 602 -13%

2008E 725 20%

Google Y/Y Growth

---

---

---

13 --

37 185%

177 375%

319 80%

838 163%

1,903 127%

2,403 26%

3,141 31%

eBay Y/Y Growth

13 --

87 581%

50 -43%

59 20%

139 133%

365 163%

293 -20%

338 16%

515 52%

454 -12%

600 32%

Amazon.com Y/Y Growth

28 --

287 913%

135 -53%

50 -63%

39 -22%

46 17%

89 94%

203 128%

216 6%

223 3%

302 35%

IAC/InterActiveCorp Y/Y Growth

---

---

---

---

---

---

168 --

241 44%

244 1%

232 -5%

243 5%

Expedia Y/Y Growth

---

---

---

---

---

46 --

53 16%

52 -2%

93 77%

87 -6%

145 67%

Orbitz Y/Y Growth

---

---

---

---

---

---

26 --

63 142%

83 32%

53 -36%

72 36%

Netflix Y/Y Growth

---

---

---

---

27 --

64 140%

118 83%

139 18%

197 42%

266 35%

339 28%

Blue Nile Y/Y Growth

---

---

---

1 --

1 -16%

4 254%

2 -48%

1 -42%

2 78%

5 157%

3 -45%

Harris Interactive Y/Y Growth

---

---

---

---

---

2 --

6 183%

6 5%

3 -48%

6 87%

7 24%

Greenfield Online Y/Y Growth

---

---

---

2 --

1 -38%

1 11%

4 188%

7 94%

5 -27%

10 100%

12 11%

Alloy Y/Y Growth

---

---

---

---

---

---

---

---

---

---

---

TechTarget Y/Y Growth

---

---

---

---

---

---

2 --

2 22%

1 -41%

3 137%

3 0%

Dice Holdings Y/Y Growth

---

---

---

---

---

---

1 --

3 154%

3 0%

4 33%

5 39%

Source: Company reports, Lehman Brothers estimates

Figure 22: Capital Expenditures as a Percentage of Revenue, 1998–2008E Yahoo!

1998 --

1999 --

2000 8.5%

2001 12.0%

2002 5.4%

2003 8.0%

2004 9.5%

2005 11.1%

2006 15.1%

2007 11.8%

2008E 12.8%

--

--

--

15.1%

10.8%

18.8%

16.3%

20.8%

26.1%

20.6%

20.0%

eBay

14.8%

38.7%

11.5%

7.9%

11.4%

16.9%

9.0%

7.4%

8.6%

5.9%

6.9%

Amazon.com

Google

4.6%

17.5%

4.9%

1.6%

1.0%

0.9%

1.3%

2.4%

2.0%

1.5%

1.6%

IAC/InterActiveCorp

--

--

--

--

--

--

4.0%

4.5%

4.1%

3.6%

3.7%

Expedia

--

--

--

--

--

3.3%

2.9%

2.5%

4.1%

3.3%

4.8%

Orbitz

--

--

--

--

--

--

--

--

10.9%

6.2%

8.1%

Netflix

--

--

--

--

17.6%

23.7%

23.3%

20.4%

19.8%

22.1%

24.7%

Blue Nile

--

--

--

2.4%

1.4%

2.7%

1.1%

0.5%

0.8%

1.5%

0.8%

Harris Interactive

--

--

--

--

--

1.4%

3.4%

2.8%

1.4%

2.4%

2.6%

Greenfield Online

--

--

--

13.4%

7.7%

4.9%

8.2%

8.0%

5.2%

8.0%

7.7%

Alloy

--

--

--

--

--

--

--

--

--

--

--

TechTarget

--

--

--

--

--

--

3.8%

3.2%

1.6%

3.2%

2.5%

Dice Holdings

--

--

--

--

--

--

2.7%

4.0%

2.5%

2.4%

2.9%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

25

Lehman Brothers

Internet Data Book

April 2008

Figure 23: Return on Invested Capital (ROIC), 2001–2008E 2001 NA

Yahoo! Google

2002 2%

2003 5%

2004 6%

2005 8%

2006 6%

2007 4%

2008E 1%

--

--

27%

29%

23%

21%

19%

19%

eBay

6%

9%

10%

13%

12%

10%

3%

14%

Amazon.com

NA

8%

19%

22%

18%

15%

20%

20%

IAC/InterActiveCorp

--

--

--

1%

2%

2%

10%

3%

Expedia

--

--

--

2%

3%

3%

5%

2%

Orbitz

--

--

--

--

--

N/A

3%

6%

Netflix

--

--

4%

14%

3%

12%

13%

17%

Blue Nile

--

--

--

34%

14%

17%

26%

40%

Harris Interactive

NA

NA

6%

6%

3%

4%

4%

6%

Greenfield Online

--

--

8%

3%

2%

2%

2%

1%

Alloy

--

--

--

--

--

--

--

--

TechTarget

--

--

--

--

5%

10%

6%

6%

Dice Holdings

--

--

--

7%

5%

5%

8%

10%

ROIC =

((Operating Income + One Time Items) x (1 - tax rate)) (Average Debt + Average Shareholders' Equity)

Source: Company reports, Lehman Brothers estimates

Figure 24: Return on Equity (ROE), 2001–2008E Yahoo!

2001 NA

2002 5%

2003 7%

2004 9%

2005 11%

2006 8%

2007 7%

2008E 1%

Google

--

--

28%

26%

25%

23%

21%

21%

eBay

7%

9%

11%

13%

13%

11%

3%

15%

Amazon.com

NA

NA

NA

NA

NA

56%

58%

43%

IAC/InterActiveCorp

--

--

--

2%

4%

3%

2%

3%

Expedia

--

--

--

2%

3%

4%

6%

2%

Orbitz

--

--

--

--

--

N/A

N/A

2%

Netflix

--

--

6%

16%

5%

15%

16%

19%

Blue Nile

--

--

--

35%

16%

20%

32%

47%

Harris Interactive

NA

NA

6%

8%

3%

5%

5%

6%

Greenfield Online

--

--

94%

10%

11%

6%

8%

4%

Alloy

--

--

--

--

--

--

--

--

TechTarget

--

--

--

--

10%

7%

4%

4%

Dice Holdings

--

--

--

5%

6%

6%

12%

16%

ROE = Source: Company reports, Lehman Brothers estimates

26

April 07, 2008

(Net Income + Tax Adjusted One Time Items) Average Shareholders' Equity

Lehman Brothers

Internet Data Book

April 2008

Figure 25: Share Repurchases, 1998–2008 ($ in millions) (1)

Yahoo! Google eBay Amazon.com IAC/InterActiveCorp (2) Expedia Orbitz Netflix Blue Nile (3) Harris Interactive Greenfield Online (4) Alloy TechTarget Dice Holdings

1998 ---------------

1999 --1.4 -6.6 ----------

2000 --0.4 -125.5 ----------

2001 60.0 -0.1 ------0.8 -----

2002 100.0 -0.1 ------0.9 -----

2003 --0.1 -1,400.0 ------3.0 ---

2004 --0.0 -426.9 ----------

2005 388.0 ---1,797.0 ---17.4 ------

2006 2,778.0 -1,666.5 252.0 999.7 288.3 --57.4 17.5 -----

2007 1,585.9 -1489.5 248.0 500.0 1,385.0 -100.0 20.0 50.5 -0.5 ---

2008 ----145.5 --150.0 -------

Notes: (1) Yahoo! share repurchase totals include open market purchases as well as structured stock transactions that settle during that calendar year. (2) Expedia YTD 2007 repurchases include tender offer which company completed on Jan. 19, for 30M shares @ $22.00 per share; also includes tender completed on Aug 8, for 25M shares @ $29.00 per share. (3) Harris Interactive's fiscal year ends June 30. (4) Alloy's fiscal year ends January 31.

Source: Company reports, Lehman Brothers estimates

April 07, 2008

27

Lehman Brothers

Internet Data Book

April 2008

Figure 26: Select Recent Internet M&A Announced

Acquisition

Acquirer

Business Type

Total Consideration

Payment Method

4/2/08 3/14/08 3/14/08 3/13/08 2/14/08 2/12/08 2/11/08 2/5/08 1/28/08 1/15/08 1/10/08 1/8/08 12/12/07 11/7/07 10/10/07 9/17/07 9/14/07 9/4/07 7/24/07 7/16/07 7/9/07 7/3/07 6/1/07 5/30/07 5/30/07 5/23/07 5/18/07 5/17/07 5/16/07 5/15/07 5/14/07 5/7/07 4/30/07 4/13/07 4/12/07 4/11/07 3/22/07 3/18/07 3/15/07 3/14/07 3/5/07 2/8/07 1/10/07 12/28/06 12/20/06 12/4/06 10/9/06 8/15/06 8/9/06 7/26/06 6/5/06 5/30/06 4/24/06 3/16/06 3/6/06 1/30/06 1/17/06 12/14/05 12/9/05 12/5/05 10/6/05 9/12/05 9/8/05 9/6/05 8/11/05 7/18/05 7/14/05 6/20/05 6/13/05 6/13/05 6/6/05 6/1/05 5/15/05 4/7/05 3/21/05 3/20/05 3/1/05 2/17/05 12/17/04 11/15/04 9/21/04 9/14/04 8/3/04 7/22/04 6/24/04

Airfarewatchdog.com CarRentals.com Rapt Bebo Holiday Watchdog Maven Networks Danger, Inc. Buy.at Fraud Sciences TicketsNow Paciolan Fast Search & Transfer ASA Multimap Quigo Jaiku Oy Zimbra Participate Media BlueLithium Tacoda MeziMedia Postini GrandCentral Feedburner StumbleUpon Photobucket Brilliance Audio Aquantive 24/7 Real Media ADTECH A.G. Third Screen Media dPreview.com ConsumerSearch.com Right Media DoubleClick Red Swoosh Fandango Tabloo AdScape Media WebEx TellMe Networks Utah Street Networks Five Across StubHub Abacus Digitas Shopping.net YouTube CollegeHumor.com Atom Entertainment BuyCostumes.com Wedding Channel Open List Tradera Uswitch iVillage Shoebuy dMarc Broadcasting PriceGrabber del.icio.us Provide Commerce Weblogs Skype IGN Entertainment LinkShare Fastclick Intermix (MySpace) Bookings BV NeoPets E-Babylon Web Marketing Holdings Shopzilla Shopping.com lastminute.com Ciao AG AskJeeves Flickr Cornerstone Brands About.com Rent.com MarketWatch Active Hotels MusicMatch PriceRunner Service Magic Advertising.com

Expedia (TripAdvisor) Expedia (Hotwire) Microsoft AOL Expedia (TripAdvisor) Yahoo! Microsoft AOL eBay (PayPal) IAC (Ticketmaster) IAC (Ticketmaster) Microsoft Microsoft AOL Google Yahoo! Yahoo! Yahoo! AOL ValueClick Google Google Google eBay MySpace Amazon Microsoft WPP Group AOL AOL Amazon.com New York Times Co. Yahoo! Google Akamai Comcast HP Google Cisco Microsoft Cisco Cisco eBay Alliance Data Systems Publicis ValueClick Google InterActiveCorp Viacom Liberty Interactive The Knot Marchex eBay Scripps, E.W. NBC Universal InterActiveCorp Google GUS Yahoo! Liberty AOL-Time Warner eBay News Corp Rakuten ValueClick News Corp Priceline Viacom ValueClick ValueClick Scripps, E.W. eBay Sabre Greenfield Online InterActiveCorp Yahoo! InterActiveCorp NY Times eBay Dow Jones Priceline Yahoo! ValueClick InterActiveCorp AOL-Time Warner

Online Travel - low airfare search Online car rental marketing and retail Advertising yield management Social Networking Online Travel - UK-based Online Video Services Mobile Services Affiliate marketing network Online risk tools Ticketing Ticketing software Enterprise Search Solutions Online Mapping Contextual advertising solutions Mobile phone software Next-gen e-mail & collaborative software Online content source tracker Advertising Network Advertising Network Comparison Shopping Communications security & compliance Web-calling Service Web reader for blogs and RSS feeds Internet content discovery Photo and video sharing services Audiobook Publisher Online Advertising Services Online Advertising Services Online advertising management & serving Mobile advertising network Online Publisher of Digital Camera Reviews Online Publisher of Meta-Reviews Online Advertsising Exchange Online Advertising Services Peer-to-peer Content Delivery Onlline Movie Tickets Web-based Printing Software In-Game Advertising Collaborative Business Applications Voice-based Services/Technology Social Networking Software Social Networking Software Online Event Ticket Marketplace Online Data Analytics Online Marketing/Advertising Services Comparison Shopping Online Video & User Generated Content Online Content Online Games & Video e-Commerce Online Content Content Aggregation Online Auctions (Sweden) Comparison Service Online Content e-Commerce Advertising Services Comparison Shopping Tagging/Bookmarking e-Commerce Blog Network VOIP Online Content - Video Games Affiliate Marketing Online Advertising Services Social Networking Online Travel Online Content/Entertainment e-Commerce Online Advertising Services Comparison Shopping Comparison Shopping Online Travel Online Surveys & Comp. Shopping Search Engine Online Photo Sharing Catalog Retailer Online Content Online Real Estate Online Content - Financial News Online Travel Entertainment/Subscriptions Comparison Shopping Local Online Advertising Services

NA NA NA $850M NA $160M NA $125M ~$169 M ~$265 M NA ~$1.2B NA $346M NA $350M NA $300M NA $100M - $352M (earnout) $625M NA NA $75M NA NA $6B $649M NA NA NA $33M $680M ($720M including Oct. 20% stake) $3.1B $15M NA NA NA $2.9B NA NA NA $310M $435M $1.3 billion $13M $1.65 billion NA $200M NA $78M $13M $52M $366M $600M NA $102M + up to $1.136B add'l $485M NA $477M NA $2.5B + up to $530M (earnout) $650M $425M $133M $580M $133M $160M $143M $15M $525M $480M GBP577M $154M ~$2.26B at closing NA $720M $410M $415M $453M $161M $160M $29M NA $435M

NA NA NA Cash NA NA NA Cash Cash NA NA ~$1.2B cash tender NA Cash NA NA NA $300M in cash NA Cash $625M in cash NA NA NA NA NA Cash Cash NA NA NA $33M in cash $680M=50/50 Cash/Stock; $40M Cash $3.1B in cash $15M in stock NA NA NA $2.9B in cash NA NA NA $310M in cash $435M in cash $1.3 billion in cash $13M in cash $1.65 billion in stock 51% stake and full voting control NA NA $57.9 million in cash, 1.15M shares NA $52M in cash $366M in cash $600M in cash NA $102M in cash NA NA $477M in cash NA $1.3B in cash, $1.2B in stock $650M in cash $425M in cash $133M in stock $580M in cash $133M in cash $160M in cash? $122M in cash, 1.8M shares of VCLK $15M in cash $525M in cash $480M in cash GBP577M in cash $74M in cash, 3.95M SRVY shares ~ 88M IACI shares NA $720M in cash $410M in cash $415M in cash $453M in cash $161M in cash $160M in cash NA NA $435M in cash

Source: Company reports, Lehman Brothers estimates

28

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April 2008

Broadband and Internet Usage

April 07, 2008

29

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Internet Data Book

April 2008

Figure 27: U.S. Households with Broadband & Broadband Penetration, 2001–10E (in millions)

2001

2002

2003

2004

2005

2006

2007E

2008E

2009E

2010E

Total U.S. Households

106.7

108.0

109.2

110.5

111.8

113.1

114.4

115.7

117.1

118.4

Total Online Homes % of U.S. Households

54.8 51%

60.9 56%

66.8 61%

71.1 64%

73.7 66%

76.2 67%

79.2 69%

83.4 72%

88.2 75%

92.9 78%

Total Narrowband % change

44.2 15%

43.4 -2%

38.6 -11%

33.5 -13%

29.4 -12%

22.0 -25%

16.6 -25%

13.0 -22%

10.6 -18%

9.1 -15%

Total Cable Broadband % change

7.2 95%

11.6 61%

16.4 41%

21.0 28%

24.5 17%

29.4 20%

33.3 13%

36.3 9%

38.8 7%

40.3 4%

Total DSL Broadband % change

3.2 129%

5.1 59%

9.5 86%

13.7 44%

16.3 19%

23.9 46%

28.4 19%

33.2 17%

37.9 14%

42.6 12%

Other Broadband % change

0.2 100%

0.8 300%

2.3 188%

2.9 26%

3.5 21%

1.0 -73%

0.9 -4%

0.9 -2%

0.9 NM

0.8 NM

Total Broadband

10.6

17.5

28.2

37.6

44.3

54.2

62.7

70.4

77.6

83.8

104%

65%

61%

33%

18%

22%

16%

12%

10%

8%

81% 19%

71% 29%

58% 42%

47% 53%

40% 60%

29% 71%

21% 79%

16% 84%

12% 88%

10% 90%

Share of Broadband Homes Cable 68% DSL 30% Other 2%

66% 29% 5%

58% 34% 8%

56% 36% 8%

55% 37% 8%

54% 44% 2%

53% 45% 1%

52% 47% 1%

50% 49% NM

48% 51% NM

% change Share of Online Homes Narrowband Broadband

Source: Veronis Suhler, PQ Media, Kagan Worldwide Media, Forrester, Lehman Brothers estimates, company reports

US Broadband Households (MM)

Figure 28: U.S. Broadband Penetration, 2000–12E 90

80%

80

70%

70

60%

60

50%

50

40%

40

30%

30

20%

20

10%

10 0

0% 2000

2001

2002

2003

2004

2005

US Broadband Households

Source: Forrester Research, September 2007

30

April 07, 2008

2006

2007E 2008E 2009E 2010E 2011E 2012E % of Total US Households

Lehman Brothers

Internet Data Book

April 2008

Figure 29: Top 23 U.S. ISPs by Subscribers, as of 3Q 2007 Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 --

ISP SBC (AT&T) Comcast AOL Verizon Road Runner EarthLink Cox Charter Qwest Cablevision United Online Embarq Windstream (formerly ALLTEL and Valor) Insight BB Mediacom CenturyTel Covad Citizens Clearwire Hughes DIRECWAY LocalNet First Communications Cincinnati Bell Other U.S. ISPs

U.S. Subscribers (millions) 17.9 12.9 10.1 8.0 7.7 4.2 3.6 2.6 2.5 2.2 1.9 1.2 0.8 0.7 0.6 0.5 0.5 0.5 0.3 0.3 0.3 0.2 0.2 18.6

Total

98.4

Market Share 18.2% 13.1% 10.3% 8.1% 7.8% 4.3% 3.7% 2.6% 2.5% 2.2% 1.9% 1.2% 0.8% 0.7% 0.7% 0.5% 0.5% 0.5% 0.3% 0.3% 0.3% 0.2% 0.2% 18.9% 100.0%

Note: List does not include MSN or RCN numbers. RCN reports Revenue Generating Units (RGUs), not subscribers. Source: ISP Planet, September 2007, AT&T

Figure 30: Global Internet Penetration – Top 20 Countries with Most Internet Users (numbers in millions) Rank Country or Region 1 United States 2 China 3 Japan 4 Germany 5 India 6 Brazil 7 United Kingdom 8 Korea (South) 9 France 10 Italy 11 Russia 12 Mexico 13 Canada 14 Indonesia 15 Spain 16 Vietnam 17 Turkey 18 Australia 19 Taiwan 20 Philippines TOP 20 Countries Rest of the World Total World - Users

Internet % Users Broadband Broadband Internet Users Population Penetration of World Subscribers Penetration 69.7% 18.0% 58.1 19.3% 210.6 302.0 12.3% 13.8% 35.3 2.7% 162.0 1,317.4 67.1% 7.4% 25.8 20.0% 86.3 128.6 61.1% 4.3% 14.1 17.1% 50.4 82.5 3.7% 3.6% 2.1 0.2% 42.0 1,129.7 21.0% 3.3% 5.8 3.1% 39.1 186.8 62.3% 3.2% 13.0 21.5% 37.6 60.4 66.5% 2.9% 14.0 27.4% 34.1 51.3 53.7% 2.8% 12.7 20.7% 32.9 61.4 52.9% 2.7% 8.6 14.5% 31.5 59.5 19.5% 2.4% 1.2 0.8% 28.0 143.4 21.3% 1.9% 3.7 3.5% 22.7 106.5 67.8% 1.9% 7.7 23.7% 22.0 32.4 0.3% 8.9% 1.7% N/A 20.0 224.5 43.9% 1.7% 6.7 14.8% 19.8 45.0 19.4% 1.4% N/A N/A 16.5 85.0 21.1% 1.4% 2.8 3.7% 16.0 75.9 71.9% 1.3% 3.9 18.8% 15.1 21.0 N/A 63.0% 1.2% N/A 14.5 23.0 36.6% 1.2% N/A N/A 14.0 38.2 915.1 258.0 1,173.1

4,174.5 2,400.2 6,574.7

21.9% 10.7% 17.8%

78.0% 22.0% 100.0%

N/A N/A N/A

N/A N/A N/A

Source: Internet World Stats (http://www.internetworldstats.com/top20.htm), compiled from various sources including Nielsen/NetRatings & ITU, June 2007, CNNIC

April 07, 2008

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April 2008

Figure 31: International Broadband Penetration – Top 20 Countries Rank 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Country Denmark Netherlands Switzerland Korea Norway Iceland Finland Sweden Canada Belgium United Kingdom Australia France Luxembourg United States Japan Germany Austria Spain New Zealand

Broadband Subscribers Per 100 Inhabitants 34.3 33.5 30.7 29.9 29.8 29.8 28.8 28.6 25.0 23.8 23.7 22.7 22.5 22.2 22.1 21.3 21.2 18.6 17.0 16.5

Total Broadband Subscribers (millions) 1.9 5.5 2.3 14.4 1.4 0.1 1.5 2.6 8.1 2.5 14.4 4.7 14.3 0.1 66.2 27.2 17.5 1.5 7.5 0.7

Source: OECD June 2007

Figure 32: U.S. Household Technology Adoption Forecast, 2000–12E PC Mobile phone Internet Digital still camera Broadband Multi-PC households Camera phone Video game console Laptop MP3 player Home network HDTV DVR PDA Satellite radio

2000 63% 54% 57% 10% 6% 21% -38% -2% ---6% --

2001 65% 53% 61% 16% 10% 22% -32% 13% 3% --1% 6% --

2002 66% 58% 64% 21% 15% 24% -33% 15% 4% --2% 8% 2%

2003 67% 62% 64% 26% 19% 25% 3% 35% 16% 5% --3% 11% 4%

2004 70% 71% 67% 40% 30% 32% 13% 37% 23% 10% 9% 14% 6% 14% 6%

2005 77% 76% 71% 51% 40% 36% 25% 37% 29% 20% 16% 17% 16% 15% 9%

2006 77% 79% 72% 59% 45% 38% 37% 37% 32% 30% 18% 23% 19% 13% 11%

2007E 80% 83% 74% 65% 52% 42% 59% 38% 38% 35% 24% 32% 26% 14% 15%

2008E 82% 85% 76% 70% 58% 47% 72% 38% 43% 38% 30% 40% 36% 14% 19%

2009E 83% 86% 78% 74% 63% 51% 77% 39% 48% 39% 36% 47% 45% 13% 22%

2010E 84% 87% 79% 76% 65% 55% 79% 39% 51% 40% 41% 52% 51% 13% 24%

2011E 85% 87% 79% 78% 67% 58% 80% 40% 53% 40% 45% 55% 55% 12% 25%

2012E 85% 87% 80% 79% 68% 60% 80% 41% 54% 40% 48% 57% 57% 11% 26%

US households

105.5

106.7

108.0

109.2

110.5

111.8

113.1

114.4

115.7

117.1

118.4

119.8

121.2

Source: Forrester Research, September 2007

32

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Figure 33: Media Consumption Time Breakdown

Radio, 19%

Video or DVD, 11%

Video Games, 3% Magazines, 6%

Newspapers, 9%

TV, 33%

Internet, 19%

Source: Forrester Research, July 2006

Figure 34: Share of Time Spent Online, December 2005–December 2006 and January 2007–February 2008 Activity Content Community Communications Commerce Search Total

Dec-05 36% 41% 19% 4%

Dec-06 44% 33% 18% 5%

Jan-07 46% 34% 16% 5%

Feb-07 46% 34% 16% 5%

Mar-07 47% 33% 16% 5%

Apr-07 47% 33% 15% 5%

May-07 48% 33% 14% 5%

Jun-07 50% 32% 14% 5%

Jul-07 51% 30% 14% 5%

Aug-07 50% 32% 14% 5%

Sep-07 50% 31% 15% 5%

Oct-07 49% 31% 15% 5%

Nov-07 48% 30% 17% 5%

Dec-07 49% 29% 18% 5%

Jan-08 43% 8% 29% 16% 5%

Feb-08 42% 7% 30% 15% 5%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Source: Online Publishers Association

Figure 35: ACSI Customer Satisfaction Scores, 2000–07 Portal/Search Engine Yahoo!, Inc. Google, Inc. Internet Portals/Search Engines All Others Ask.com MSN AOL, LLC AltaVista

2000

2001

2002

2003

2004

2005

2006

2007

74 NM 63 67 NM 71 56 NM

73 NM 65 72 NM 67 58 NM

76 80 68 72 62 72 59 61

78 82 71 78 69 74 65 63

78 82 72 78 71 75 67 66

80 82 76 77 72 75 71 NM

76 81 77 78 71 74 74 NM

79 78 75 75 75 75 67 NM

Source: ACSI

April 07, 2008

33

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April 2008

Figure 36: Top 50 U.S. Web Properties by Unique Visitors, February 2007–February 2008 (in thousands) Web Property Yahoo! Sites Y/Y growth Google Sites Y/Y growth Microsoft Sites Y/Y growth AOL LLC Y/Y growth Fox Interactive Media Y/Y growth eBay Y/Y growth Wikipedia Sites Y/Y growth Amazon Sites Y/Y growth Ask Network Y/Y growth Time Warner - Excluding AOL Y/Y growth New York Times Digital Y/Y growth Apple Inc. Y/Y growth Viacom Digital Y/Y growth Weather Channel, The Y/Y growth CNET Networks Y/Y growth FACEBOOK.COM Y/Y growth Adobe Sites Y/Y growth Glam Media Y/Y growth Wal-Mart Y/Y growth Superpages.com Network Y/Y growth Verizon Communications Corporation Y/Y growth Disney Online Y/Y growth craigslist, inc. Y/Y growth Gorilla Nation Y/Y growth Target Corporation Y/Y growth AT&T, Inc. Y/Y growth Shopzilla.com Sites Y/Y growth Comcast Corporation Y/Y growth Yellowpages.com Network Y/Y growth CBS Corporation Y/Y growth Gannett Sites Y/Y growth Expedia Inc Y/Y growth Bank of America Y/Y growth Monster Worldwide Y/Y growth CareerBuilder LLC Y/Y growth United Online, Inc Y/Y growth Photobucket.com LLC Y/Y growth Atrinsic, Inc. Y/Y growth E.W. Scripps Y/Y growth AmericanGreetings Property Y/Y growth WebMD Health Y/Y growth WorldNow - ABC Owned Sites Y/Y growth Real.com Network Y/Y growth NBC Universal Y/Y growth IRS.GOV Y/Y growth ESPN Y/Y growth Lycos Sites Y/Y growth Cox Enterprises Inc. Y/Y growth Demand Media Y/Y growth Weatherbug Property Y/Y growth Total Internet : Total Audience Y/Y growth

Feb-2007 128,559 7% 114,694 21% 114,155 3% N/A 77,969 461% 79,559 19% 43,656 122% 48,905 15% 48,722 13% N/A 39,769 14% 36,767 51% 39,128 37,374 34% 29,881 13% 16,737 59% 26,035 19% 8,410 25,125 20% 15,236 21,265 -34% 21,959 15,991 29,098 40% 23,038 16% 27,391 23% 16,744 -10% 16,986 1% 16,274 23,045 23% 18,619 -1% 25,060 -1% 21,695 3% 22,794 -5% 20,834 6% 24,773 0% 16,751 133% N/A 16,346 11,155 16,466 26% 12,188 18,032 5% 15,189 17,319 15,207 -15% 22,341 -5% 15,709 9% 6,748 15,025 -2%

Mar-2007 131,227 6% 118,492 14% 118,716 2% N/A 80,098 346% 80,154 13% 47,011 84% 49,980 6% 46,346 -5% N/A 41,464 14% 27,317 2% 39,724 36,189 13% 30,984 7% 20,896 62% 26,842 6% 10,048 25,679 18% 21,727 23,251 -33% 20,183 17,793 28,852 26% 25,123 18% 27,349 14% 17,532 -10% 18,342 -5% 18,122 26,815 7% 20,724 1% 27,039 -2% 21,848 2% 23,515 -12% 20,823 0% 24,277 -10% 17,978 93% N/A 16,343 7,568 17,801 22% 10,645 18,988 0% 15,902 12,104 19,199 3% 22,387 -10% 16,187 7% 7,345 15,474 3%

Apr-2007 131,392 3% 119,640 10% 115,605 -4% N/A 80,789 370% 79,167 4% 49,632 66% 48,914 1% 47,926 -11% N/A 43,127 9% 38,789 35% 39,514 39,555 13% 30,789 3% 23,042 85% 29,477 5% 12,221 2526% 28,362 16% 19,970 21,903 -38% 19,626 -11% 18,934 69% 28,573 19% 25,064 7% 26,608 4% 19,040 -5% 18,302 9% 17,750 21,952 0% 20,630 -1% 24,435 -11% 21,843 -5% 22,062 -22% 20,750 -1% 23,548 -23% 19,020 88% N/A 14,501 9,385 16,883 16% 10,312 18,795 -20% 15,277 12,808 17,689 1% 22,584 -3% 16,433 -2% 8,538 16,394 4%

May-2007 130,526 0% 120,010 15% 113,916 -4% N/A 82,260 283% 79,428 2% 48,743 55% 51,567 7% 50,068 -8% N/A 43,603 8% 41,909 36% 40,462 38,496 8% 30,954 7% 26,649 89% 28,458 8% 17,299 3638% 27,796 7% 20,956 23,669 -35% 20,127 -6% 20,581 75% 29,547 26% 26,013 12% 26,975 4% 19,137 -6% 17,860 6% 19,826 21,951 0% 19,262 -4% 25,212 -9% 21,414 -7% 24,879 -17% 21,266 -5% 21,430 -20% 21,168 93% N/A 14,329 8,146 16,578 9% 9,824 18,684 -23% 15,682 4,967 17,572 9% 21,540 -12% 16,185 -6% 10,724 15,714 -2%

Jun-2007 133,093 3% 123,601 20% 116,824 -1% N/A 83,598 529% 81,224 4% 47,031 72% 53,285 9% 52,600 0% N/A 42,718 12% 44,114 42% 42,212 39,865 10% 31,023 10% 27,965 103% 36,441 36% 19,075 1232% 27,922 10% 21,426 23,876 -32% 23,443 -12% 22,529 72% 30,721 22% 28,323 21% 29,992 17% 21,417 14% 19,267 12% 19,340 21,838 6% 18,999 -4% 28,238 -2% 23,240 0% 25,825 -12% 21,723 3% 24,199 -6% 22,873 65% N/A 14,164 -5% 7,340 17,127 28% 10,354 19,130 -10% 14,984 25% 4,065 17,473 -2% 20,900 -11% 17,370 7% 11,927 16,375 3%

Jul-2007 133,428 3% 123,892 19% 118,154 0% N/A 81,233 521% 79,787 5% 46,372 65% 52,702 13% 51,885 0% N/A 42,710 12% 42,561 37% 43,056 40% 38,534 10% 32,182 6% 30,557 113% 33,361 11% 20,656 778% 29,213 10% 22,526 25,151 -31% 23,948 -7% 23,946 73% 32,560 23% 30,391 30% 29,692 18% 21,983 18% 20,659 17% 20,600 22,258 7% 20,089 2% 29,243 -2% 23,325 -1% 25,753 -9% 21,723 4% 23,683 -12% 24,188 56% N/A 16,819 5% 7,254 16,829 23% 11,184 20,298 -3% 15,012 33% 3,711 18,227 5% 20,268 -14% 17,777 4% 14,444 16,289 2%

Aug-2007 135,251 3% 128,544 19% 118,392 -1% N/A 79,966 11% 79,707 -1% 48,386 56% 53,904 11% 52,075 -3% N/A 44,113 15% 42,744 35% 44,888 40% 38,905 12% 32,490 2% 33,745 128% 31,231 7% 20,058 677% 28,510 9% 21,344 25,033 -34% 25,606 3% 23,987 64% 30,776 18% 31,042 22% 28,501 8% 21,644 10% 25,279 37% 21,347 25,821 5% 20,050 -3% 27,034 -3% 23,809 2% 27,986 7% 20,202 -2% 26,255 -11% 23,727 63% N/A 16,501 4% 6,312 16,945 15% 11,783 20,116 -4% 16,107 44% 3,435 19,740 11% 20,375 -21% 18,025 2% 13,226 16,722 4%

Sep-2007 135,578 5% 129,508 21% 119,193 0% N/A 79,951 13% 78,105 -1% 52,800 51% 53,803 9% 51,723 -6% N/A 45,276 12% 43,122 35% 44,300 26% 37,571 13% 32,687 14% 30,601 129% 30,847 17% 22,421 581% 27,036 8% 18,980 23,982 -30% 21,343 -9% 23,124 68% 30,097 23% 28,749 26% 28,301 4% 22,272 9% 24,007 35% 22,808 30,118 14% 20,829 2% 25,058 9% 22,997 3% 25,615 3% 22,507 3% 22,908 -13% 21,349 45% N/A 17,080 9% 6,561 18,366 29% 13,230 19,998 -2% 17,132 -13% 3,430 24,168 19% 20,273 -21% 16,224 12% 13,615 16,772 9%

Oct-2007 136,775 6% 131,639 20% 120,502 2% N/A 84,205 18% 79,669 -1% 56,104 44% 56,746 11% 55,512 0% N/A 49,816 16% 43,157 34% 43,345 18% 38,796 14% 35,336 22% 32,910 118% 30,592 21% 25,487 742% 29,238 8% 19,402 24,389 -28% 21,133 -16% 23,992 67% 31,889 26% 31,090 28% 33,749 39% 23,569 7% 25,277 47% 24,921 117% 28,262 18% 22,807 13% 24,575 9% 22,761 4% 26,013 6% 23,000 2% 23,913 -13% 22,177 47% N/A 19,254 24% 10,257 -19% 19,904 32% 16,539 #N/A 20,108 0% 17,462 24% 4,065 22,937 13% 20,229 -24% 16,414 9% 15,843 17,051 12%

Nov-2007 136,180 5% 131,538 21% 119,194 2% N/A 81,325 10% 80,510 -3% 55,157 41% 59,058 12% 51,636 -5% N/A 47,997 13% 43,775 30% 42,796 8% 34,124 6% 35,731 13% 33,660 102% 31,848 26% 25,394 561% 42,462 -1% 25,603 29,072 -13% 23,822 -4% 24,427 71% 26,556 7% 41,933 26% 29,843 36% 25,023 12% 26,479 46% 24,221 125% 28,714 14% 22,272 10% 21,796 2% 23,354 10% 23,390 -1% 17,021 1% 19,305 -24% 19,628 26% N/A 21,045 18% 16,444 33% 18,346 22% 14,014 43% 20,242 -6% 16,933 26% 4,096 22,186 19% 18,335 -21% 16,058 11% 15,132 16,274 4%

Dec-2007 136,634 4% 132,954 18% 120,034 3% N/A 81,847 12% 79,892 -5% 51,851 34% 65,205 15% 49,509 -11% N/A 44,362 13% 47,724 21% 43,109 8% 40,663 25% 35,773 12% 34,658 81% 30,798 19% 25,028 213% 44,341 1% 23,448 28,656 -17% 26,167 4% 24,468 74% 26,642 5% 42,634 24% 30,212 27% 26,524 16% 26,445 41% 24,453 51% 25,083 8% 20,163 11% 18,702 -4% 23,771 5% 22,565 -2% 13,914 0% 19,617 -16% 18,060 8% N/A 20,207 24% 18,102 51% 15,597 15% 15,474 78% 20,988 2% 17,309 25% 4,442 2% 20,667 21% 18,427 -18% 15,450 7% 14,958 149% 17,077 7%

Jan-2008 138,059 7% 134,886 19% 119,297 4% 109,442 83,752 12% 78,789 -2% 55,589 30% 59,003 16% 52,102 6% 52,645 48,471 21% 48,413 25% 42,011 13% 40,478 14% 34,859 13% 33,861 79% 31,169 19% 24,626 251% 30,747 14% 28,299 68% 27,220 20% 27,524 10% 26,660 75% 27,119 14% 27,874 16% 27,890 -3% 24,210 22% 27,068 53% 22,869 42% 23,643 5% 22,997 23% 23,454 -8% 22,990 -1% 24,185 -3% 24,752 17% 22,065 -10% 20,497 16% N/A 20,952 19% 16,771 107% 19,219 13% 19,115 86% 19,747 7% 17,828 19% 12,495 -6% 19,166 18% 19,484 -19% 17,286 6% 16,673 125% 17,456 19%

Feb-2008 136,767 6% 135,970 19% 118,355 4% 108,911 83,638 7% 77,864 -2% 55,906 28% 55,172 13% 54,120 11% 52,661 47,632 20% 47,048 28% 41,216 5% 41,057 10% 33,320 12% 32,436 94% 30,620 18% 29,136 246% 27,651 10% 27,526 81% 27,101 27% 27,094 23% 26,822 68% 26,710 -8% 26,631 16% 26,385 -4% 24,782 48% 24,466 44% 23,691 46% 23,564 2% 23,407 26% 23,150 -8% 23,111 7% 22,389 -2% 22,357 7% 21,966 -11% 20,917 25% 20,473 20,005 22% 19,884 78% 19,637 19% 19,426 59% 18,498 3% 17,863 18% 17,863 3% 17,836 17% 17,702 -21% 17,603 12% 17,532 160% 17,256 15%

175,653 5%

177,372 3%

178,079 4%

177,487 3%

178,839 3%

180,078 4%

181,257 5%

181,858 5%

182,206 5%

182,362 5%

183,619 5%

184,239 5%

185,017 5%

Note: MySpace.com is included in Fox Interactive Media as of August 2006. Source: comScore Networks

34

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 37: Top 50 U.S. Web Properties by Page Views, February 2007–February 2008 (in millions) Rank 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

Web Property Fox Interactive Media Y/Y growth Yahoo! Sites Y/Y growth Google Sites Y/Y growth Microsoft Sites Y/Y growth AOL LLC Y/Y growth FACEBOOK.COM Y/Y growth eBay Y/Y growth craigslist, inc. Y/Y growth Comcast Corporation Y/Y growth Viacom Digital Y/Y growth Time Warner - Excluding AOL Y/Y growth Intuit Y/Y growth AT&T, Inc. Y/Y growth Amazon Sites Y/Y growth EA Online Y/Y growth Ask Network Y/Y growth Photobucket.com LLC Y/Y growth Bank of America Y/Y growth Verizon Communications Corporation Y/Y growth Cox Enterprises Inc. Y/Y growth Disney Online Y/Y growth United Online, Inc Y/Y growth Glam Media Y/Y growth ESPN Y/Y growth Wal-Mart Y/Y growth Pearson Education Y/Y growth Wikipedia Sites Y/Y growth JPMorgan Chase Property Y/Y growth Weather Channel, The Y/Y growth Weatherbug Property Y/Y growth Gorilla Nation Y/Y growth Gannett Sites Y/Y growth Expedia Inc Y/Y growth New York Times Digital Y/Y growth Target Corporation Y/Y growth Apple Inc. Y/Y growth Wells Fargo Y/Y growth JCPenney Sites Y/Y growth E.W. Scripps Y/Y growth CNET Networks Y/Y growth CBS Corporation Y/Y growth Sprint Nextel Corporation Y/Y growth WorldNow - ABC Owned Sites Y/Y growth CareerBuilder LLC Y/Y growth Citigroup Y/Y growth Monster Worldwide Y/Y growth NETFLIX.COM Y/Y growth Capital One Y/Y growth Macy's Inc. Y/Y growth Hearst Corporation Y/Y growth Total Internet : Total Audience Y/Y growth

Feb-2007 42,901 12803% 34,863 15% 14,349 86% 17,603 -3% N/A 10,779 96% 9,758 -8% 4,209 127% 2,847 12% 2,493 N/A 2,082 20% 1,555 82% 1,352 -10% 1,267 -25% 1,434 -6% 764 190% 1,201 11% 995 4% 906 3% 945 1,238 23% 85 687 -19% 734 7% 398 598 180% 650 27% 591 21% 682 5% 556 40% 445 26% 790 -5% 462 9% 505 -2% 440 33% 495 -9% 538 36% 447 -6% 532 -52% 513 483 12% 244 414 17% 580 9% 483 -21% 329 374 391 N/A -

Mar-2007 44,432 9861% 36,282 10% 15,716 76% 18,788 -7% N/A 12,179 61% 10,754 -8% 5,346 125% 3,116 45% 2,427 N/A 989 18% 1,678 97% 1,532 -8% 1,412 -10% 1,450 -17% 824 144% 1,229 4% 1,068 -6% 950 5% 726 1,352 25% 101 1,043 -7% 724 -6% 304 701 161% 697 15% 510 -32% 752 7% 529 18% 493 14% 942 5% 508 9% 598 5% 452 36% 588 -2% 630 13% 387 -8% 561 -42% 751 5% 479 9% 213 439 13% 552 -2% 532 -18% 347 393 302 N/A -

Apr-2007 44,765 9014% 37,490 1% 16,450 67% 18,086 -15% N/A 14,997 110% 9,910 -24% 5,696 114% 3,063 21% 2,506 N/A 1,201 24% 1,672 92% 1,580 -7% 1,149 -15% 1,483 -26% 1,141 195% 1,148 -8% 978 -18% 910 -23% 655 -38% 1,294 4% 130 5886% 920 -18% 769 -1% 307 817 125% 713 8% 578 -22% 723 -3% 523 6% 493 -1% 712 -16% 569 -2% 528 -14% 418 20% 560 -7% 491 2% 324 -16% 568 -42% 696 2% 461 -2% 245 449 14% 509 -25% 530 -26% 305 343 269 N/A -

May-2007 45,134 9680% 36,232 -5% 18,425 88% 20,335 2% N/A 15,841 143% 8,761 -30% 5,378 88% 2,996 30% 2,521 N/A 264 -10% 1,725 80% 1,589 -4% 1,182 -10% 1,606 -13% 1,666 219% 1,152 -6% 895 -22% 912 -5% 715 -27% 1,180 18% 373 21479% 854 30% 744 -11% 352 846 104% 691 11% 551 -33% 726 -10% 578 20% 479 11% 672 -21% 509 4% 549 -8% 526 37% 546 -3% 495 9% 346 -9% 560 -45% 640 -6% 452 -3% 220 406 -11% 482 -34% 531 -24% 277 306 320 N/A -

Jun-2007 48,088 16298% 34,927 -12% 19,089 88% 20,418 6% N/A 14,785 143% 8,998 -22% 5,904 109% 3,068 35% 3,222 N/A 222 -3% 1,818 75% 1,678 -6% 1,219 -10% 1,675 -11% 1,912 148% 1,223 -3% 920 -20% 991 9% 879 -43% 1,235 25% 460 5630% 899 -5% 778 -9% 393 826 117% 660 6% 600 -29% 808 6% 705 26% 518 20% 704 -29% 508 8% 620 4% 478 18% 571 -5% 439 -7% 348 -10% 579 -38% 603 -15% 500 4% 289 432 -6% 476 -37% 527 -26% 315 345 323 N/A -

Jul-2007 47,712 17264% 34,919 -7% 19,922 94% 19,876 2% N/A 14,985 145% 9,430 -16% 6,575 111% 3,261 41% 3,597 5% N/A 224 21% 1,800 76% 1,942 24% 1,374 -4% 1,747 -3% 2,101 208% 1,258 2% 1,040 -12% 1,067 9% 962 -34% 1,136 14% 734 3193% 977 41% 876 10% 293 925 146% 714 22% 546 -28% 771 -1% 724 17% 573 28% 800 -13% 505 2% 698 28% 501 32% 565 3% 505 -3% 395 2% 653 -24% 509 -19% 526 14% 304 428 -8% 483 -33% 531 -26% 338 334 303 N/A -

Aug-2007 46,016 36% 36,356 -8% 20,123 100% 20,302 0% N/A 15,260 136% 8,882 -17% 6,379 88% 3,402 38% 3,253 -3% N/A 271 208% 1,977 85% 1,896 21% 1,332 -15% 1,788 -4% 2,247 193% 1,295 5% 1,065 -15% 1,010 -1% 993 -22% 1,105 -9% 768 2071% 1,245 58% 820 10% 362 846 87% 722 20% 558 -18% 757 1% 577 -6% 602 25% 673 -19% 519 -3% 609 2% 486 26% 619 3% 525 -2% 395 11% 666 -14% 651 -25% 526 5% 316 429 -22% 498 -34% 541 -18% 343 353 -12% 273 N/A -

Sep-2007 45,007 26% 35,502 -11% 21,313 108% 19,493 4% N/A 14,687 105% 8,468 -23% 6,404 102% 3,627 44% 2,622 -18% N/A 244 164% 2,052 101% 1,770 23% 1,360 -9% 1,679 -6% 2,207 256% 1,262 11% 1,081 -8% 985 8% 722 -34% 1,027 -8% 666 1637% 1,888 77% 757 -2% 585 44% 841 82% 729 32% 451 -32% 656 -2% 525 -7% 612 43% 572 -7% 535 7% 531 10% 541 17% 581 1% 490 -14% 410 13% 640 4% 1,036 -4% 459 -6% 311 411 -8% 493 -22% 574 -5% 325 329 -8% 281 -3% N/A -

Oct-2007 45,956 19% 36,853 -11% 22,912 103% 20,476 6% N/A 15,178 61% 8,527 -20% 7,240 116% 4,290 63% 2,317 -23% N/A 320 294% 2,127 142% 1,819 25% 1,522 2% 1,700 -3% 2,445 340% 1,295 7% 1,113 -5% 943 1% 624 -37% 1,133 8% 685 1891% 1,849 61% 876 3% 695 61% 931 88% 819 36% 508 -23% 681 8% 777 41% 630 31% 522 -17% 610 9% 604 4% 491 8% 616 11% 506 -4% 466 32% 567 -14% 976 -2% 458 -7% 315 430 -8% 601 3% 561 -1% 324 378 3% 340 10% N/A -

Nov-2007 42,796 8% 34,894 -8% 23,854 101% 18,893 6% N/A 14,832 64% 8,958 -20% 6,560 135% 4,706 78% 2,378 -34% N/A 287 156% 1,881 128% 2,058 11% 1,382 -6% 1,575 -6% 2,146 211% 1,280 6% 1,189 6% 921 16% 853 -21% 949 -10% 719 1448% 1,667 77% 1,609 11% 669 58% 832 39% 794 35% 396 -33% 584 -4% 723 66% 537 12% 444 -16% 546 -3% 914 16% 511 5% 585 20% 678 -17% 571 32% 498 -30% 851 -11% 530 7% 271 57% 327 -8% 500 -4% 461 -14% 314 -1% 451 37% 441 10% 403 -

Dec-2007 38,889 -6% 32,756 -9% 23,507 76% 18,560 3% N/A 12,984 43% 9,025 -18% 6,602 119% 4,083 44% 2,668 -24% N/A 284 47% 1,825 113% 2,571 25% 1,423 17% 1,433 -16% 2,104 179% 1,307 7% 1,205 5% 946 14% 1,039 -3% 1,023 -21% 756 1333% 1,310 36% 1,800 25% 531 79% 781 35% 784 20% 672 12% 711 13% 718 68% 528 23% 413 -16% 484 1% 931 17% 694 -1% 587 20% 674 -12% 507 15% 476 -26% 613 -17% 507 4% 331 98% 267 -19% 484 -14% 378 -23% 335 0% 398 8% 521 7% 381 -

Jan-2008 44,013 9% 32,361 -9% 26,138 91% 19,937 10% N/A 12,743 23% 9,028 -3% 7,152 69% 4,225 57% 2,574 16% 2,367 1,413 -2% 2,064 24% 2,057 31% 1,686 34% 1,528 2% 1,180 51% 1,333 9% 1,267 27% 1,104 10% 1,100 11% 984 -19% 860 1209% 949 24% 917 22% 643 93% 805 39% 843 42% 681 -12% 699 9% 747 85% 586 32% 626 -18% 557 11% 564 10% 603 17% 627 24% 512 -3% 617 19% 468 -24% 452 0% 444 -8% 428 108% 460 8% 489 -22% 482 -22% 428 13% 406 10% 398 0% 361 -

Feb-2008 39,781 -7% 30,206 -13% 25,860 80% 18,972 8% 16,568 11,707 9% 8,503 -13% 6,866 63% 3,803 34% 2,499 0% 2,432 2,023 -3% 1,890 22% 1,671 24% 1,608 27% 1,412 -2% 1,302 71% 1,282 7% 1,199 21% 1,132 25% 1,090 15% 953 -23% 891 946% 885 29% 809 10% 793 99% 751 26% 735 13% 685 16% 666 -2% 641 15% 594 34% 572 -28% 547 18% 547 8% 545 24% 541 9% 528 -2% 492 10% 471 -12% 465 -9% 463 -4% 460 88% 459 11% 439 -24% 396 -18% 385 17% 379 1% 356 -9% 353 -

456,035 13%

473,502 6%

471,849 -1%

459,025 -5%

473,831 -4%

475,063 -3%

474,003 -5%

462,970 0%

485,718 3%

469,819 3%

456,584 1%

495,481 12%

458,811 1%

Note: MySpace.com is included in Fox Interactive Media as of August 2006 Source: comScore Networks

April 07, 2008

35

Lehman Brothers

Internet Data Book

April 2008

Figure 38: Top 50 Global Properties by Unique Visitors, February 2007–February 2008 (in thousands) Rank Web Property 1 Google Sites Y/Y growth 2 Microsoft Sites Y/Y growth 3 Yahoo! Sites Y/Y growth 4 AOL LLC Y/Y growth 5 Wikipedia Sites Y/Y growth 6 eBay Y/Y growth 7 Fox Interactive Media Y/Y growth 8 Amazon Sites Y/Y growth 9 Apple Inc. Y/Y growth 10 CNET Networks Y/Y growth 11 Ask Network Y/Y growth 12 Adobe Sites Y/Y growth 13 FACEBOOK.COM Y/Y growth 14 Time Warner - Excluding AOL Y/Y growth 15 Connexus Y/Y growth 16 Viacom Digital Y/Y growth 17 The Mozilla Organization Y/Y growth 18 WordPress Y/Y growth 19 New York Times Digital Y/Y growth 20 Baidu.com Inc. Y/Y growth 21 TENCENT Inc. Y/Y growth 22 Lycos Sites Y/Y growth 23 SINA Corporation Y/Y growth 24 Orange Sites Y/Y growth 25 Gorilla Nation Y/Y growth 26 Sony Online Y/Y growth 27 Expedia Inc Y/Y growth 28 Glam Media Y/Y growth 29 Lycos Europe Sites Y/Y growth 30 Real.com Network Y/Y growth 31 Disney Online Y/Y growth 32 NetEase.com Inc. Y/Y growth 33 Weather Channel, The Y/Y growth 34 Oversee.net Network Y/Y growth 35 Peerflix Media Network Y/Y growth 36 Terra Networks Y/Y growth 37 Ares Galaxy - P2P (App) Y/Y growth 38 Monster Worldwide Y/Y growth 39 ARTISTdirect Network Y/Y growth 40 Alibaba.com Corporation Y/Y growth 41 BBC Sites Y/Y growth 42 AmericanGreetings Property Y/Y growth 43 Sohu.com Inc. Y/Y growth 44 Photobucket.com LLC Y/Y growth 45 HI5.COM Y/Y growth 46 RapidShare AG Y/Y growth 47 FRIENDSTER.COM Y/Y growth 48 CBS Corporation Y/Y growth 49 UGO Y/Y growth 50 Shopzilla.com Sites Y/Y growth

Feb-2007 503,033 13% 507,317 5% 458,985 1% N/A 192,176 93% 248,558 2% 140,500 390% 143,084 11% 111,877 37% 116,394 33% 108,663 -4% 98,748 1% 24,782 129% N/A 39,140 -41% 76,625 49,812 146% N/A 70,984 16% 52,724 53,175 86,581 95% 54,191 51,442 65,240 39% 57,666 8% 51,579 -6% 15,040 36,570 -18% 57,684 -14% 41,056 10% 40,654 45,097 16% N/A N/A 58,645 9% 22,373 50,931 -31% 39,964 34% 33,972 46,354 6% 28,585 40,214 27,706 #N/A 27,914 26,078 20,284 29,176 24,857 27,277 -

Mar-2007 528,005 13% 526,999 4% 476,256 1% N/A 212,171 82% 256,270 0% 151,203 336% 149,643 7% 109,988 23% 129,384 32% 111,427 -6% 105,955 -1% 32,115 145% N/A 42,484 -36% 83,358 61,918 243% N/A 75,057 14% 59,226 60,175 87,426 92% 60,480 65,010 68,628 34% 61,096 3% 58,498 -6% 18,038 48,507 6% 62,042 -15% 43,240 11% 44,260 43,813 -2% N/A N/A 60,337 4% 25,411 55,381 -30% 45,077 32% 38,824 47,579 0% 20,640 43,466 29,836 93% 27,149 27,306 21,083 31,800 25,978 28,689 -

Apr-2007 527,572 12% 520,238 3% 467,642 -1% N/A 208,906 71% 248,006 -4% 147,760 313% 136,655 1% 115,262 29% 119,865 33% 110,553 -9% 101,133 -5% 38,764 204% N/A 39,244 -39% 81,344 39,759 59% N/A 68,485 6% 58,595 59,473 79,110 -14% 57,520 62,199 65,883 33% 59,963 5% 54,307 -11% 21,901 54,190 -41% 59,122 -24% 40,238 -1% 43,331 47,014 0% 48,769 N/A 59,445 9% 27,588 49,215 -33% 45,424 26% 36,952 46,357 2% 23,270 43,033 29,972 88% 29,345 26,670 22,517 26,370 25,484 30,452 -

May-2007 536,401 18% 528,078 5% 469,826 -2% N/A 217,464 60% 258,678 -1% 151,369 278% 141,578 5% 120,982 27% 121,423 39% 113,954 -4% 103,165 3% 47,208 235% N/A 42,465 -28% 85,522 47,129 64% 37,980 68,225 3% 58,958 57,381 80,728 -14% 58,803 65,093 67,909 43% 58,318 1% 55,638 -5% 30,912 56,649 33% 56,571 -27% 43,841 15% 43,507 -16% 48,864 8% 51,536 N/A 63,256 32% 29,934 166% 50,725 -36% 50,599 47% 36,991 47,364 1% 19,520 43,611 -18% 33,695 100% 28,492 28,591 24,684 26,209 27,882 31,337 -

Jun-2007 544,783 20% 529,156 6% 471,924 -2% N/A 208,120 63% 264,732 3% 163,546 502% 145,947 13% 123,554 34% 116,579 38% 115,655 3% 121,966 27% 52,167 270% N/A 42,422 -19% 88,655 70,851 136% 41,898 66,230 7% 60,062 61,970 8% 77,518 -11% 60,729 -4% 60,847 67,789 38% 53,393 2% 59,551 4% 33,185 1031% 53,649 46% 55,532 -18% 43,772 6% 46,648 -7% 49,897 7% 52,733 N/A 63,021 36% 32,194 177% 50,636 -30% 49,041 42% 40,152 45,615 1% 19,660 48,465 -9% 34,630 80% 28,174 56% 30,428 24,675 34,358 28,771 31,964 -

Jul-2007 552,035 20% 532,351 5% 475,826 -1% N/A 198,746 57% 247,666 3% 161,700 469% 148,366 13% 123,834 34% 124,081 39% 116,918 2% 115,820 13% 60,491 304% N/A 42,136 -21% 91,243 70% 73,989 167% 46,060 66,534 6% 63,134 66,223 15% 78,265 -12% 62,464 0% 58,225 70,137 36% 54,054 -1% 64,757 1% 35,036 557% 52,985 52% 57,857 -16% 45,939 2% 49,654 1% 49,998 12% 50,936 N/A 64,067 27% 34,463 162% 49,549 -35% 50,572 22% 40,800 -11% 45,264 4% 19,804 48,005 -10% 38,467 75% 32,211 51% 30,640 25,817 33,754 29,640 32,831 -

Aug-2007 561,090 20% 525,541 4% 478,723 -1% N/A 210,811 52% 240,357 1% 158,232 30% 151,944 13% 124,069 32% 122,240 33% 121,604 5% 108,728 8% 69,256 348% N/A 41,805 -22% 92,373 68% 72,514 107% 52,346 67,751 6% 58,816 63,140 16% 76,789 -18% 58,072 -1% 62,986 68,155 31% 53,064 -2% 62,427 3% 32,868 443% 54,187 47% 55,009 -17% 48,647 12% 44,563 3% 51,120 15% 52,361 N/A 63,399 27% 36,316 158% 50,516 -26% 50,749 23% 35,788 -16% 44,777 4% 18,088 42,503 -11% 38,674 83% 34,898 54% 32,399 27,378 39,086 31,062 33,127 8%

Sep-2007 570,480 22% 528,651 5% 481,511 0% N/A 228,830 48% 243,348 3% 154,975 32% 154,210 15% 126,575 33% 124,598 48% 121,470 8% 107,877 13% 73,521 420% N/A 41,469 -14% 91,697 39% 76,030 106% 62,615 69,959 7% 63,344 65,787 26% 74,550 -18% 59,957 5% 63,173 58% 63,066 31% 51,896 -4% 56,938 12% 37,157 451% 55,546 51% 56,068 -13% 44,054 12% 47,396 9% 47,745 16% 50,781 N/A 62,559 34% 38,573 161% 50,275 -16% 49,010 27% 40,868 6% 46,338 6% 19,896 -6% 42,622 -3% 37,491 81% 35,064 51% 32,743 26,504 42,501 28,507 34,221 9%

Oct-2007 583,445 24% 539,364 7% 495,901 4% N/A 244,474 49% 253,685 6% 160,958 29% 160,286 16% 126,880 34% 135,449 45% 131,387 16% 113,544 23% 85,636 424% N/A 44,896 -8% 89,993 32% 79,676 176% 69,617 77,237 10% 66,905 68,485 27% 77,743 -14% 65,750 15% 66,973 24% 66,682 34% 58,076 9% 56,228 12% 43,548 515% 57,828 57% 57,065 -9% 49,805 18% 49,188 20% 49,105 20% 53,407 N/A 56,391 18% 40,581 165% 50,634 -13% 52,134 40% 43,915 8% 47,760 12% 23,838 -12% 47,262 9% 38,849 74% 31,422 25% 35,521 28,261 41,302 29,722 36,024 7%

Nov-2007 581,085 22% 531,087 6% 490,019 3% N/A 241,533 40% 254,867 2% 156,328 20% 163,417 14% 127,023 29% 130,635 30% 127,588 15% 116,496 19% 92,754 399% N/A 99,350 100% 87,219 16% 88,294 97% 72,335 75,074 6% 67,534 70,974 26% 73,739 -13% 60,244 4% 62,485 16% 52,803 1% 59,233 -2% 53,746 16% 44,465 418% 57,639 51% 55,940 -13% 49,787 23% 49,794 19% 43,945 14% 51,628 254 51,518 -5% 41,436 134% 45,198 -16% 48,900 31% 45,263 6% 45,967 5% 38,616 48% 45,814 6% 35,611 51% 31,058 35% 34,730 28,408 42,325 28,702 37,531 9%

Dec-2007 587,806 19% 540,285 6% 484,674 2% N/A 226,119 37% 251,847 0% 158,418 17% 170,599 13% 137,355 24% 126,451 10% 119,799 5% 111,112 11% 97,792 330% N/A 105,204 123% 88,745 17% 81,253 75% 71,027 69,435 2% 69,558 68,769 19% 70,017 -16% 60,362 3% 59,326 17% 52,931 -4% 66,097 4% 48,780 14% 44,912 212% 56,584 56% 56,003 -10% 54,190 27% 48,638 16% 49,265 26% 48,617 417 49,602 -20% 44,090 117% 41,276 -18% 47,753 18% 46,971 3% 42,975 -2% 43,199 45% 45,805 3% 35,887 38% 31,428 35% 36,414 38% 29,735 59% 36,656 34% 35,792 48% 39,795 11%

Jan-2008 597,234 19% 545,608 7% 495,335 6% 247,880 242,554 28% 249,307 0% 160,625 15% 165,959 11% 140,309 20% 125,565 6% 121,303 11% 112,819 11% 100,668 305% 91,744 97,567 105% 86,008 13% 47,989 28% 78,766 76,331 6% 70,050 24% 70,643 27% 70,576 -22% 60,970 6% 57,913 9% 57,350 3% 61,933 1% 59,357 8% 46,853 272% 56,338 46% 53,802 -11% 51,765 17% 51,422 24% 48,926 14% 51,580 29,767 49,259 -22% 43,920 104% 46,359 -17% 44,658 10% 47,089 28% 45,610 -6% 40,488 79% 44,901 5% 39,152 44% 38,344 61% 38,726 49% 34,083 76% 35,214 27% 35,671 45% 37,113 15%

Feb-2008 605,576 20% 542,751 7% 487,573 6% 240,810 240,754 25% 239,900 -3% 158,216 13% 155,193 8% 139,213 24% 124,750 7% 116,420 7% 107,954 9% 100,319 305% 90,468 84,322 115% 83,583 9% 82,593 66% 78,784 75,371 6% 66,711 27% 66,228 25% 65,454 -24% 59,507 10% 58,415 14% 55,597 -15% 55,358 -4% 53,986 5% 53,017 252% 52,953 45% 50,574 -12% 49,645 21% 49,330 21% 48,323 7% 47,742 46,675 46,161 -21% 44,722 100% 44,656 -12% 44,544 11% 44,455 31% 44,103 -5% 42,249 48% 41,600 3% 39,556 43% 39,297 41% 37,662 44% 37,114 83% 36,781 26% 35,965 45% 35,456 30%

Total Internet : Total Audience Y/Y growth

739,835 10%

762,736 10%

766,188 10%

771,997 9%

778,310 9%

784,692 9%

791,338 9%

797,836 10%

804,546 10%

810,779 10%

815,797 10%

824,435 10%

822,990 11%

Note: MySpace.com is included in Fox Interactive Media as of August 2006 Source: comScore Networks

36

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Figure 39: Top 50 Global Properties by Page Views, February 2007–February 2008 (in millions) Rank Web Property 1 Google Sites Y/Y growth 2 Yahoo! Sites Y/Y growth 3 Microsoft Sites Y/Y growth 4 Fox Interactive Media Y/Y growth 5 FACEBOOK.COM Y/Y growth 6 eBay Y/Y growth 7 AOL LLC Y/Y growth 8 FRIENDSTER.COM Y/Y growth 9 TENCENT Inc. Y/Y growth 10 NHN Corporation Y/Y growth 11 HI5.COM Y/Y growth 12 Baidu.com Inc. Y/Y growth 13 Lycos Sites Y/Y growth 14 Groupe Hi-Media Y/Y growth 15 Craigslist.org Y/Y growth 16 Alibaba.com Corporation Y/Y growth 17 SINA Corporation Y/Y growth 18 NetEase.com Inc. Y/Y growth 19 Viacom Digital Y/Y growth 20 Amazon Sites Y/Y growth 21 Wikipedia Sites Y/Y growth 22 Orange Sites Y/Y growth 23 Comcast Corporation Y/Y growth 24 Sohu.com Inc. Y/Y growth 25 Rakuten Inc Y/Y growth 26 Terra Networks Y/Y growth 27 Time Warner - Excluding AOL Y/Y growth 28 FC2 inc. Y/Y growth 29 Ask Network Y/Y growth 30 DAILYMOTION.COM Y/Y growth 31 BBC Sites Y/Y growth 32 CNET Networks Y/Y growth 33 Disney Online Y/Y growth 34 AT&T, Inc. Y/Y growth 35 Photobucket.com LLC Y/Y growth 36 ESPN Y/Y growth 37 Spill Group Y/Y growth 38 TUDOU.COM Y/Y growth 39 Bank of America Y/Y growth 40 Xunlei Networking Y/Y growth 41 NTT Group Y/Y growth 42 Verizon Communications Corporation Y/Y growth 43 Monster Worldwide Y/Y growth 44 Glam Media Y/Y growth 45 Apple Inc. Y/Y growth 46 United Online, Inc Y/Y growth 47 MercadoLibre Y/Y growth 48 Lycos Europe Sites Y/Y growth 49 Groupe PPR Y/Y growth 50 Gorilla Nation Y/Y growth

Feb-2007 120,477 62% 99,543 -6% 78,825 5% 48,152 11253% 15,500 177% 34,546 -2% NA 4,938 84% 26,487 21,006 5,985 54% 6,006 14,836 -35% ... 4,026 112% 3,209 10,685 4,429 4,289 3,699 -3% 3,093 157% 4,052 2,796 6,755 3,302 -3% 4,059 -4% NA NA 2,325 -17% 710 2935% 2,122 6% 2,156 -2% 1,645 13% 1,559 72% 973 150% 1,377 -13% NA 1,235 1,234 12% NA NA 974 -3% 1,339 -42% 137 936 1,334 1,252 43% 1,758 38% 935 -14% 926 -

Mar-2007 141,384 63% 109,887 -7% 85,938 2% 51,732 8608% 20,049 191% 35,169 -13% NA 6,081 140% 31,390 21,770 6,842 65% 7,210 13,393 -41% ... 5,347 122% 4,820 9,493 5,629 4,240 3,963 -5% 3,673 157% 4,661 3,026 7,142 3,513 -7% 4,421 4% NA NA 2,501 -17% 980 2093% 2,322 2% 2,448 12% 1,505 0% 1,682 82% 1,087 126% 1,767 -20% NA 1,618 1,262 5% NA NA 1,038 -13% 1,550 -35% 170 1,075 29% 1,500 1,437 56% 2,199 50% 1,074 -12% 991 -

Apr-2007 137,240 61% 107,055 -8% 80,655 2% 50,143 7526% 26,655 271% 31,069 -18% NA 6,402 230% 31,208 22,287 7,280 65% 6,925 11,815 -45% 254 5,789 115% 4,888 8,853 4,469 4,645 3,389 -12% 3,454 128% 4,080 2,863 6,762 3,384 -9% 4,267 10% NA NA 2,405 -26% 1,254 1916% 2,129 5% 2,350 12% 1,380 -12% 1,617 75% 1,319 150% 1,555 -17% NA 1,931 1,162 -7% NA 1,106 940 -23% 1,349 -25% 192 877 11% 1,307 1,445 69% 1,301 -2% 910 -23% 990 -

May-2007 148,150 74% 106,530 -7% 84,508 12% 51,760 8520% 29,882 355% 30,872 -23% NA 8,990 311% 32,224 24,123 7,192 51% 7,684 12,763 -37% 295 5,529 93% 6,014 8,519 -20% 4,473 -56% 4,569 3,430 -6% 3,730 103% 4,374 2,840 27% 7,084 -32% 3,152 -9% 4,513 6% NA NA 2,581 -16% 1,411 2137% 2,184 8% 2,542 23% 1,365 -3% 1,680 71% 1,841 181% 1,516 29% NA 1,028 1,158 -6% NA 1,082 867 -27% 1,365 -24% 474 997 25% 1,251 1,467 40% 1,352 12% 1,059 -15% 984 -

Jun-2007 150,149 78% 105,776 -9% 83,223 11% 54,114 14180% 29,075 385% 29,497 -15% NA 9,507 308% 39,950 56% 22,183 6,779 52% 9,053 12,616 -40% 348 6,011 109% 6,684 12,893 -12% 5,038 -49% 5,358 3,655 3% 3,530 112% 4,120 2,910 32% 8,575 -30% 3,260 9% 4,109 3% NA NA 2,612 -10% 1,720 2601% 2,015 -2% 2,283 24% 1,499 -12% 1,731 66% 2,025 144% 1,471 -12% NA 1,099 1,234 -3% NA 1,030 867 -27% 1,297 -27% 564 971 24% 1,291 1,315 25% 1,344 34% 1,028 -16% 1,089 -

Jul-2007 154,132 68% 107,514 -7% 81,190 6% 52,856 14260% 30,799 403% 29,833 -13% NA 11,219 368% 44,124 50% 21,164 7,184 66% 9,781 12,473 -43% 363 6,428 97% 7,642 41% 10,885 -26% 5,861 -42% 5,302 14% 4,045 16% 3,340 96% 4,068 3,099 38% 7,504 -37% 3,511 10% 4,462 8% NA 2,056 64% 2,740 -4% 1,429 1375% 2,006 5% 2,607 48% 1,703 -13% 1,671 60% 2,286 177% 1,653 36% 696 1,684 1,268 3% NA 1,306 972 -19% 1,256 -34% 809 1,004 20% 1,200 1,380 12% 1,295 38% 973 -10% 1,127 -

Aug-2007 153,189 78% 106,541 -6% 78,484 3% 51,983 45% 32,967 410% 27,790 -17% NA 10,422 257% 26,210 -1% 19,375 9,116 131% 9,431 11,857 -40% 5,682 6,486 89% 7,979 75% 8,302 -35% 4,794 -46% 5,311 8% 4,059 15% 3,232 77% 3,792 3,224 34% 6,014 -37% 3,348 9% 3,933 -1% NA 1,958 60% 2,752 -1% 1,518 783% 2,059 8% 2,493 54% 1,712 -6% 1,810 64% 2,407 163% 1,981 56% 958 1,026 1,320 6% 3,000 1,096 1,030 -18% 1,235 -33% 786 973 22% 1,166 1,363 -16% 1,281 37% 853 -20% 926 -

Sep-2007 153,693 80% 102,521 -9% 77,151 7% 50,907 36% 34,535 364% 28,066 -19% NA 11,172 278% 18,821 10% 15,310 9,869 189% 7,944 10,201 -37% 5,887 6,508 110% 9,359 144% 7,122 -31% 5,353 -30% 4,262 8% 3,956 16% 3,586 72% 3,995 -1% 3,493 43% 5,550 -34% 3,281 4% 3,746 -15% NA 1,967 2,732 2% 1,632 576% 1,919 4% 2,087 51% 1,518 4% 1,943 86% 2,677 250% 2,797 71% 1,083 1,043 1,275 11% 1,691 1,021 1,036 -11% 1,224 -16% 741 1,160 26% 1,098 1,247 -12% 1,267 17% 903 -17% 845 -

Oct-2007 168,531 85% 107,227 -6% 81,501 8% 52,245 28% 38,689 285% 29,738 -14% NA 11,946 228% 20,878 33% 17,650 10,647 202% 10,129 11,308 -30% 6,215 7,178 123% 10,964 219% 7,913 -24% 6,224 10% 4,111 3% 4,175 14% 3,959 66% 4,422 -4% 4,081 58% 6,470 -18% 3,274 6% 3,855 -9% NA 1,944 2,827 10% 1,984 496% 2,009 7% 2,129 12% 1,407 -8% 2,036 127% 3,040 314% 2,639 62% 1,288 1,262 699% 1,319 9% 2,011 1,061 1,077 -9% 1,518 -2% 841 1,082 21% 1,163 1,321 5% 1,304 35% 965 -11% 1,109 -

Nov-2007 166,587 76% 105,931 1% 78,621 6% 48,746 16% 41,581 311% 31,005 -14% NA 10,627 178% 20,427 -7% 17,249 11,163 183% 10,280 11,085 -22% 6,162 6,390 124% 12,548 202% 8,020 -31% 6,996 8% 4,013 -10% 4,574 7% 3,854 43% 4,251 -1% 4,536 78% 5,729 -32% 3,424 15% 3,717 -5% NA 2,219 2,586 3% 2,081 348% 1,992 3% 1,958 0% 1,636 10% 1,786 118% 2,778 230% 2,538 64% 1,455 1,242 329% 1,288 8% 1,957 1,171 1,138 1% 1,285 -23% 924 1,124 21% 1,008 1,140 -9% 1,229 -39% 1,020 -13% 1,011 -

Dec-2007 166,343 57% 102,052 3% 75,934 3% 44,649 -2% 37,998 254% 29,080 -11% NA 11,328 152% 19,195 -11% 16,927 11,927 163% 9,131 9,632 -29% 6,573 6,314 113% 9,186 119% 7,623 -24% 6,105 1% 4,730 -3% 5,301 14% 3,305 38% 3,900 2% 3,897 47% 5,067 -31% 3,453 21% 3,417 -18% NA 2,311 2,361 -6% 1,909 244% 1,887 -5% 1,905 -11% 1,775 11% 1,731 104% 2,807 220% 2,268 25% 2,020 1,071 163% 1,319 7% 1,705 1,106 1,128 -2% 1,016 -25% 972 947% 1,404 14% 1,041 -26% 1,326 5% 1,199 -33% 991 -6% 998 -

Jan-2008 181,558 52% 103,216 0% 80,874 6% 50,342 10% 41,752 203% 29,882 -11% 20,249 13,759 194% 19,787 -1% 16,792 -28% 14,549 153% 8,005 46% 9,538 -39% 7,095 6,876 72% 8,738 161% 6,490 -35% 6,675 19% 4,474 9% 4,773 20% 3,852 32% 4,045 -1% 3,887 46% 4,866 -27% 3,599 7% 3,619 -17% 3,170 2,300 2,469 6% 1,962 222% 2,188 0% 1,880 -8% 1,834 7% 1,951 18% 1,616 64% 1,944 16% 1,873 1,919 183% 1,349 7% 1,456 1,129 1,185 21% 1,132 -27% 1,101 918% 1,254 18% 1,118 -18% 1,191 -21% 1,227 -37% 1,216 7% 1,084 -

Feb-2008 169,587 41% 96,011 -4% 74,584 -5% 45,517 -5% 39,681 156% 27,568 -20% 19,204 16,096 226% 15,818 -40% 13,528 -36% 13,102 119% 8,361 39% 7,888 -47% 7,389 6,951 73% 5,969 86% 4,680 -56% 4,665 5% 4,249 -1% 3,848 4% 3,711 20% 3,629 -10% 3,475 24% 3,429 -49% 3,347 1% 3,317 -18% 3,160 2,371 2,245 -3% 1,933 172% 1,850 -13% 1,832 -15% 1,791 9% 1,789 15% 1,761 81% 1,653 20% 1,623 1,452 18% 1,277 3% 1,141 1,133 1,114 14% 1,110 -17% 1,097 700% 1,095 17% 1,066 -20% 1,058 -16% 1,039 -41% 1,006 8% 990 -

Total Internet : Total Audience Y/Y growth

1,838,417 7%

2,009,919 5%

1,925,110 5%

1,944,666 6%

1,975,534 7%

2,004,579 6%

1,947,320 7%

1,915,743 13%

2,059,327 19%

2,005,557 15%

1,962,912 14%

2,127,210 17%

1,951,904 6%

Note: MySpace.com is included in Fox Interactive Media as of August 2006 Source: comScore Networks

April 07, 2008

37

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April 2008

Figure 40: Online Subscription Revenue by Category ($ in millions) 2001 112.0

Entertainment/Lifestyle Y/Y Growth Personals/Dating Y/Y Growth Business Content/Investment Y/Y Growth Research Y/Y Growth Personal Growth Y/Y Growth Games Y/Y Growth General News Y/Y Growth Community-Made Directories Y/Y Growth Sports Y/Y Growth Greeting Cards Y/Y Growth Credit Help Y/Y Growth Total Online Content Spending Y/Y Growth

2002 227.5 103% 302.1 320% 292.0 36% 106.6 84% 44.3 79% 72.0 55% 70.0 35% 91.1 98% 30.3 203% 36.2 1624% 40.4 25% 1,312.5 96%

72.0 214.3 57.9 24.7 46.5 51.8 46.1 10.0 2.1 32.4 669.8

2003 217.6 -4% 449.5 49% 334.1 14% 108.6 2% 90.7 105% 73.0 1% 87.5 25% 87.0 -5% 38.2 26% 40.6 12% 36.6 -9% 1,563.4 19%

2004 413.5 90% 469.5 4% 312.9 -6% 115.1 6% 96.5 6% 88.8 22% 87.9 0% 70.5 -19% 52.8 38% 43.4 7% 27.1 -26% 1,778.0 14%

2005 573.8 39% 503.4 7% 320.3 2% 152.3 32% 117.3 22% 108.4 22% 78.7 -10% 65.4 -7% 51.3 -3% 45.7 5% 28.4 5% 2,045.0 15%

Source: Online Publishers Association

Figure 41: Online Subscription Revenue by Subscription Period and Category ($ in millions) Entertainment/Lifestyle Y/Y Growth

Monthly 89.6

2001 Annual Other 16.8 5.6

Monthly 102.4 14%

2002 Annual Other 109.2 15.9 550% 184%

Total 227.5 103%

Monthly 87.3 -15%

2003 Annual Other 114.2 16.1 5% 1%

Total 217.6 -4%

Monthly 261.3 199%

2004 Annual Other 126.5 25.6 11% 59%

Total 413.5 90%

Monthly 353.5 35%

2005 Annual Other 191.1 29.3 51% 14%

Total 573.8 39%

Personals/Dating Y/Y Growth

38.9

15.8

17.3

72.0

178.2 358%

87.6 453%

36.3 110%

302.1 320%

256.7 44%

144.7 65%

48.1 33%

449.5 49%

306.6 19%

89.7 -38%

73.2 52%

469.5 4%

357.4 17%

92.1 3%

53.9 -26%

503.4 7%

Business Content/Investment Y/Y Growth

40.7

158.6

15.0

214.3

84.7 108%

186.9 18%

20.4 36%

292.0 36%

146.7 73%

162.4 -13%

25.1 23%

334.1 14%

147.4 0%

145.8 -10%

19.7 -21%

312.9 -6%

159.5 8%

138.7 -5%

22.1 12%

320.3 2%

Research Y/Y Growth

9.3

48.6

0.0

57.9

35.2 280%

66.1 36%

5.3 NA

106.6 84%

52.0 48%

48.2 -27%

8.4 57%

108.6 2%

55.4 6%

53.6 11%

6.1 -27%

115.1 6%

78.1 41%

68.1 27%

6.1 0%

152.3 32%

Personal Growth Y/Y Growth

4.7

19.8

0.2

24.7

21.7 363%

15.9 -19%

6.6 2590%

44.3 79%

53.1 144%

29.0 82%

8.6 30%

90.7 105%

61.4 16%

25.8 -11%

9.4 9%

96.5 6%

85.5 39%

23.2 -10%

8.6 -9%

117.3 22%

Games Y/Y Growth

44.6

1.9

0.0

46.5

51.1 15%

18.0 868%

2.9 NA

72.0 55%

44.7 -12%

24.7 37%

3.5 22%

73.0 1%

53.4 19%

31.9 29%

3.6 1%

88.8 22%

84.8 59%

20.3 -36%

3.4 -5%

108.4 22%

General News Y/Y Growth

48.7

3.1

0.0

51.8

55.3 14%

10.5 238%

4.2 NA

70.0 35%

64.5 17%

17.8 69%

5.3 25%

87.5 25%

69.3 7%

13.6 -23%

5.0 -5%

87.9 0%

59.7 -14%

14.6 7%

4.5 -10%

78.7 -10%

Community-Made Directories Y/Y Growth

2.8

34.1

9.2

46.1

15.5 460%

61.9 82%

13.7 48%

91.1 98%

22.4 44%

53.1 -14%

11.6 -15%

87.0 -5%

14.6 -35%

43.3 -18%

12.6 9%

70.5 -19%

12.8 -13%

36.7 -15%

16.0 26%

65.4 -7%

Sports Y/Y Growth

2.4

6.1

1.5

10.0

15.8 557%

10.3 69%

4.2 183%

30.3 203%

19.7 25%

14.5 41%

4.0 -5%

38.2 26%

25.7 30%

22.0 52%

5.1 28%

52.8 38%

21.0 -18%

26.5 20%

3.8 -26%

51.3 -3%

Greeting Cards Y/Y Growth

1.0

1.1

0.0

2.1

10.9 1024%

22.8 1911%

2.5 NA

36.2 1624%

22.7 109%

15.6 -32%

2.4 -7%

40.6 12%

22.1 -2%

19.1 22%

2.2 -6%

43.4 7%

26.0 18%

18.0 -6%

1.7 -22%

45.7 5%

Credit Help Y/Y Growth

3.9

28.5

0.0

32.4

8.1 108%

30.7 8%

1.6 NA

40.4 25%

6.7 -18%

26.9 -12%

3.0 86%

36.6 -9%

4.1 -39%

21.7 -20%

1.4 -55%

27.1 -26%

3.2 -22%

24.2 12%

1.1 -22%

28.4 5%

Total Y/Y Growth

286.5

334.4

48.8

669.8

578.8 102%

620.0 85%

113.7 133%

1,312.5 96%

776.3 34%

651.2 5%

135.9 20%

1,563.4 19%

1,021.1 32%

593.0 -9%

163.9 21%

1,778.0 14%

1,241.3 22%

653.4 10%

150.3 -8%

2,045.0 15%

Source: Online Publishers Association

38

Total 112.0

April 07, 2008

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April 2008

Online Advertising

April 07, 2008

39

Lehman Brothers

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April 2008

Figure 42: Lehman Brothers U.S. Online Advertising Forecast ($ in millions), 2001–11E (in millions)

2001

2002

2003

2004

2005

2006

2007E

2008E

2009E

2010E

2011E

Display Advertising % Y/Y growth % of total % of total growth

$5,351 -28% 75% NA

$3,907 -27% 65% NA

$3,198 -18% 44% NA

$3,754 17% 39% 24%

$4,264 14% 34% 17%

$5,373 26% 32% 26%

$6,630 23% 31% 29%

$7,956 20% 30% 27%

$9,309 17% 30% 26%

$10,612 14% 29% 26%

$11,886 12% 29% 25%

Search % Y/Y growth % of total % of total growth

$285 253% 4% NA

$902 216% 15% NA

$2,543 182% 35% 131%

$3,850 51% 40% 55%

$5,142 34% 41% 44%

$6,799 32% 40% 38%

$8,907 31% 42% 49%

$11,401 28% 44% 50%

$14,023 23% 45% 50%

$16,547 18% 45% 50%

$19,029 15% 46% 50%

Classifieds % Y/Y growth % of total % of total growth

$1,141 102% 16% NA

$902 -21% 15% NA

$1,235 37% 17% 27%

$1,733 40% 18% 21%

$2,132 23% 17% 14%

$3,059 43% 18% 21%

$3,457 13% 16% 9%

$3,975 15% 15% 10%

$4,532 14% 14% 11%

$5,075 12% 14% 11%

$5,583 10% 13% 10%

$357 -37% 5% NA

$301 -16% 5% NA

$291 -3% 4% -1%

$289 -1% 3% 0%

$1,004 247% 8% 25%

$1,648 64% 10% 15%

$2,208 34% 10% 13%

$2,871 30% 11% 13%

$3,589 25% 11% 14%

$4,306 20% 12% 14%

$5,038 17% 12% 15%

$7,134 -11.8%

$6,010 -15.8%

$7,267 20.9%

$9,626 32.5%

$12,542 30.3%

$16,879 34.6%

$21,202 25.6%

$26,203 23.6%

$31,452 20.0%

$36,541 16.2%

$41,536 13.7%

Total U.S. Advertising % Y/Y growth

$234,185 -6.2%

$239,595 2.3%

$248,764 3.8%

$268,617 8.0%

$278,166 3.6%

$291,964 5.0%

$299,633 2.6%

$310,835 3.7%

$319,421 2.8%

$333,291 4.3%

$343,377 3.0%

Online as a % of Total

3.0%

2.5%

2.9%

3.6%

4.5%

5.8%

7.1%

8.4%

9.8%

11.0%

12.1%

Lead Generation/E-mail % Y/Y growth % of total % of total growth Total Online Advertising % Y/Y growth

Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC), Lehman Brothers estimates. Total U.S. Advertising figures through 2011 are from Lehman Brothers U.S. Media & Internet research team

Figure 43: Lehman Brothers Online Video Advertising Forecast ($ in millions) U.S. Online Video Ad Spend

2002 $3

2003 $29 866.7%

2004 $96 231.0%

2005 $225 134.4%

2006 $394 75.0%

2007E $669 70.0%

2008E $1,091 63.0%

2009E $1,669 53.0%

2010E $2,387 43.0%

$6,010

$7,267 20.9%

$9,626 32.5%

$12,542 30.3%

$16,879 34.6%

$21,577 27.8%

$26,820 24.3%

$31,980 19.2%

$36,948 15.5%

0.0%

0.4%

1.0%

1.8%

2.3%

3.1%

4.1%

5.2%

6.5%

Y/Y Growth Total U.S. Online Ad Spend Y/Y Growth % of Total U.S. Online Ad Spend

Source: Lehman Brothers estimates, Veronis Suhler Stevenson

40

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Lehman Brothers

Internet Data Book

April 2008

Figure 44: Top 10 U.S. Online Advertising Sites ($ in millions), 2000–10E 2000

2001

2002

2003

2004

2005

2006

2007

2008E

2009E

2010E

$8,087 75%

$7,134 -12%

$6,010 -16%

$7,267 21%

$9,626 32%

$12,542 30%

$16,879 35%

$21,202 26%

$26,203 24%

$31,452 20%

$36,541 16%

1. Google % Y/Y growth % share

$19 -0%

$52 170% 1%

$230 345% 4%

$589 156% 8%

$1,176 100% 12%

$2,220 89% 18%

$3,726 68% 22%

$5,443 46% 26%

$6,604 21% 25%

$8,005 21% 25%

$9,158 14% 25%

2. Yahoo! % Y/Y growth % share

$838 -10%

$496 -41% 7%

$631 27% 10%

$1,003 59% 14%

$1,689 68% 18%

$2,290 36% 18%

$2,822 23% 17%

$3,177 13% 15%

$3,633 14% 14%

$4,130 14% 13%

$4,638 12% 13%

3. MSN % Y/Y growth % share

$458 -6%

$496 8% 7%

$600 21% 10%

$837 40% 12%

$1,024 22% 11%

$1,136 11% 9%

$1,274 12% 8%

$1,564 23% 7%

$1,705 9% 7%

$1,933 13% 6%

$2,153 11% 6%

4. eBay * % Y/Y growth % share

$238 -3%

$370 55% 5%

$490 32% 8%

$638 30% 9%

$840 32% 9%

$1,082 29% 9%

$1,311 21% 8%

$1,490 14% 7%

$1,497 0% 6%

$1,434 -4% 5%

$1,363 -5% 4%

5. AOL % Y/Y growth % share

$1,779 -22%

$1,427 -20% 20%

$1,093 -23% 18%

$630 -42% 9%

$784 25% 8%

$1,016 30% 8%

$1,235 22% 7%

$1,379 12% 7%

$1,396 1% 5%

$1,527 9% 5%

$1,632 7% 4%

$296 -4%

$413 40% 6%

$310 -25% 5%

$320 3% 4%

$448 40% 5%

$583 30% 5%

$771 32% 5%

$927 20% 4%

$1,076 16% 4%

$1,211 13% 4%

$1,332 10% 4%

----

----

----

----

----

$67 -1%

$298 348% 2%

$659 121% 3%

$954 45% 4%

$1,104 16% 4%

$1,221 11% 3%

8. InterActiveCorp ** % Y/Y growth % share

$136 -2%

$107 -21% 1%

$103 -4% 2%

$136 33% 2%

$292 115% 3%

$418 43% 3%

$544 30% 3%

$759 39% 4%

$795 5% 3%

$889 12% 3%

$991 11% 3%

9. Gannett % Y/Y growth % share

$75 -1%

$71 -5% 1%

$91 28% 2%

$131 44% 2%

$201 53% 2%

$300 50% 2%

$400 33% 2%

$460 15% 2%

$518 13% 2%

$569 10% 2%

$615 8% 2%

10. CareerBuilder *** % Y/Y growth % share

$45 -1%

$63 39% 1%

$54 -13% 1%

$80 48% 1%

$141 76% 1%

$248 75% 2%

$337 36% 2%

$387 15% 2%

$426 10% 2%

$458 8% 1%

$485 6% 1%

0% 10% 3% 6% 22% 4% 2% 0% 1% 1% 48%

1% 7% 5% 7% 20% 6% 1% 0% 1% 1% 49%

4% 10% 8% 10% 18% 5% 2% 0% 2% 1% 60%

8% 14% 9% 12% 9% 4% 2% 0% 2% 1% 60%

12% 18% 9% 11% 8% 5% 3% 0% 2% 1% 69%

18% 18% 9% 9% 8% 5% 3% 1% 2% 2% 75%

22% 17% 8% 8% 7% 5% 3% 2% 2% 2% 75%

26% 15% 7% 7% 7% 4% 4% 3% 2% 2% 77%

25% 14% 6% 7% 5% 4% 3% 4% 2% 2% 71%

25% 13% 5% 6% 5% 4% 3% 4% 2% 1% 68%

25% 13% 4% 6% 4% 4% 3% 3% 2% 1% 65%

TOTAL U.S. ONLINE ADVERTISING % Y/Y growth

6. Monster Worldwide % Y/Y growth % share 7. Fox Interactive Media % Y/Y growth % share

Market Share Summary 1. Google 2. Yahoo! 3. eBay 4. MSN 5. AOL 6. Monster Worldwide 7. InterActiveCorp 8. Fox Interactive Media 9. Gannett 10. CareerBuilder Market Share of Current Top 10

Note: Top 10 rankings based on estimated 2007 positions * eBay advertising revenue includes listing fees and advertising revenue ** InterActiveCorp historical figures include Ask.com revenue prior to July 2005 acquisition *** CareerBuilder revenue shown excludes revenue allocated directly to the contributing newspaper websites (approximately 50%)

Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers (PwC), Lehman Brothers estimates, company reports

April 07, 2008

41

Lehman Brothers

Internet Data Book

April 2008

Figure 45: Total U.S. Advertising Spend by Medium ($ in millions), 2000–09E 2000

2001

2002

2003

2004

2005

2006

2007(E)

2008(E)

2009(E)

Newspapers % Change

48,670 5.1%

44,305 -9.0%

44,102 -0.5%

44,939 1.9%

46,712 3.9%

47,407 1.5%

46,611 -1.7%

42,795 -8.2%

40,228 -6.0%

38,621 -4.0%

Magazines % Change

12,370 8.2%

11,095 -10.3%

10,995 -0.9%

11,435 4.0%

12,247 7.1%

12,847 4.9%

13,168 2.5%

13,497 2.5%

13,767 2.0%

14,042 2.0%

Broadcast TV % Change

44,802 12.0%

38,881 -13.2%

42,068 8.2%

41,932 -0.3%

46,264 10.3%

44,293 -4.3%

46,880 5.8%

46,743 -0.3%

49,059 5.0%

47,123 -3.9%

Cable TV % Change

15,455 23.0%

15,736 1.8%

16,297 3.6%

18,814 15.4%

21,527 14.4%

23,654 9.9%

25,025 5.8%

26,816 7.2%

28,365 5.8%

30,003 5.8%

Radio % Change

19,848 12.3%

18,369 -7.5%

19,409 5.7%

20,863 7.5%

21,411 2.6%

21,455 0.2%

21,665 1.0%

21,366 -1.4%

20,982 -1.8%

20,683 -1.4%

Yellow Pages % Change

13,704 6.9%

14,384 5.0%

14,709 2.3%

14,906 1.3%

15,486 3.9%

15,970 3.1%

16,289 2.0%

16,632 2.1%

16,299 -2.0%

15,998 -1.8%

Direct Mail % Change

44,591 7.2%

44,725 0.3%

46,067 3.0%

48,370 5.0%

52,191 7.9%

55,218 5.8%

58,647 6.2%

62,166 6.0%

65,896 6.0%

69,850 6.0%

Business Papers % Change

4,915 10.6%

4,468 -9.1%

3,976 -11.0%

4,004 0.7%

4,072 1.7%

4,170 2.4%

4,195 0.6%

4,195 0.0%

4,195 0.0%

4,195 0.0%

Outdoor % Change

5,235 8.3%

5,193 -0.8%

5,232 0.8%

5,504 5.2%

5,834 6.0%

6,301 8.0%

6,805 8.0%

7,239 6.4%

7,627 5.4%

8,035 5.4%

Internet % Change

8,087 75.0%

7,134 -11.8%

6,010 -15.8%

7,267 20.9%

9,626 32.5%

12,542 30.3%

16,879 34.6%

21,202 25.6%

26,203 23.6%

31,452 20.0%

32,083 1.7%

29,895 -6.8%

30,730 2.8%

31,990 4.1%

34,645 8.3%

35,692 3.0%

37,321 4.6%

38,655 3.6%

40,039 3.6%

41,317 3.2%

249,760 9.6%

234,185 -6.2%

239,595 2.3%

248,764 3.8%

268,617 8.0%

278,166 3.6%

291,964 5.0%

299,633 2.6%

310,835 3.7%

319,421 2.8%

Real GDP ($ billions) % Change

9,817 3.7%

9,891 0.8%

10,049 1.6%

10,321 2.7%

10,756 4.2%

11,049 2.7%

11,415 2.9%

11,655 2.1%

11,888 2.0%

12,126 2.0%

Nominal GDP ($ billions) % Change

9,817 5.9%

10,128 3.2%

10,470 3.4%

10,971 4.8%

11,734 7.0%

12,456 6.1%

13,247 6.1%

13,882 4.8%

14,479 4.3%

15,102 4.3%

Miscellaneous % Change Grand Total % Change

Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers

42

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Lehman Brothers

Internet Data Book

April 2008

Figure 46: Share of Total U.S. Advertising Spending by Medium, 2000–09E 2000 Newspapers

2001

2002

2003

2004

2005

2006

2007(E)

2008(E)

2009(E)

19.5%

18.9%

18.4%

18.1%

17.4%

17.0%

16.0%

14.3%

12.9%

12.1%

5.0%

4.7%

4.6%

4.6%

4.6%

4.6%

4.5%

4.5%

4.4%

4.4%

17.9%

16.6%

17.6%

16.9%

17.2%

15.9%

16.1%

15.6%

15.8%

14.8%

Cable TV

6.2%

6.7%

6.8%

7.6%

8.0%

8.5%

8.6%

8.9%

9.1%

9.4%

Radio

7.9%

7.8%

8.1%

8.4%

8.0%

7.7%

7.4%

7.1%

6.8%

6.5%

Yellow Pages

5.5%

6.1%

6.1%

6.0%

5.8%

5.7%

5.6%

5.6%

5.2%

5.0%

17.9%

19.1%

19.2%

19.4%

19.4%

19.9%

20.1%

20.7%

21.2%

21.9%

Business Papers

2.0%

1.9%

1.7%

1.6%

1.5%

1.5%

1.4%

1.4%

1.3%

1.3%

Outdoor

2.1%

2.2%

2.2%

2.2%

2.2%

2.3%

2.3%

2.4%

2.5%

2.5%

Internet

3.2%

3.0%

2.5%

2.9%

3.6%

4.5%

5.8%

7.1%

8.4%

9.8%

12.8%

12.8%

12.8%

12.9%

12.9%

12.8%

12.8%

12.9%

12.9%

12.9%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Magazines Broadcast TV

Direct Mail

Miscellaneous Grand Total

Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers

Figure 47: Total U.S. Advertising Growth by Medium, 2000–09E 2000

2001

2002

2003

2004

2005

2006

2007(E)

2008(E)

2009(E)

Newspapers

5.1%

-9.0%

-0.5%

1.9%

3.9%

1.5%

-1.7%

-8.2%

-6.0%

-4.0%

Magazines

8.2%

-10.3%

-0.9%

4.0%

7.1%

4.9%

2.5%

2.5%

2.0%

2.0%

Broadcast TV

12.0%

-13.2%

8.2%

-0.3%

10.3%

-4.3%

5.8%

-0.3%

5.0%

-3.9%

Cable TV

23.0%

1.8%

3.6%

15.4%

14.4%

9.9%

5.8%

7.2%

5.8%

5.8%

Radio

12.3%

-7.5%

5.7%

7.5%

2.6%

0.2%

1.0%

-1.4%

-1.8%

-1.4%

Yellow Pages

6.9%

5.0%

2.3%

1.3%

3.9%

3.1%

2.0%

2.1%

-2.0%

-1.8%

Direct Mail

7.2%

0.3%

3.0%

5.0%

7.9%

5.8%

6.2%

6.0%

6.0%

6.0%

10.6%

-9.1%

-11.0%

0.7%

1.7%

2.4%

0.6%

0.0%

0.0%

0.0%

8.3%

-0.8%

0.8%

5.2%

6.0%

8.0%

8.0%

6.4%

5.4%

5.4%

75.0%

-11.8%

-15.8%

20.9%

32.5%

30.3%

34.6%

25.6%

23.6%

20.0%

Miscellaneous

1.7%

-6.8%

2.8%

4.1%

8.3%

3.0%

4.6%

3.6%

3.6%

3.2%

Grand Total

9.6%

-6.2%

2.3%

3.8%

8.0%

3.6%

5.0%

2.6%

3.7%

2.8%

Business Papers Total Outdoor Internet

Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers

April 07, 2008

43

Lehman Brothers

Internet Data Book

April 2008

Figure 48: Contribution to Total U.S. Advertising Growth by Medium, 2000–09E 2000 Newspapers

10.9%

Magazines

2001 28.0%

2002

2003

-3.8%

2004

9.1%

2005

8.9%

7.3%

2006 -5.8%

2007(E)

2008(E)

-49.8%

2009(E)

-22.9%

-18.7%

4.3%

8.2%

-1.8%

4.8%

4.1%

6.3%

2.3%

4.3%

2.4%

3.2%

Broadcast TV

21.9%

38.0%

58.9%

-1.5%

21.8%

-20.6%

18.7%

-1.8%

20.7%

-22.6%

Cable TV

13.2%

-1.8%

10.4%

27.5%

13.7%

22.3%

9.9%

23.4%

13.8%

19.1%

Radio

9.9%

9.5%

19.2%

15.9%

2.8%

0.5%

1.5%

-3.9%

-3.4%

-3.5%

Yellow Pages

4.0%

-4.4%

6.0%

2.1%

2.9%

5.1%

2.3%

4.5%

-3.0%

-3.5%

Direct Mail

13.6%

-0.9%

24.8%

25.1%

19.2%

31.7%

24.9%

45.9%

33.3%

46.1%

Business Papers

2.2%

2.9%

-9.1%

0.3%

0.3%

1.0%

0.2%

0.0%

0.0%

0.0%

Outdoor

1.8%

0.3%

0.7%

3.0%

1.7%

4.9%

3.7%

5.7%

3.5%

4.8%

15.8%

6.1%

-20.8%

13.7%

11.9%

30.5%

31.4%

56.4%

44.6%

61.1%

2.5%

14.0%

15.4%

13.7%

13.4%

11.0%

11.8%

17.4%

12.4%

14.9%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Internet Miscellaneous Grand Total

Source: Advertising Age by Robert J. Coen, McCann-Erickson Inc; Newspaper Association of America; Radio Advertising Bureau; Simba Information; Outdoor Advertising Association of America; Interactive Advertising Bureau (IAB); Lehman Brothers

Figure 49: Initial Year Growth Comparisons – Internet Advertising vs. Broadcast & Cable Television Broadcast

Year 1

Year 2

Year 3

Year 4

Year 5

Year 6

Year 7

Year 8

Year 9

Year 10

Year 11

358

1,012

2,162

2,787

3,698

5,030

6,557

7,885

8,188

8,859

9,766

183%

114%

29%

33%

36%

30%

20%

4%

8%

10%

Y/Y Growth Cable

147

Y/Y Growth Internet

295

499

745

1,190

1,580

1,853

2,080

2,490

3,180

3,654

101%

69%

49%

60%

33%

17%

12%

20%

28%

15%

55

Y/Y Growth

267

907

1,920

4,621

8,087

7,134

6,010

7,267

9,626

12,542

385%

240%

112%

141%

75%

-12%

-16%

21%

32%

30%

Source: Interactive Advertising Bureau (IAB), PricewaterhouseCoopers LLP, Universal McCann

Figure 50: U.S. Online Advertising Revenue by Quarter ($ in millions), 1996–2010E 1Q96 2Q96 3Q96 4Q96 Total 1996 1Q97 2Q97 3Q97 4Q97 Total 1997 1Q98 2Q98 3Q98 4Q98 Total 1998 1Q99 2Q99 3Q99 4Q99 Total 1999 1Q00 2Q00 3Q00 4Q00 Total 2000

$ Rev 30 52 76 110 267 130 214 227 336 907 351 423 491 656 1,920 693 934 1,217 1,777 4,621 1,922 2,091 1,951 2,123 8,087

Q/Q Growth NA 74% 46% 45% 18% 66% 6% 48% 5% 20% 16% 34% 6% 35% 30% 46% 8% 9% -7% 9%

Y/Y Growth NA NA NA NA NA 333% 313% 200% 205% 239% 171% 97% 116% 95% 112% 97% 121% 148% 171% 141% 177% 123% 60% 19% 75%

1Q01 2Q01 3Q01 4Q01 Total 2001 1Q02 2Q02 3Q02 4Q02 Total 2002 1Q03 2Q03 3Q03 4Q03 Total 2003 1Q04 2Q04 3Q04 4Q04 Total 2004 1Q05 2Q05 3Q05 4Q05 Total 2005

$ Rev 1,872 1,848 1,773 1,641 7,134 1,520 1,458 1,451 1,580 6,010 1,632 1,660 1,793 2,182 7,267 2,230 2,369 2,333 2,694 9,626 2,802 2,985 3,147 3,608 12,542

Q/Q Growth -12% -1% -4% -7% -7% -4% -1% -9% 3% 2% 8% 22% 2% 6% -2% 15% 4% 7% 5% 15%

*Note: $5.9B represents IAB’s preliminary estimate for 4Q07 announced on February 25, 2008. Source: Interactive Advertising Bureau (IAB), Lehman Brothers estimates

44

April 07, 2008

Y/Y Growth -3% -12% -10% -23% -12% -19% -21% -18% -4% -16% 7% 14% 24% 38% 21% 37% 43% 30% 24% 33% 25% 26% 35% 34% 30%

1Q06 2Q06 3Q06 4Q06 Total 2006 1Q07 2Q07 3Q07 4Q07E* Total 2007E

$ Rev 3,848 4,061 4,186 4,784 16,879 4,864 5,129 5,245 5,900 21,138

Q/Q Growth 7% 6% 3% 14.3%

Total 2008E

26,203

24%

Total 2009E

31,452

20%

Total 2010E

36,541

16%

1.7% 5.4% 2.3% 12.5%

Y/Y Growth 37% 36% 33% 33% 35% 26% 26% 25% 23% 25%

Lehman Brothers

Internet Data Book

April 2008

Figure 51: U.S. Online Advertising Revenue by Format ($ in millions), 2000–2006 Online Advertising Revenue by Format Search Display Related

2000

2001

2002

2003

2004

2005

2006

82

285

902

2,543

3,850

5,142

6,799

6,970

5,351

3,907

3,198

3,754

4,264

5,373

Classifieds

574

1,141

902

1,235

1,733

2,132

3,059

E-mail

246

193

240

218

193

251

338

Lead Generation/Referrals

328

164

60

73

96

753

1,310

8,200

7,134

6,010

7,267

9,626

12,542

16,879

2006

Total

Online Advertising Revenue by Format - % Mix 2000

2001

2002

2003

2004

2005

Search

1%

4%

15%

35%

40%

41%

40%

Display Related

85%

75%

65%

44%

39%

34%

32%

Classifieds

7%

16%

15%

17%

18%

17%

18%

E-mail

3%

3%

4%

3%

2%

2%

2%

Lead Generation/Referrals

4%

2%

1%

1%

1%

6%

8%

100%

100%

100%

100%

100%

100%

100%

Total

Online Advertising Revenue by Format - % Growth 2000

2001

2002

2003

2004

2005

2006

Search

--

248%

216%

182%

51%

34%

32%

Display Related

--

-23%

-27%

-18%

17%

14%

26%

Classifieds

--

99%

-21%

37%

40%

23%

43%

E-mail

--

-22%

25%

-9%

-12%

31%

35%

Lead Generation/Referrals

--

-50%

-63%

21%

32%

682%

74%

Total

--

-13%

-16%

21%

32%

30%

35%

Note: Total dollar amounts differ slightly from reported historical numbers because the above totals are driven by percentage mix. Source: Interactive Advertising Bureau (IAB)

Figure 52: U.S. Online Advertising Revenue by Pricing Model ($ in millions), 1998–2006 Online Advertising Revenue by Pricing Models 1998

1999

2000

2001

2002

2003

2004

2005

2006

Performance

77

322

820

856

1,262

2,689

3,947

5,142

7,933

CPM

941

1,840

3,526

3,424

2,705

3,125

4,043

5,769

8,102

Hybrid

902

2,438

3,854

2,854

2,043

1,453

1,636

1,630

844

1,920

4,600

8,200

7,134

6,010

7,267

9,626

12,542

16,879

2006

Total

Online Advertising Revenue by Pricing Models - % Mix 1998

1999

2000

2001

2002

2003

2004

2005

Performance

4%

7%

10%

12%

21%

37%

41%

41%

47%

CPM

49%

40%

43%

48%

45%

43%

42%

46%

48%

Hybrid

47%

53%

47%

40%

34%

20%

17%

13%

5%

Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

2006

Online Advertising Revenue by Pricing Models - % Growth 1998

1999

2000

2001

2002

2003

2004

2005

Performance

--

319%

155%

4%

47%

113%

47%

30%

54%

CPM

--

96%

92%

-3%

-21%

16%

29%

43%

40%

Hybrid

--

170%

58%

-26%

-28%

-29%

13%

0%

-48%

Total

--

140%

78%

-13%

-16%

21%

32%

30%

35%

Source: Interactive Advertising Bureau (IAB)

April 07, 2008

45

Lehman Brothers

Internet Data Book

April 2008

Figure 53: Total U.S. Measured Media Advertising by Category and Medium ($ in millions), 2006 Rank 2006 2005 1 1 2 2 3 3 4 5 5 6 6 4 7 7 8 8 9 10 10 9 11 11 12 12 13 16 14 13 15 15 16 14 17 17 18 19 19 18 20 21 21 20 22 22 23 23 24 25 25 24 26 26 27 27 28 28 29 29

Category Automobile Retail Telecom,internet,ISP Medicine & remedies General services Financial services Food, beverages & candy Personal care Airlines, hotels, car rental Movie, video & music Restaurants Media Government, politics, religion Insurance Real estate Apparel Computers, software Home Furnishings, appliances, electronics Beer, wine & liquor Education Home supplies & cleaners Toys & games Hardware & home building Sporting goods Gas & oil Pet food & pet care Office equipment Shipping & freight Cigarettes & tobacco Direct response advertising Miscellaneous Total

Measured Media 2006 % Chg. 19,799.0 -5.7 19,114.0 2.0 10,950.2 9.6 9,192.9 9.0 8,702.0 10.4 8,689.0 2.1 7,225.0 -1.2 5,732.0 1.2 5,415.6 -1.3 5.379.9 -3.6 5,291.5 4.5 5,050.5 2.5 3,510.6 43.0 3,446.2 19.2 3,132.3 20.3 2,911.7 6.8 2,509.8 13.5 2,213.6 7.6 2,099.9 -4.9 1,942.4 8.5 1,938.0 4.0 1,253.4 -2.9 1,028.3 -1.3 562.3 5.8 524.0 -3.7 490.1 -1.0 334.2 -8.5 326.8 -8.9 155.6 0.1 6,461.6 5.4 4,306.4 2.0 149,688.7 3.6

Magazine 2,089.2 1,992.5 681.5 2,730.1 698.3 927.9 1,892.3 2,347.5 1,233.7 239.0 132.9 1,527.3 342.7 220.4 363.0 2,105.2 451.3 882.4 505.4 153.2 358.3 97.0 368.0 374.2 104.2 149.6 102.1 33.1 105.2 2,347.1 952.2 26,506.7

Biz Pub 85.5 105.4 217.2 56.4 335.2 260.9 104.9 40.2 250.5 78.1 2.1 216.8 43.8 57.2 17.8 81.1 714.6 187.3 14.8 229.1 9.5 82.6 151.5 1.9 7.8 1.9 43.0 32.9 4.7 139.0 944.4 4,518.1

U.S. Measured Media Breakout 2006 Newspaper Outdoor TV Cable Nets 5,024.5 343.8 8,637.0 1,348.0 6,763.2 387.4 5,420.0 1,039.7 2,172.6 278.4 4,061.7 1,269.7 279.5 22.7 4,038.7 1,382.0 2,270.8 583.5 2,302.8 454.2 1,891.3 245.2 2,224.3 932.3 50.3 76.5 3,190.3 1,450.8 29.4 13.5 2,345.5 796.7 1,412.9 331.9 876.1 515.4 1,028.3 91.8 2,447.0 1,047.4 183.8 240.2 3,339.1 810.6 1,269.0 246.5 266.1 67.2 530.1 148.9 1,585.9 238.6 385.9 113.3 1,499.7 635.0 1,894.1 258.2 251.8 77.2 59.6 28.7 353.4 223.4 226.4 49.2 381.8 167.7 114.1 17.0 551.6 307.8 54.2 163.9 734.4 340.5 342.4 74.6 544.9 166.9 5.8 2.6 978.5 525.9 7.5 3.3 286.8 607.9 103.8 8.6 169.1 168.8 28.2 5.0 86.0 48.1 70.1 34.5 149.1 73.6 3.2 0.1 209.5 98.1 25.1 2.2 94.1 36.4 14.2 3.2 147.1 41.7 1.6 0.5 31.2 5.7 493.7 1.9 1,154.0 2,121.1 1,285.2 54.2 356.3 275.2 28,020.8 3,831.3 48,713.8 17,273.5

Radio 1,543.8 2,148.4 774.6 304.1 1,319.5 725.0 326.3 53.9 342.9 258.7 534.2 741.1 465.0 383.6 138.4 20.8 62.8 68.8 225.7 157.7 27.6 8.3 32.2 5.5 72.9 6.6 20.9 43.4 0.5 69.8 171.9 11,054.9

Internet 727.2 1,257.5 1,494.7 379.3 737.7 1,481.9 133.7 105.5 452.2 189.7 48.5 716.4 155.6 151.2 131.7 39.4 456.0 84.6 61.0 273.7 29.8 159.9 26.3 13.5 11.8 21.3 10.4 11.2 6.2 135.0 266.9 9,769.8

Source: Advertising Age

Figure 54: Total U.S. Measured Media Advertising by Category and Medium – % Mix, ($ in millions), 2006 Rank 2006 2005 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 11 11 12 12 13 13 14 14 15 15 16 16 17 17 18 18 19 19 20 20 21 21 22 22 23 23 24 24 25 25 26 26 27 27 28 28 29 29

Category Automobile Retail Telecom,internet,ISP Medicine & remedies General services Financial services Food, beverages & candy Personal care Airlines, hotels, car rental Movie, video & music Restaurants Media Government, politics, religion Insurance Real estate Apparel Computers, software Home Furnishings, appliances, electronics Beer, wine & liquor Education Home supplies & cleaners Toys & games Hardware & home building Sporting goods Gas & oil Pet food & pet care Office equipment Shipping & freight Cigarettes & tobacco Direct response advertising Miscellaneous Total

Source: Advertising Age

46

April 07, 2008

Measured Media 2006 % Chg. 19,799.0 -5.7 19,114.0 2.0 10,950.2 9.6 9,192.9 9.0 8,702.0 10.4 8,689.0 2.1 7,225.0 -1.2 5,732.0 1.2 5,415.6 -1.3 5.379.9 -3.6 5,291.5 4.5 5,050.5 2.5 3,510.6 43.0 3,446.2 19.2 3,132.3 20.3 2,911.7 6.8 2,509.8 13.5 2,213.6 7.6 2,099.9 -4.9 1,942.4 8.5 1,938.0 4.0 1,253.4 -2.9 1,028.3 -1.3 562.3 5.8 524.0 -3.7 490.1 -1.0 334.2 -8.5 326.8 -8.9 155.6 0.1 6,461.6 5.4 4,306.4 2.0 149,688.7 3.6

Magazine 10.55% 10.42% 6.22% 29.70% 8.02% 10.68% 26.19% 40.95% 22.78% 4.44% 2.51% 30.24% 9.76% 6.40% 11.59% 72.30% 17.98% 39.86% 24.07% 7.89% 18.49% 7.74% 35.79% 66.55% 19.89% 30.52% 30.55% 10.13% 67.61% 36.32% 22.11% 17.71%

Biz Pub 0.43% 0.55% 1.98% 0.61% 3.85% 3.00% 1.45% 0.70% 4.63% 1.45% 0.04% 4.29% 1.25% 1.66% 0.57% 2.79% 28.47% 8.46% 0.70% 11.79% 0.49% 6.59% 14.73% 0.34% 1.49% 0.39% 12.87% 10.07% 3.02% 2.15% 21.93% 3.02%

U.S. Measured Media Breakout in % terms 2006 Newspaper Outdoor TV Cable Nets 25.38% 1.74% 43.62% 6.81% 35.38% 2.03% 28.36% 5.44% 19.84% 2.54% 37.09% 11.60% 3.04% 0.25% 43.93% 15.03% 26.10% 6.71% 26.46% 5.22% 21.77% 2.82% 25.60% 10.73% 0.70% 1.06% 44.16% 20.08% 0.51% 0.24% 40.92% 13.90% 26.09% 6.13% 16.18% 9.52% 19.11% 1.71% 45.48% 19.47% 3.47% 4.54% 63.10% 15.32% 25.13% 4.88% 5.27% 1.33% 15.10% 4.24% 45.17% 6.80% 11.20% 3.29% 43.52% 18.43% 60.47% 8.24% 8.04% 2.46% 2.05% 0.99% 12.14% 7.67% 9.02% 1.96% 15.21% 6.68% 5.15% 0.77% 24.92% 13.90% 2.58% 7.81% 34.97% 16.22% 17.63% 3.84% 28.05% 8.59% 0.30% 0.13% 50.49% 27.14% 0.60% 0.26% 22.88% 48.50% 10.09% 0.84% 16.44% 16.42% 5.02% 0.89% 15.29% 8.55% 13.38% 6.58% 28.45% 14.05% 0.65% 0.02% 42.75% 20.02% 7.51% 0.66% 28.16% 10.89% 4.35% 0.98% 45.01% 12.76% 1.03% 0.32% 20.05% 3.66% 7.64% 0.03% 17.86% 32.83% 29.84% 1.26% 8.27% 6.39% 18.72% 2.56% 32.54% 11.54%

Radio 7.80% 11.24% 7.07% 3.31% 15.16% 8.34% 4.52% 0.94% 6.33% 4.81% 10.10% 14.67% 13.25% 11.13% 4.42% 0.71% 2.50% 3.11% 10.75% 8.12% 1.42% 0.66% 3.13% 0.98% 13.91% 1.35% 6.25% 13.28% 0.32% 1.08% 3.99% 7.39%

Internet 3.67% 6.58% 13.65% 4.13% 8.48% 17.05% 1.85% 1.84% 8.35% 3.53% 0.92% 14.18% 4.43% 4.39% 4.20% 1.35% 18.17% 3.82% 2.90% 14.09% 1.54% 12.76% 2.56% 2.40% 2.25% 4.35% 3.11% 3.43% 3.98% 2.09% 6.20% 6.53%

Lehman Brothers

Internet Data Book

April 2008

Figure 55: Top U.S. Advertisers (1–50) with Total Spend and Internet Spend ($ in millions) Rank 2006 2005 1 1 2 5 3 2 4 3 5 7 6 6 7 9 8 8 9 4 10 12 11 14 12 13 13 10 14 11 15 16 16 17 17 15 18 19 19 22 20 23 21 24 22 18 23 21 24 20 25 25 26 28 27 30 28 34 29 26 30 29 31 45 32 39 33 41 34 36 35 38 36 27 37 33 38 65 39 35 40 48 41 31 42 43 43 32 44 44 45 46 46 42 47 37 48 50 49 49 50 51

Marketer Procter & Gamble Co. AT&T General Motors Corp. Time Warner Verizon Communications Ford Motors Co. GlaxoSmithKline Walt Disney Co. Johnson & Johnson Unilever Toyota Motor Corp. Sony Corp. DaimlerChrysler General Electric Co. Sprint Nextel Corp. McDonald's Corp. Sears Holdings Corp. L'Oreal Kraft Foods Federated Departmet Stores Honda Motor Co. Bank of America Corp. Nissan Motor Co. PepsiCo Nestle News Corp. J.C. Penny Co. Target Corp. U.S. Government Home Depot Pfizer Berkshire Hathaway Wyeth Wal-Mart Stores JP Morgan Chase & Co. Novartis Estee Lauder Cos. Merck & Co. Citigroup Astra Zeneca Viacom Schering-Plough Corp. American Express Co. General Mills Microsoft Corp. Yum Brands Dell Best Buy Co. Capital One Finance Corp. Lowe's Co.

Headquarters Cincinnati San Antanio Detroit New York New York Dearborn, Mich. Brentford, Middlesex, U.K. Burbank, Calif. New Brunswick, N.J. London/Rotterdam Toyota City, Japan Tokyo Auburn Hills, Mich./Stuttgart,Germany Fairfield, Conn. Reston, Va. Oak Brook,Ill. Hoffman Estates, Ill. Clinchy, France Northfield, Ill. Cincinnati Tokyo Charlotte, N.C. Tokyo Purchase, N.Y. Vevey, Switzerland New York Plano, Texas Minneapolis Washington Atlanta New York Omaha Madison, N.J. Bentonville, Ark. New York Basel, Switzerland New York Whitehouse Station, N.J. New York London New York Kenilworth,N.J. New York Minneapolis Redmond, Wash. Lousiville, Ky. Round Rock, Texas Richfield, Minn. McLean, VA. Mooresville, N.C.

2006 4,898.0 3,344.7 3,296.0 3,088.8 2,821.8 2,576.8 2,444.2 2,320.0 2,290.5 2,098.3 1,995.3 1,994.0 1,952.2 1,860.2 1,775.2 1,748.3 1,652.8 1,456.3 1,423.2 1,361.2 1,350.8 1,334.4 1,328.9 1,322.7 1,315.0 1,244.5 1,162.3 1,156.9 1,132.7 1,118.1 1,104.9 1,093.4 1,076.8 1,072.6 1,062.5 1,052.2 1,031.3 1,024.2 1,012.2 1,005.3 934.1 931.5 928.7 920.5 912.2 902.0 882.5 878.7 863.7 838.5

Total Ad Spending 2005 %CHG 4,587.9 6.8 2,653.6 26.0 4,110.1 -19.8 3,518.3 -12.2 2,481.3 13.7 2,611.8 -1.3 2,249.8 8.6 2,291.7 1.2 2,669.4 -14.2 1,943.5 8.0 1,783.2 11.9 1,801.8 10.7 2,181.2 -10.5 1,979.9 -6.0 1,715.2 3.5 1,656.8 5.5 1,715.3 -3.6 1,464.2 -0.5 1,428.9 -0.4 1,346.7 1.1 1,314.9 2.7 1,497.0 -10.9 1,441.8 -7.8 1,461.0 -9.5 1,270.9 3.5 1,166.4 6.7 1,084.9 7.1 1,021.2 13.3 1,230.2 -7.9 1,109.3 0.8 849.2 30.1 919.6 18.9 892.7 20.6 970.3 10.5 922.2 15.2 1,175.3 -10.5 1,039.0 -0.7 538.6 90.2 1,000.5 1.2 826.0 21.7 1,075.5 -13.1 854.7 9.0 1,068.9 -13.1 852.0 8.0 839.9 8.6 866.7 4.1 945.8 -6.7 823.5 6.7 824.8 4.7 778.2 7.7

Total Internet Ad Spending 2006 2005 %CHG 54.0 33.5 61.1 168.7 56.2 200.3 118.2 110.5 7.0 90.6 166.1 -45.4 123.6 144.0 -14.2 99.1 55.0 80.1 15.1 14.1 7.3 133.2 90.3 47.5 34.1 24.6 38.5 27.9 13.4 108.5 55.6 32.9 69.1 73.6 44.1 67.0 44.6 31.6 41.3 60.8 36.8 65.2 37.5 26.6 40.7 13.9 12.5 11.4 24.3 6.4 282.5 7.8 6.9 12.3 22.9 --4.5 2.8 60.5 34.3 11.2 207.4 42.7 24.5 73.9 28.6 6.9 312.8 14.3 19.1 -25.2 20.9 51.4 -59.4 55.7 47.6 17.0 33.1 32.5 1.9 56.7 36.9 53.7 43.7 30.5 43.1 7.4 2.4 214.5 23.2 20.9 10.7 13.9 2.2 529.0 17.8 19.0 -6.3 61.2 34.2 78.8 27.8 31.2 -10.9 27.3 25.5 7.0 1.7 0.5 252.0 17.9 7.5 137.8 24.8 33.7 -26.5 29.9 24.8 20.3 30.0 36.3 -17.3 4.8 5.1 -5.8 80.8 28.1 188.0 15.7 20.3 -22.6 81.6 103.0 -20.8 2.8 0.9 204.0 137.8 156.6 -12.0 31.6 13.5 134.7 53.1 33.0 61.1 19.5 8.0 145.0

Internet Advertising As % of Total Advertising 2006 2005 1.10% 0.73% 5.04% 2.12% 3.59% 2.69% 2.93% 4.72% 4.38% 5.80% 3.85% 2.11% 0.62% 0.63% 5.74% 3.94% 1.49% 0.92% 1.33% 0.69% 2.79% 1.84% 3.69% 2.45% 2.28% 1.45% 3.27% 1.86% 2.11% 1.55% 0.80% 0.75% 1.47% 0.37% 0.54% 0.47% 1.61% -0.33% 0.21% 2.54% 0.85% 3.20% 1.64% 2.15% 0.48% 1.08% 1.31% 1.59% 4.05% 4.48% 4.08% 2.85% 2.99% 4.90% 3.61% 3.86% 2.48% 0.66% 0.21% 2.10% 2.47% 1.27% 0.24% 1.65% 2.13% 5.71% 3.53% 2.62% 3.38% 2.59% 2.17% 0.16% 0.05% 1.75% 1.40% 2.45% 3.37% 2.97% 3.01% 3.21% 3.37% 0.52% 0.60% 8.70% 2.62% 1.71% 2.38% 8.95% 12.27% 0.31% 0.11% 15.61% 16.56% 3.60% 1.63% 6.15% 4.00% 2.33% 1.02%

Source: Advertising Age

April 07, 2008

47

Lehman Brothers

Internet Data Book

April 2008

Figure 56: Top U.S. Advertisers (51–100) – with Total Spend and Internet Spend ($ in millions) Rank 2006 2005 51 47 52 53 53 40 54 59 55 55 56 52 57 71 58 54 59 61 60 58 61 56 62 57 63 68 64 69 65 62 66 63 67 70 68 73 69 75 70 79 71 72 72 74 73 66 74 64 75 83 76 82 77 76 78 92 79 85 80 67 81 87 82 80 83 90 84 86 85 77 86 60 87 91 88 95 89 156 90 101 91 81 92 78 93 89 94 84 95 97 96 100 97 102 98 103 99 109 100 88

Marketer Hewlett-Packard Co. Deutsche Telekom Anheuser-Busch Cos. Hyundai Motors Co. Kohl's Corp. Kellog Co. IAC/InterActiveCorp Coca-Cola Co. Bristol-Myers Squibb Co. Nike Mars Inc. Cadbury Schweppes Victoria's Secret Corp. Visa International SC Johnson Clorox Co. Comcast Corp. Campbell Soup Co. Eli Lilly & Co. Bayer Doctor's Associates Safeway Kroger Co. IBM Corp. Circuit City Stores Gap Inc. MasterCard International Allstate Corp. Vonage Holdings Corp. Sanofi-Aventis Staples Wells Fargo & Co. eBay Washington Mutual Wendy's International Volkswagen Diageo Mattel Apple Burger King Corp. Abbot Laboratories SABMiller Molson Coors Brewing Co. CBS Corp. Reckitt Benckiser ConAgra Foods Qwest Communications International Philips Electronics Office Depot State Farm Mutual Auto Insurance Co. Total

Headquarters Palo Alto, Calif. Bonn, Germany St. Louis Seoul Menomonee Falls, Wis. Battle Creek, Mich New York Atlanta New York Beaverton.Ore. McLean, VA. London Columbus, Ohio San Francisco Racine, Wis. Oakland, Calif. Philadelphia Camden, N.J. Indianapolis Leverkusen, Germany Milford, Conn. Pleasanton, Calif. Cincinnati Armonk, N.Y. Richmond, Va. San Francisco Purchase, N.Y. Northbrook, Ill. Holmdel, N.J. Paris Framingham, MA San Francisco, CA. San Jose, CA Seattle, WA Dublin, Ohio Wolfsburg, Germany London El Segundo, Calif. Cupertino, CA Miami Abbott Park, Ill London Denver/Montreal New York, NY Sloth, Berkshire, U.K. Omaha Denver, CO. Amsterdam Delray Beach, Fl. Bloomington, Ill

2006 828.8 815.1 813.4 785.9 765.9 765.1 743.5 740.8 691.1 678.4 658.2 643.7 600.5 597.1 596.5 584.2 568.5 564.3 561.0 553.6 539.8 533.6 527.5 516.5 498.2 489.4 486.3 476.9 465.1 463.1 457.2 456.1 453.3 443.0 435.2 419.3 418.9 394.1 383.7 379.5 374.4 370.8 369.5 369.2 366.7 366.2 362.4 350.8 342.7 338.1 104,795.0

Total Ad Spending 2005 %CHG 831.8 -0.4 714.6 14.1 919.2 -11.5 608.5 29.2 646.6 18.5 725.2 5.5 496.1 49.9 711.2 4.2 585.4 18.1 608.6 11.5 636.5 3.4 628.2 2.5 515.0 16.6 500.3 19.3 575.7 3.6 572.4 2.1 497.1 14.4 484.0 16.6 475.3 18.0 452.7 22.3 486.8 10.9 481.7 10.8 537.5 -1.9 547.0 -5.6 426.5 16.8 432.1 13.3 466.0 4.4 394.0 21.0 413.7 12.4 518.3 -10.7 404.9 12.92 443.1 2.9 396.6 14.3 406.9 8.9 453.4 -4.0 590.0 -28.9 394.3 6.2 383.6 2.7 219.5 74.8 354.5 7.1 436.4 -14.2 452.9 -18.1 400.9 -7.8 426.5 -13.4 369.3 -0.7 355.8 2.9 352.6 2.8 337.2 4.0 314.4 9.0 401.7 -15.8 101,634.1 3.1

Total Internet Ad Spending 2006 2005 %CHG 111.4 108.0 3.2 35.0 13.0 168.7 6.1 2.6 132.0 14.4 8.7 66.0 4.0 4.5 -10.9 9.3 10.6 -12.3 122.1 --21.3 5.9 258.4 17.1 7.9 115.9 11.0 3.0 268.9 11.1 2.6 327.7 6.6 1.5 340.9 45.3 13.9 226.7 17.2 20.9 -17.7 1.7 0.3 509.3 8.8 2.6 240.8 32.1 7.4 335.9 4.1 3.1 34.3 9.2 9.1 0.9 11.3 0.8 1,323.2 2.3 2.4 -3.2 0.7 0.0 7,677.8 1.0 0.8 24.2 13.0 9.9 32.0 49.4 50.3 -1.8 5.8 5.3 9.4 21.6 10.3 109.5 18.6 20.3 -8.3 185.7 275.7 -32.7 8.8 8.2 6.8 1.9 --7.1 --51.7 --17.7 --6.9 4.6 51.3 19.5 19.9 -1.9 10.5 2.6 305.7 2.8 1.7 61.2 14.6 --1.8 0.9 91.7 3.3 2.5 33.7 4.5 4.5 -1.1 6.5 2.3 183.6 13.9 --0.6 0.6 -0.7 0.6 1.0 -41.7 2.6 --3.5 8.1 -56.9 12.5 --33.9 15.5 118.0 3,273.0 2,449.5 33.6

Internet Advertising As % of Total Advertising 2006 2005 13.44% 12.98% 4.29% 1.82% 0.75% 0.29% 1.83% 1.43% 0.52% 0.69% 1.22% 1.46% 16.42% -2.88% 0.84% 2.47% 1.35% 1.62% 0.49% 1.69% 0.41% 1.03% 0.24% 7.54% 2.69% 2.88% 4.18% 0.28% 0.05% 1.51% 0.45% 5.65% 1.48% 0.73% 0.63% 1.64% 1.92% 2.04% 0.18% 0.43% 0.49% 0.13% 0.00% 0.19% 0.15% 2.52% 1.80% 9.92% 11.79% 1.19% 1.23% 4.44% 2.21% 3.90% 5.15% 39.93% 66.65% 1.90% 1.59% 0.42% -1.56% -11.41% -4.00% -1.59% 1.01% 4.65% 3.37% 2.51% 0.66% 0.71% 0.45% 3.81% -0.47% 0.26% 0.88% 0.57% 1.21% 1.00% 1.76% 0.57% 3.76% -0.16% 0.16% 0.16% 0.29% 0.72% -1.00% 2.41% 3.65% -10.03% 3.87% 3.12% 2.41%

Source: Advertising Age

Figure 57: Domestic Search Share Comparison by Data Source, October 2007–February 2008 Oct-07 Provider Google Yahoo! MSN AOL Ask Network

comScore NetRatings 58.5% 55.5% 22.9% 18.8% 9.7% 13.8% 4.2% 3.7% 4.7% 4.1%

Nov-07 Hitwise 64.5% 21.7% 7.4% NA 4.8%

Source: comScore Networks, NetRatings, Hitwise

48

April 07, 2008

comScore NetRatings 58.6% 57.7% 22.4% 17.9% 9.8% 12.0% 4.5% 4.5% 4.6% 3.9%

Dec-07 Hitwise 65.1% 21.2% 7.1% NA 4.6%

comScore NetRatings 58.4% 56.3% 22.9% 17.7% 9.8% 13.8% 4.6% 4.7% 4.3% 3.2%

Jan-08 Hitwise 66.0% 20.9% 7.0% NA 4.1%

comScore NetRatings 58.5% 56.9% 22.2% 19.0% 9.8% 12.1% 4.9% 4.7% 4.5% 3.4%

Feb-08 Hitwise 66.0% 20.9% 6.9% NA 4.2%

comScore NetRatings 59.2% 58.7% 21.6% 17.6% 9.6% 11.2% 4.9% 5.2% 4.6% 3.4%

Hitwise 66.4% 20.6% 7.0% NA 4.2%

Lehman Brothers

Internet Data Book

April 2008

Figure 58: Domestic Search Share, February 2008

Ask Network, 4.6% Google Sites, 59.2%

MSN-Microsoft Sites, 9.6%

AOL, 4.9%

Yahoo! Sites, 21.6%

Source: comScore Networks, Lehman Brothers estimates

Figure 59: Global Search Share, February 2008

NHN, 2.5% Baidu , 6.3% Ask Network, 1.6%

AOL, 1.3%

Google Sites, 68.1%

Microsoft Sites, 4.1% Yahoo! Sites, 16.2%

Source: comScore Networks, Lehman Brothers estimates

April 07, 2008

49

Lehman Brothers

Internet Data Book

April 2008

Figure 60: Domestic Search Share – Google and Yahoo!

60.0% 55.0%

Google, 59.2%

50.0% 45.0% 40.0% 35.0% 30.0% Yahoo!, 21.6%

25.0%

Google Sites

b08 Fe

-0 8 Ja n

07 ec D

-0 7 ov N

ct -0 7 O

Ju l-0 7 A ug -0 7 Se p07

-0 7 Ju n

-0 7 M ay

A pr -0 7

M ar -0 7

b07 Fe

Ja n

-0 7

20.0%

Yahoo! Sites

Source: comScore Networks, Lehman Brothers estimates

Figure 61: Domestic Search Share – Microsoft, Ask.com, and AOL

18.0% 15.0% Microsoft Sites, 9.6%

12.0% 9.0%

AOL, 4.9% 6.0% 3.0%

Ask Network, 4.6%

AOL Source: comScore Networks, Lehman Brothers estimates

50

April 07, 2008

MSN-Microsoft Sites

Ask Network

b08 Fe

D ec -0 7 Ja n08

7 -0 ov N

ug -0 7 Se p07 O ct -0 7

A

Ju n07 Ju l-0 7

ay -0 7

M

M ar -0 7 A pr -0 7

Ja n07 Fe b07

0.0%

Lehman Brothers

Internet Data Book

April 2008

Figure 62: U.S. Search Market Share and Growth, January 2007–February 2008 Total Searches

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

Feb-08

Total

8,519,110,401

8,604,483,858

9,094,458,052

8,910,075,062

9,187,947,103

9,706,525,899

9,895,494,580

9,820,417,289

9,400,076,393

10,525,907,747

10,030,270,373

9,636,397,662

10,491,850,712

9,881,567,684

Google Sites

4,483,655,852

4,631,107,268

4,963,051,262

4,996,928,190

5,191,302,260

5,329,775,278

5,459,123,358

5,545,220,205

5,356,063,930

6,151,037,065

5,881,898,412

5,629,034,922

6,139,377,909

5,854,533,236

Yahoo! Sites

2,404,919,113

2,248,824,429

2,211,293,270

2,292,178,678

2,250,586,176

2,338,877,952

2,192,199,726

2,267,110,264

2,289,814,630

2,227,135,222

2,332,177,645

2,136,156,211

AOL

457,272,564

452,264,863

459,247,212

483,343,730

437,677,167

439,838,469

436,086,834

441,118,707

404,762,581

442,631,698

453,230,343

441,650,650

514,452,264

488,299,479

MSN-Microsoft Sites

889,998,489

871,035,322

924,974,018

840,896,424

874,211,385

1,180,981,364

2,307,352,061

1,213,927,571

2,324,736,567

1,105,913,080

968,568,291

1,036,165,953

983,765,779

939,632,703

1,030,367,682

952,775,597

Ask Network

396,004,819

399,490,229

408,307,608

396,706,992

417,646,027

448,578,727

461,620,250

438,350,667

443,546,368

491,153,919

462,551,410

414,786,117

475,475,212

449,803,162

M/M Change

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

Feb-08

Total

2.0%

1.0%

5.7%

-2.0%

3.1%

5.6%

1.9%

-0.8%

-4.3%

12.0%

-4.7%

-3.9%

8.9%

Google Sites

3.9%

3.3%

7.2%

0.7%

3.9%

2.7%

2.4%

1.6%

-3.4%

14.8%

-4.4%

-4.3%

9.1%

-4.6%

Yahoo! Sites

-0.3%

-1.8%

3.9%

-6.3%

3.4%

1.8%

0.8%

-1.5%

-2.7%

8.0%

-6.5%

-1.7%

5.5%

-8.4%

AOL

-1.6%

-1.1%

1.5%

5.2%

-9.4%

0.5%

-0.9%

1.2%

-8.2%

9.4%

2.4%

-2.6%

16.5%

-5.1%

2.2%

-2.1%

6.2%

-9.1%

4.0%

35.1%

2.8%

-8.9%

-12.4%

7.0%

-5.1%

-4.5%

9.7%

-7.5%

-0.1%

0.9%

2.2%

-2.8%

5.3%

7.4%

2.9%

-5.0%

1.2%

10.7%

-5.8%

-10.3%

14.6%

-5.4%

MSN-Microsoft Sites Ask Network

Total Quarterly Searches

-5.8%

17,123,594,259

1Q07 26,218,052,312

8,910,075,062

18,098,022,165

2Q07 27,804,548,064

9,895,494,580

19,715,911,869

3Q07 29,115,988,262

10,525,907,747

20,556,178,120

4Q07 30,192,575,782

10,491,850,712

20,373,418,397

Google Sites

4,483,655,852

9,114,763,120

14,077,814,382

4,996,928,190

10,188,230,450

15,518,005,728

5,459,123,358

11,004,343,563

16,360,407,493

6,151,037,065

12,032,935,476

17,661,970,398

6,139,377,909

11,993,911,145

Yahoo! Sites

2,292,178,678

4,542,764,853

6,881,642,805

2,192,199,726

4,459,309,990

6,766,662,050

2,324,736,567

4,614,551,197

6,841,686,419

2,404,919,113

4,653,743,541

6,865,036,811

2,332,177,645

4,468,333,856

AOL

457,272,564

909,537,427

1,368,784,639

483,343,730

921,020,897

1,360,859,366

436,086,834

877,205,541

1,281,968,122

442,631,698

895,862,040

1,337,512,690

514,452,264

1,002,751,743

MSN-Microsoft Sites

889,998,489

1,761,033,811

2,686,007,830

840,896,424

1,715,107,809

2,896,089,173

1,213,927,571

2,319,840,651

3,288,408,942

1,036,165,953

2,019,931,733

2,959,564,436

1,030,367,682

1,983,143,279

Ask Network

396,004,819

795,495,048

1,203,802,656

396,706,992

814,353,019

1,262,931,746

461,620,250

899,970,917

1,343,517,285

491,153,919

953,705,329

1,368,491,446

475,475,212

925,278,374

-0.3%

-0.9%

Total

8,519,110,401

Q/Q Change Total

1Q07

3Q07 11.1%

8.9%

4Q07

2.3%

4.5%

4.6%

5.7%

6.1%

4.7%

6.4%

Google Sites

9.6%

9.8%

11.6%

11.4%

11.8%

10.2%

9.2%

8.0%

5.4%

12.7%

9.3%

8.0%

-0.2%

Yahoo! Sites

-4.3%

-4.9%

-2.8%

-4.4%

-1.8%

-1.7%

6.0%

3.5%

1.1%

3.4%

0.8%

0.3%

-3.0%

-4.0%

-11.0%

-8.8%

-6.3%

5.7%

1.3%

-0.6%

-9.8%

-4.8%

-5.8%

1.5%

2.1%

4.3%

16.2%

11.9% -1.8%

AOL

2.0%

2Q07

4.3%

3.7%

MSN-Microsoft Sites

-3.2%

-2.9%

0.1%

-5.5%

-2.6%

7.8%

44.4%

35.3%

13.5%

-14.6%

-12.9%

-10.0%

-0.6%

Ask Network

-9.0%

-6.9%

-3.8%

0.2%

2.4%

4.9%

16.4%

10.5%

6.4%

6.4%

6.0%

1.9%

-3.2%

Search Share Total

Jan-07

Feb-07

100.0%

Mar-07

100.0%

Apr-07

100.0%

100.0%

May-07 100.0%

Jun-07 100.0%

Jul-07

Aug-07

100.0%

100.0%

Sep-07 100.0%

Oct-07 100.0%

Nov-07

Dec-07

100.0%

100.0%

Jan-08 100.0%

-0.3%

-3.0% Feb-08 100.0%

Google Sites

52.6%

53.8%

54.6%

56.1%

56.5%

54.9%

55.2%

56.5%

57.0%

58.4%

58.6%

58.4%

58.5%

59.2%

Yahoo! Sites

26.9%

26.2%

25.7%

24.6%

24.7%

23.8%

23.5%

23.3%

23.7%

22.8%

22.4%

22.9%

22.2%

21.6%

5.4%

5.3%

5.0%

5.4%

4.8%

4.5%

4.4%

4.5%

4.3%

4.2%

4.5%

4.6%

4.9%

4.9%

10.4%

10.1%

10.2%

9.4%

9.5%

12.2%

12.3%

11.3%

10.3%

9.8%

9.8%

9.8%

9.8%

9.6%

4.6%

4.6%

4.5%

4.5%

4.5%

4.6%

4.7%

4.5%

4.7%

4.7%

4.6%

4.3%

4.5%

4.6%

AOL MSN-Microsoft Sites Ask Network

Y/Y Change

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

Feb-08

Total

---

---

---

29.3%

24.9%

26.4%

37.6%

28.4%

16.8%

26.0%

19.5%

15.4%

23.2%

14.8%

Google Sites

---

---

---

60.6%

53.1%

49.7%

64.3%

55.7%

38.7%

50.4%

39.6%

30.4%

36.9%

26.4%

Yahoo! Sites

---

---

---

7.8%

4.7%

2.2%

8.4%

0.3%

-4.5%

0.4%

-5.6%

-3.8%

1.7%

-5.1%

AOL

---

---

---

-2.2%

-8.3%

-9.3%

-7.8%

14.2%

-6.6%

-13.9%

-6.1%

-5.0%

12.5%

MSN-Microsoft Sites

---

---

---

-4.6%

-6.8%

19.8%

35.7%

17.9%

5.8%

12.7%

10.0%

7.9%

15.8%

9.4%

Ask Network

---

---

---

6.8%

7.5%

14.5%

29.5%

-8.4%

-12.4%

12.9%

10.3%

4.7%

20.1%

12.6%

Quarterly Market Share Total

1Q07

2Q07

3Q07

8.0%

4Q07

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Google Sites

52.6%

53.2%

53.7%

56.1%

56.3%

55.8%

55.2%

55.8%

56.2%

58.4%

58.5%

58.5%

58.5%

58.9%

Yahoo! Sites

26.9%

26.5%

24.3%

23.5%

23.4%

26.2%

24.6%

24.6%

23.5%

22.8%

22.6%

22.7%

22.2%

21.9%

5.4%

5.3%

5.2%

5.4%

5.1%

4.9%

4.4%

4.4%

4.4%

4.2%

4.4%

4.4%

4.9%

4.9%

10.4%

10.3%

10.2%

9.4%

9.5%

10.4%

12.3%

11.8%

11.3%

9.8%

9.8%

9.8%

9.8%

9.7%

4.6%

4.6%

4.6%

4.5%

4.5%

4.5%

4.7%

4.6%

4.6%

4.7%

4.6%

4.5%

4.5%

4.5%

Total

---

---

---

29.3%

27.0%

26.8%

37.6%

32.9%

27.2%

26.0%

22.8%

20.3%

23.2%

19.0%

Google Sites

---

---

---

60.6%

56.7%

54.2%

64.3%

59.9%

52.3%

50.4%

44.9%

40.0%

36.9%

31.6%

Yahoo! Sites

---

---

---

7.8%

6.2%

4.8%

8.4%

4.2%

1.2%

0.4%

-2.6%

-3.0%

1.7%

-1.6%

AOL

---

---

---

-2.2%

-5.2%

-6.6%

-7.8%

2.1%

-0.8%

-13.9%

-10.1%

-8.5%

12.5%

10.2%

MSN-Microsoft Sites

---

---

---

-4.6%

-5.7%

3.2%

35.7%

26.6%

19.6%

12.7%

11.4%

10.2%

15.8%

12.6%

Ask Network

---

---

---

6.8%

7.2%

9.7%

29.5%

7.7%

0.1%

12.9%

11.6%

9.4%

20.1%

16.3%

AOL MSN-Microsoft Sites Ask Network

Y/Y Query Growth - Quarterly

1Q07

2Q07

3Q07

4Q07

Note: Shaded cells represent intra-quarter quarterly comparisons Source: comScore Networks, Lehman Brothers estimates

April 07, 2008

51

Lehman Brothers

Internet Data Book

April 2008

Figure 63: Global Search Market Share and Growth, January 2007–February 2008 Searches

Jan-07

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

Feb-08

Total

39,271,472,000

38,694,282,000

45,488,285,000

43,275,654,000

45,625,287,000

46,952,761,000

47,107,205,000

46,740,210,000

46,640,845,000

51,666,583,000

50,244,495,000

48,589,823,000

52,316,984,000

48,269,655,000

Google Sites

25,950,403,000

25,750,059,000

28,865,015,000

28,079,236,000

29,852,035,000

30,272,310,000

29,738,081,000

30,051,734,000

31,037,600,000

34,349,551,000

33,503,030,000

32,316,035,000

35,464,484,000

32,849,799,000

Yahoo! Sites Microsoft Sites

8,131,394,000

7,762,525,000

8,403,888,000

7,648,882,000

7,915,866,000

7,990,425,000

8,267,802,000

8,217,840,000

7,893,794,000

8,440,644,000

8,155,221,000

8,228,126,000

8,501,574,000

7,811,186,000

1,750,290,000

1,709,246,000

1,887,445,000

1,790,823,000

1,871,961,000

2,268,589,000

2,335,192,000

2,096,240,000

1,976,225,000

2,055,534,000

1,938,469,000

1,861,366,000

2,130,001,000

1,994,075,000

Ask Network

660,831,000

649,816,000

686,382,000

657,910,000

706,634,000

736,419,000

751,095,000

743,050,000

756,960,000

837,422,000

818,689,000

728,210,000

846,287,000

AOL

639,868,000

601,608,000

578,169,000

581,367,000

536,877,000

572,001,000

588,406,000

573,465,000

550,623,000

597,965,000

615,867,000

590,852,000

682,292,000

614,330,000

2,138,686,000

2,221,028,000

2,989,118,000

2,629,753,000

2,786,308,000

3,205,715,000

3,484,004,000

3,253,213,000

2,955,795,000

3,741,321,000

3,637,055,000

3,428,278,000

3,296,143,000

3,030,778,000

NA

NA

2,078,268,000

1,887,683,000

1,955,606,000

1,907,302,000

1,942,625,000

1,804,668,000

1,469,848,000

1,644,146,000

1,576,164,000

1,436,956,000

1,396,203,000

1,191,054,000

Baidu NHN

Monthly Change

Jan-07

Total

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

778,433,000

Feb-08

13.4%

-1.5%

17.6%

-4.9%

5.4%

2.9%

0.3%

-0.8%

-0.2%

10.8%

-2.8%

-3.3%

7.7%

-7.7%

Google Sites

8.4%

-0.8%

12.1%

-2.7%

6.3%

1.4%

-1.8%

1.1%

3.3%

10.7%

-2.5%

-3.5%

9.7%

-7.4%

Yahoo! Sites

3.9%

-4.5%

8.3%

-9.0%

3.5%

0.9%

3.5%

-0.6%

-3.9%

6.9%

-3.4%

0.9%

3.3%

Microsoft Sites

8.4%

-2.3%

10.4%

-5.1%

4.5%

21.2%

2.9%

-10.2%

-5.7%

4.0%

-5.7%

-4.0%

14.4%

-6.4%

Ask Network

7.6%

-1.7%

5.6%

-4.1%

7.4%

4.2%

2.0%

-1.1%

1.9%

10.6%

-2.2%

-11.1%

16.2%

-8.0%

AOL

-4.1%

15.5%

0.3%

-6.0%

-3.9%

0.6%

-7.7%

6.5%

Baidu

---

3.9%

34.6%

-12.0%

6.0%

15.1%

8.7%

-6.6%

-9.1%

26.6%

-2.8%

-5.7%

-3.9%

-8.1%

NHN

---

---

---

-9.2%

3.6%

-2.5%

1.9%

-7.1%

-18.6%

11.9%

-4.1%

-8.8%

-2.8%

-14.7%

100,586,639,000

Quarterly

1Q07

2.9%

-2.5%

2Q07

-4.0%

8.6%

3.0%

-8.1%

3Q07

-10.0%

4Q07

Total

39,271,472,000

77,965,754,000

123,454,039,000

43,275,654,000

88,900,941,000 135,853,702,000

47,107,205,000

93,847,415,000

140,488,260,000

51,666,583,000

101,911,078,000

150,500,901,000

52,316,984,000

Google Sites

25,950,403,000

51,700,462,000

80,565,477,000

28,079,236,000

57,931,271,000

88,203,581,000

29,738,081,000

59,789,815,000

90,827,415,000

34,349,551,000

67,852,581,000

100,168,616,000

35,464,484,000

68,314,283,000

Yahoo! Sites

8,131,394,000

15,893,919,000

24,297,807,000

7,648,882,000

15,564,748,000

23,555,173,000

8,267,802,000

16,485,642,000

24,379,436,000

8,440,644,000

16,595,865,000

24,823,991,000

8,501,574,000

16,312,760,000

Microsoft Sites

1,750,290,000

3,459,536,000

5,346,981,000

1,790,823,000

3,662,784,000

5,931,373,000

2,335,192,000

4,431,432,000

6,407,657,000

2,055,534,000

3,994,003,000

5,855,369,000

2,130,001,000

4,124,076,000

Ask Network

660,831,000

1,310,647,000

1,997,029,000

657,910,000

1,364,544,000

2,100,963,000

751,095,000

1,494,145,000

2,251,105,000

837,422,000

1,656,111,000

2,384,321,000

846,287,000

1,624,720,000

AOL

639,868,000

1,241,476,000

1,819,645,000

581,367,000

1,118,244,000

1,690,245,000

588,406,000

1,161,871,000

1,712,494,000

597,965,000

1,213,832,000

1,804,684,000

682,292,000

1,296,622,000

2,138,686,000

4,359,714,000

7,348,832,000

2,629,753,000

5,416,061,000

8,621,776,000

3,484,004,000

6,737,217,000

9,693,012,000

3,741,321,000

7,378,376,000

10,806,654,000

3,296,143,000

6,326,921,000

NA

NA

2,078,268,000

1,887,683,000

3,843,289,000

5,750,591,000

1,942,625,000

3,747,293,000

5,217,141,000

1,644,146,000

3,220,310,000

4,657,266,000

1,396,203,000

2,587,257,000

Baidu NHN

Q/Q Change

1Q07

2Q07

3Q07

4Q07

Total

20.5%

17.4%

22.2%

10.2%

14.0%

10.0%

8.9%

5.6%

3.4%

9.7%

8.6%

7.1%

Google Sites

19.6%

16.0%

17.6%

8.2%

12.1%

9.5%

5.9%

3.2%

3.0%

15.5%

13.5%

10.3%

3.2%

0.7%

Yahoo! Sites

4.1%

0.9%

3.0%

-5.9%

-2.1%

-3.1%

8.1%

5.9%

3.5%

2.1%

0.7%

1.8%

0.7%

1.3%

-1.7%

-1.3%

Microsoft Sites

2.5%

1.8%

6.7%

2.3%

5.9%

10.9%

30.4%

21.0%

8.0%

-12.0%

-9.9%

-8.6%

3.6%

3.3%

Ask Network

-2.3%

-1.4%

2.8%

-0.4%

4.1%

5.2%

14.2%

9.5%

7.1%

11.5%

10.8%

5.9%

1.1%

-1.9%

AOL

-8.7%

-9.1%

-9.2%

-9.1%

-9.9%

-7.1%

1.2%

3.9%

1.3%

1.6%

4.5%

5.4%

14.1%

6.8%

Baidu

---

---

---

23.0%

24.2%

17.3%

32.5%

24.4%

12.4%

7.4%

9.5%

11.5%

-11.9%

-14.3%

NHN

---

---

---

---

---

---

2.9%

-2.5%

-9.3%

-15.4%

-14.1%

-10.7%

-15.1%

-19.7%

Search Share

Jan-07

Total

Feb-07

Mar-07

Apr-07

May-07

Jun-07

Jul-07

Aug-07

Sep-07

Oct-07

Nov-07

Dec-07

Jan-08

Feb-08

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

100.0%

Google Sites

66.1%

66.5%

63.5%

64.9%

65.4%

64.5%

63.1%

64.3%

66.5%

66.5%

66.7%

66.5%

67.8%

68.1%

Yahoo! Sites

20.7%

20.1%

18.5%

17.7%

17.3%

17.0%

17.6%

17.6%

16.9%

16.3%

16.2%

16.9%

16.3%

16.2%

Microsoft Sites

4.5%

4.4%

4.1%

4.1%

4.1%

4.8%

5.0%

4.5%

4.2%

4.0%

3.9%

3.8%

4.1%

Ask Network

1.7%

1.7%

1.5%

1.5%

1.5%

1.6%

1.6%

1.6%

1.6%

1.6%

1.6%

1.5%

1.6%

1.6%

AOL

1.6%

1.6%

1.3%

1.3%

1.2%

1.2%

1.2%

1.2%

1.2%

1.2%

1.2%

1.2%

1.3%

1.3%

Baidu

5.4%

5.7%

6.6%

6.1%

6.1%

6.8%

7.4%

7.0%

6.3%

7.2%

7.2%

7.1%

6.3%

6.3%

NA

NA

4.6%

4.4%

4.3%

4.1%

4.1%

3.9%

3.2%

3.2%

3.1%

3.0%

2.7%

2.5%

NHN

Quarterly Market Share Total

1Q07

2Q07

3Q07

4.1%

4Q07

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Google Sites

66.1%

66.3%

65.3%

64.9%

65.2%

64.9%

63.1%

63.7%

64.7%

66.5%

66.6%

66.6%

67.8%

67.9%

Yahoo! Sites

16.2%

20.7%

20.4%

19.7%

17.7%

17.5%

17.3%

17.6%

17.6%

17.4%

16.3%

16.3%

16.5%

16.3%

Microsoft Sites

4.5%

4.4%

4.3%

4.1%

4.1%

4.4%

5.0%

4.7%

4.6%

4.0%

3.9%

3.9%

4.1%

Ask Network

1.7%

1.7%

1.6%

1.5%

1.5%

1.5%

1.6%

1.6%

1.6%

1.6%

1.6%

1.6%

1.6%

1.6%

AOL

1.6%

1.6%

1.5%

1.3%

1.3%

1.2%

1.2%

1.2%

1.2%

1.2%

1.2%

1.2%

1.3%

1.3%

---

---

6.0%

6.1%

6.1%

6.3%

7.4%

7.2%

6.9%

7.2%

7.2%

7.2%

6.3%

6.3%

Baidu NHN

---

Y/Y Change

Jan-07

--Feb-07

1.7% Mar-07

4.4% Apr-07

4.3% May-07

4.2% Jun-07

4.1% Jul-07

4.0% Aug-07

3.7% Sep-07

3.2% Oct-07

3.2% Nov-07

3.1% Dec-07

2.7% Jan-08

4.1%

2.6% Feb-08

Total

---

---

---

47.5%

42.3%

42.4%

51.9%

51.8%

44.3%

58.5%

48.5%

40.3%

33.2%

24.7%

Google Sites

---

---

---

57.7%

50.3%

48.6%

51.8%

53.4%

48.7%

58.3%

46.5%

35.0%

36.7%

27.6%

Yahoo! Sites

---

---

---

-2.8%

-4.4%

-7.5%

-0.3%

1.5%

-4.9%

8.1%

2.6%

5.1%

4.6%

Microsoft Sites

---

---

---

-6.4%

-9.6%

7.5%

26.2%

14.7%

12.3%

20.4%

14.6%

15.3%

21.7%

16.7%

Ask Network

---

---

---

10.4%

12.5%

17.5%

25.0%

19.7%

10.7%

23.9%

25.4%

18.6%

28.1%

19.8%

0.6%

AOL

---

---

---

-50.0%

-55.7%

-53.5%

-12.2%

-13.6%

-20.8%

-14.6%

-7.4%

-7.4%

6.6%

2.1%

Baidu

---

---

---

---

---

---

---

---

---

---

---

---

---

36.5%

NHN

---

---

---

---

---

---

---

---

---

---

---

---

---

---

29.0%

Y/Y Change - Quarterly

1Q07

2Q07

3Q07

4Q07

Total

---

---

---

47.5%

44.8%

43.9%

51.9%

51.8%

49.3%

58.5%

53.4%

48.9%

33.2%

Google Sites

---

---

---

57.7%

53.8%

52.0%

51.8%

52.6%

51.2%

58.3%

52.2%

46.2%

36.7%

Yahoo! Sites

---

---

---

-2.8%

-3.6%

-5.0%

-0.3%

0.6%

-1.3%

8.1%

5.3%

5.3%

4.6%

2.6%

Microsoft Sites

---

---

---

-6.4%

-8.1%

-2.7%

26.2%

20.5%

17.8%

20.4%

17.5%

16.8%

21.7%

19.2%

Ask Network

---

---

---

10.4%

11.5%

13.5%

25.0%

22.3%

18.2%

23.9%

24.6%

22.7%

28.1%

24.0%

AOL

---

---

---

-50.0%

-52.9%

-53.1%

-12.2%

-12.9%

-15.6%

-14.6%

-11.1%

-9.9%

6.6%

4.4%

Baidu

---

---

---

---

---

---

---

---

---

---

---

---

54.1%

45.1%

NHN

---

---

---

---

---

---

---

---

---

---

---

---

---

---

Note: Shaded cells represent intra-quarter quarterly comparisons Source: comScore Networks, Lehman Brothers estimates

52

April 07, 2008

32.1%

Lehman Brothers

Internet Data Book

April 2008

Figure 64: Lehman Brothers Partnership Matrix, Part 1: Destination Site and Advertising Provider Portal Web Domain YAHOO.COM MSN.COM AOL.COM ABOUT.COM GO.COM GLAM.COM Network COMCAST.NET

Type of Site Portal Portal Portal Portal Portal Portal Portal

Feb-08 Unique Visitors 132,174 90,671 81,173 39,349 35,426 29,136 14,672

Natural Search Yahoo Microsoft Google -Yahoo Google Google

Paid Search Yahoo Microsoft Google Google Yahoo Google Google

Contextual Ads Yahoo Microsoft Google Google -Google --

Graphical Display Advertising Yahoo Microsoft AOL --Glam/Google Yahoo

Type of Site Portal Search Engine Search Engine Search Engine Video Search Engine Search Engine Search Engine Meta Search Engine Meta Search Engine Search Engine Search Engine Search Engine

Feb-08 Unique Visitors 129,560 28,569 13,504 10,113 5,847 6,074 3,129 6,396 #N/A 2,149 3,505 1,399

Natural Search Google Ask.com Ask.com --LookSmart Ask.com Google/Yahoo/Microsoft/Ask Google/Yahoo/Microsoft/Ask Yahoo Google --

Paid Search Google Google/Ask Google/Ask Google -LookSmart Google/Ask Google/Yahoo/Microsoft/Ask Google/Yahoo/Microsoft/Ask Yahoo Google --

Contextual Ads Google ----------Google

Graphical Display Advertising ----Google --------

Type of Site Weather General News General News Newspaper Website General News Newspaper Website General News Newspaper Website Social News Ranking Technology News Weather General News General News Newspaper Website General News

Feb-08 Unique Visitors 31,792 29,070 22,223 12,250 7,381 8,098 7,349 7,213 5,546 4,237 3,157 3,376 3,464 3,297 1,749

Natural Search Yahoo Microsoft Google Google Microsoft Yahoo -Google -Search.com (Meta) Google Yahoo --Yahoo

Paid Search Yahoo Microsoft Google Google Microsoft Yahoo -Google Microsoft Google Google Yahoo -Google Yahoo

Contextual Ads Seevast Seevast Google Google Quigo Quigo Quigo Google Microsoft Google Google Yahoo Quigo Quigo Google

Type of Site Social Networking Social Networking Social Networking Women Social Networking

Feb-08 Unique Visitors 67,972 32,436 4,784 4,571 2,496

Natural Search Google -Yahoo Yahoo Google

Paid Search Google -Yahoo Yahoo Google

Contextual Ads Google Microsoft -Yahoo Google

Graphical Display Advertising MySpace/Google Facebook/Microsoft Yahoo (UK, Ireland) -Google

Type of Site Online Auctions Multicategory E-Commerce Comparison Shopping Comparison Shopping Comparison Shopping Comparison Shopping Comparison Shopping Comparison Shopping

Feb-08 Unique Visitors 66,768 44,926 15,860 12,591 7,077 11,045 6,201 4,563

Natural Search -Amazon (A9) -------

Paid Search -Amazon (ClickRiver) Google Google Google Google Google Google

Contextual Ads Yahoo --------

Graphical Display Advertising Yahoo Amazon -------

Type of Site Financial News Financial News Financial News Financial News Financial News

Feb-08 Unique Visitors 5,971 5,613 1,979 3,335 998

Natural Search Eurekster Yahoo ----

Paid Search Business.com Yahoo Business.com Microsoft --

Contextual Ads Quigo Quigo IndustryBrains.com Microsoft Microsoft

Graphical Display Advertising Forbes/Yahoo ---Microsoft

Search/Navigation Web Domain GOOGLE.COM ASK.COM MYWEBSEARCH.COM ANSWERS.COM METACAFE.COM FINDARTICLES.COM LYCOS.COM INFOSPACE.COM DOGPILE.COM ALTAVISTA.COM IWON.COM TECHNORATI.COM

News/Information Web Domain WEATHER.COM MSNBC.COM CNN.COM NYTIMES.COM FOXNEWS.COM USATODAY.COM ABCNEWS.COM WASHINGTONPOST.COM DIGG.COM CNET.COM ACCUWEATHER.COM CBSNEWS.COM TIME.COM LATIMES.COM SALON.COM

Graphical Display Advertising -----------------

Community Web Domain MYSPACE.COM FACEBOOK.COM BEBO.COM IVILLAGE.COM FRIENDSTER.COM

Retail/E-Commerce Web Domain EBAY.COM AMAZON.COM BIZRATE.COM SHOPPING.COM SHOPLOCAL.COM SHOPZILLA.COM DEALTIME.COM PRICEGRABBER.COM

Business/Finance Web Domain FORBES.COM CNNMONEY.COM BUSINESSWEEK.COM WSJ.COM CNBC.COM

Source: Company Web sites, Lehman Brothers, comScore Networks

April 07, 2008

53

Lehman Brothers

Internet Data Book

April 2008

Figure 65: Lehman Brothers Partnership Matrix, Part 2: Destination Site and Advertising Provider Directories/Resources Web Domain MAPQUEST.COM DICTIONARY.COM SWITCHBOARD.COM MATCH.COM

Type of Site Maps Reference Directories Personals

Feb-08 Unique Visitors 45,000 14,354 5,336 4,312

Natural Search Google via AOL Google InfoSpace (Meta) Ask.com

Paid Search Google via AOL Google InfoSpace (Meta) Google/Ask

Contextual Ads -----

Graphical Display Advertising -----

Type of Site Online Video Movies Event Tickets Local Directory Entertainment/Music Entertainment News Entertainment News TV TV Entertainment/Music Multimedia Entertainment

Feb-08 Unique Visitors 63,921 22,110 13,276 12,341 7,433 9,393 7,539 8,537 7,880 3,947 2,903 NA

Natural Search --Ask.com Ask.com -Google via AOL -Yahoo SLI Systems -Yahoo --

Paid Search --Google/Ask Google/Ask Yahoo Google via AOL -Yahoo Yahoo Yahoo Yahoo --

Contextual Ads -Seevast --Yahoo -Quigo --Yahoo ---

Graphical Display Advertising Google ----------Viacom/Microsoft

Type of Site ISP ISP ISP

Feb-08 Unique Visitors 5,161 3,599 1,936

Natural Search Google Yahoo Yahoo

Paid Search Google Yahoo Yahoo

Contextual Ads ----

Graphical Display Advertising ----

Type of Site Email Blogs Social Networking-Photo Online Invitation

Feb-08 Unique Visitors 4,507 39,050 13,389 5,776

Natural Search Microsoft Google Yahoo --

Paid Search Microsoft Google Yahoo Google via Ask.com

Contextual Ads Microsoft ----

Graphical Display Advertising Microsoft ----

Type of Site Sports News Sports News Sports News Sports News Sports News

Feb-08 Unique Visitors 14,943 16,157 5,976 5170 2,980

Natural Search -Microsoft Yahoo -Google

Paid Search Quigo Microsoft Yahoo Seevast Google

Contextual Ads Quigo Seevast Quigo Seevast Google

Graphical Display Advertising ------

Type of Site Career Resources Health Automotive Technology & Videogame sites

Feb-08 Unique Visitors 14,395 12,459 5,486 NA

Natural Search Yahoo -Google --

Paid Search Yahoo Yahoo ---

Contextual Ads -----

Graphical Display Advertising --Cars/Yahoo Ziff-Davis/Yahoo

Natural Search Baidu Google Yahoo BBC Naver Google Yahoo Google

Paid Search -Google Yahoo -Yahoo Google Yahoo

Entertainment Web Domain YOUTUBE.COM IMDB.COM TICKETMASTER.COM CITYSEARCH.COM MTV.COM TMZ.COM PEOPLE.COM ABC.COM NBC.COM VH1.COM WARNERBROS.COM Viacom Sites

ISP Web Domain EARTHLINK.NET NETZERO.NET JUNO.COM

Services Web Domain HOTMAIL.COM BLOGGER.COM FLICKR.COM EVITE.COM

Sports Web Domain ESPN.COM FOXSPORTS.COM SI.COM NASCAR.COM SPORTSLINE.COM

Other Web Domain HOTJOBS.COM WEBMD.COM CARS.COM Ziff-Davis Media Sites

International Web Domain BAIDU.COM Homepage SINA.COM Sites YAHOO.CO.JP BBC.CO.UK NAVER.COM DAUM.NET ALIBABA.COM TERRA.COM

Type of Site Search Engine Portal Portal News Portal Portal Portal Web Services Company Portal

Country China China Japan U.K. S. Korea S. Korea China Spain

Jan-08 Unique Visitors 66,711 58,104 50,233 42,868 23,040 19,312 18,331 4,745

Software Company Adobe Adobe DivX CA

Provider Yahoo! Google Yahoo! Yahoo!

Length of Deal undisclosed undisclosed 2 years undisclosed

Products Distributed Toolbar on Acrobat Reader Toolbar on Shockwave Player Toolbar & IE7 customized for Yahoo! Toolbar on home/home office products

OEM Company DELL HP HP ACER LENOVO GATEWAY

Provider Google Yahoo! AOL Yahoo! Microsoft Google

Deal Scope Google toolbar and desktop search Yahoo! search toolbar in the US AOL customized homepage in the US, Toolbar and Search WW Yahoo! search toolbar & homepage Windows Live services pre-loaded Google toolbar and desktop search

Source: Company reports, Lehman Brothers, comScore Networks

54

April 07, 2008

Contextual Ads ---------

Lehman Brothers

Internet Data Book

April 2008

Figure 66: Help Wanted Advertising Market Share Analysis, U.S. ($ in millions), 1998–2011E Help Wanted Market - U.S. Traditional Newspaper Internet Total Revenue % Change Traditional Newspaper Internet Total

1998

1999

2000

2001

2002

2003

2004

2005

7,702.1 182.0 7,884.1

8,026.0 411.0 8,437.0

8,712.6 740.0 9,452.6

5,704.7 877.0 6,581.7

4,387.5 798.0 5,185.5

3,977.4 859.0 4,836.4

4,576.3 1,161.0 5,737.3

5,126.5 1,601.3 6,727.8

2007(E)

2008(E)

2009(E)

2010(E)

2011(E)

4,741.1 2,079.2 6,820.4

3,769.9 2,431.3 6,201.2

2,916.4 2,482.2 5,398.5

2,551.8 2,651.5 5,203.4

2,296.7 2,832.8 5,129.4

2,067.0 3,026.7 5,093.7

4.2% 125.8% 7.0%

8.6% 80.0% 12.0%

-34.5% 18.5% -30.4%

-23.1% -9.0% -21.2%

-9.3% 7.6% -6.7%

15.1% 35.2% 18.6%

12.0% 37.9% 17.3%

-7.5% 29.8% 1.4%

-20.5% 16.9% -9.1%

-22.6% 2.1% -12.9%

-12.5% 6.8% -3.6%

-10.0% 6.8% -1.4%

-10.0% 6.8% -0.7%

95.1% 4.9% 100.0%

92.2% 7.8% 100.0%

86.7% 13.3% 100.0%

84.6% 15.4% 100.0%

82.2% 17.8% 100.0%

79.8% 20.2% 100.0%

76.2% 23.8% 100.0%

69.5% 30.5% 100.0%

60.8% 39.2% 100.0%

54.0% 46.0% 100.0%

49.0% 51.0% 100.0%

44.8% 55.2% 100.0%

40.6% 59.4% 100.0%

Internet Help Wanted Market - U.S. -- Major Players Revenue Monster (U.S.) --CareerBuilder --Other --Total 182.0 411.0

270.3 80.0 389.7 740.0

373.6 89.0 414.4 877.0

288.8 46.5 462.7 798.0

300.5 67.5 491.1 859.0

405.5 124.4 631.1 1,161.0

521.6 227.7 852.0 1,601.3

658.1 356.2 1,065.0 2,079.2

707.4 499.2 1,224.8 2,431.3

672.0 524.2 1,286.0 2,482.2

705.6 563.5 1,382.4 2,651.5

740.9 605.7 1,486.1 2,832.8

777.9 651.2 1,597.6 3,026.7

% Change Monster (U.S.) CareerBuilder Other Total

---80.0%

38.2% 11.3% 6.3% 18.5%

-22.7% -47.7% 11.6% -9.0%

4.0% 45.0% 6.1% 7.6%

% Market Share Traditional Newspaper Internet Total

----

2006(A)

97.7% 2.3% 100.0%

-----

---125.8%

35.0% 84.4% 28.5% 35.2%

28.6% 83.1% 35.0% 37.9%

26.2% 56.4% 25.0% 29.8%

7.5% 40.2% 15.0% 16.9%

-5.0% 5.0% 5.0% 2.1%

5.0% 7.5% 7.5% 6.8%

5.0% 7.5% 7.5% 6.8%

5.0% 7.5% 7.5% 6.8%

E = Lehman Brothers estimates A = Actual Note: CareerBuilder revenue shown excludes revenue allocated directly to the contributing newspaper websites (approximately 35% of total in 2007). Thus, the contributing newspaper websites' help wanted revenue is included in the other category.

Source: NAA, Forrester, Lehman Brothers Advertising & Publishing Analyst Craig Huber

Figure 67: Auto Classified Advertising Market Share, U.S. ($ in millions), 1998–2011E Auto Classified Market - U.S. Traditional Newspaper Internet Total Revenue % Change Traditional Newspaper Internet Total % Market Share Traditional Newspaper Internet Total E = Lehman Brothers estimates

1998

1999

2000

2001

2002

2003

2004

2005

4,505.3 21.5 4,526.8

4,911.6 38.7 4,950.3

5,026.3 65.8 5,092.1

4,889.5 111.8 5,001.3

5,156.0 190.1 5,346.1

5,192.4 304.2 5,496.6

5,023.8 446.9 5,470.7

4,589.0 625.6 5,214.6

---99.5% 0.5% 100.0%

2006(A)

2007(E)

2008(E)

2009(E)

2010(E)

2011(E)

3,999.5 782.0 4,781.6

3,256.0 899.3 4,155.4

2,753.8 989.3 3,743.1

2,409.6 1,088.2 3,497.8

2,168.7 1,169.8 3,338.5

1,951.8 1,257.5 3,209.3

9.0% 80.0% 9.4%

2.3% 70.0% 2.9%

-2.7% 70.0% -1.8%

5.5% 70.0% 6.9%

0.7% 60.0% 2.8%

-3.2% 46.9% -0.5%

-8.7% 40.0% -4.7%

-12.8% 25.0% -8.3%

-18.6% 15.0% -13.1%

-15.4% 10.0% -9.9%

-12.5% 10.0% -6.6%

-10.0% 7.5% -4.6%

-10.0% 7.5% -3.9%

99.2% 0.8% 100.0%

98.7% 1.3% 100.0%

97.8% 2.2% 100.0%

96.4% 3.6% 100.0%

94.5% 5.5% 100.0%

91.8% 8.2% 100.0%

88.0% 12.0% 100.0%

83.6% 16.4% 100.0%

78.4% 21.6% 100.0%

73.6% 26.4% 100.0%

68.9% 31.1% 100.0%

65.0% 35.0% 100.0%

60.8% 39.2% 100.0%

A = Actual

Source: NAA, Forrester, Lehman Brothers Advertising & Publishing Analyst Craig Huber

Figure 68: Real Estate Advertising Market Share Analysis, U.S. ($ in millions), 1998–2011E Real Estate Market - U.S. Traditional Newspaper Internet Total Revenue % Change Traditional Newspaper Internet Total % Market Share Traditional Newspaper Internet Total E = Lehman Brothers estimates

1998

1999

2000

2001

2002

2003

2004

2005

3,094.3 38.4 3,132.7

3,116.3 65.3 3,181.6

3,166.8 110.9 3,277.8

3,511.8 188.6 3,700.4

3,668.4 320.6 3,989.1

3,953.7 398.0 4,351.7

4,221.5 565.1 4,786.6

4,639.4 762.9 5,402.2

---98.8% 1.2% 100.0%

2006(A)

2007(E)

2008(E)

2009(E)

2010(E)

2011(E)

5,155.5 953.6 6,109.1

3,996.4 1,096.6 5,093.0

3,155.9 1,206.3 4,362.2

2,761.4 1,326.9 4,088.3

2,485.3 1,426.4 3,911.7

2,236.8 1,533.4 3,770.1

0.7% 70.0% 1.6%

1.6% 70.0% 3.0%

10.9% 70.0% 12.9%

4.5% 70.0% 7.8%

7.8% 24.1% 9.1%

6.8% 42.0% 10.0%

9.9% 35.0% 12.9%

11.1% 25.0% 13.1%

-22.5% 15.0% -16.6%

-21.0% 10.0% -14.4%

-12.5% 10.0% -6.3%

-10.0% 7.5% -4.3%

-10.0% 7.5% -3.6%

97.9% 2.1% 100.0%

96.6% 3.4% 100.0%

94.9% 5.1% 100.0%

92.0% 8.0% 100.0%

90.9% 9.1% 100.0%

88.2% 11.8% 100.0%

85.9% 14.1% 100.0%

84.4% 15.6% 100.0%

78.5% 21.5% 100.0%

72.3% 27.7% 100.0%

67.5% 32.5% 100.0%

63.5% 36.5% 100.0%

59.3% 40.7% 100.0%

A = Actual

Source: NAA, Forrester, Lehman Brothers Advertising & Publishing Analyst Craig Huber

April 07, 2008

55

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Figure 69: Select Internet Advertising and Usage Statistics in the U.S. and U.K. Markets, 2006 & 1H07 ($ in millions) 2006 US

UK*

US

UK**

Total Advertising Market

$291,964

$32,436

$149,817

$17,922

Internet Advertising Y/Y % Internet Advertising Growth

$16,879 34.6%

$3,715 41.6%

$9,993 27.0%

$2,628 41.3%

5.8%

11.5%

6.7%

14.7%

Internet Advertising Split Display % of Total

$5,373 31.8%

$836 22.5%

$3,198 32.0%

$565 21.5%

Search % of Total

$6,799 40.3%

$2,147 57.8%

$4,097 41.0%

$1,500 57.1%

Classifieds % of Total

$3,059 18.1%

$698 18.8%

$1,699 17.0%

$547 20.8%

Other % of Total

$1,648 9.8%

$33 0.9%

$999 10.0%

$16 0.6%

Total Internet Advertsing % of total

$16,879 100.0%

$3,715 100.0%

$9,993 100.0%

$2,628 100.0%

% Internet Media Consumption

19%

25%

TBD

26%

Broadband Penetration

70%

89%

75%

90%

Online Advertising Penetration

* $1.84 exchange rate used, the average for 2006 ** $1.97 exchange rate used, the average for 1H07 Source: IAB UK, Lehman Brothers estimates

56

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April 07, 2008

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Figure 70: U.S. E-Commerce by Category, 2003–11 Forecast ($ in millions) Apparel General Apparel Accessories Footwear

2003 $6,922 $5,139 $737 $1,046

2004 $8,542 $6,055 $870 $1,617

2005 $11,150 $7,863 $1,066 $2,220

2006E $13,762 $9,571 $1,333 $2,859

2007E $16,420 $11,290 $1,653 $3,478

2008E $19,260 $13,179 $1,984 $4,096

2009E $22,213 $15,213 $2,314 $4,686

2010E $25,215 $17,357 $2,631 $5,227

2011E $28,211 $19,566 $2,932 $5,713

Books Trade/consumer Academic

$4,070 $2,926 $1,144

$4,378 $3,078 $1,300

$4,743 $3,282 $1,461

$5,268 $3,621 $1,648

$5,864 $4,030 $1,834

$6,371 $4,378 $1,992

$6,795 $4,670 $2,125

$7,150 $4,914 $2,236

$7,451 $5,121 $2,330

$13,274 $10,387 $1,783 $1,104

$14,622 $11,442 $2,013 $1,167

$16,221 $12,599 $2,356 $1,265

$18,166 $14,131 $2,664 $1,372

$20,517 $15,935 $3,092 $1,491

$22,778 $17,659 $3,526 $1,592

$25,018 $19,364 $3,973 $1,680

$27,299 $21,100 $4,440 $1,758

$29,671 $22,906 $4,935 $1,829

Consumer electronics

$4,525

$5,756

$7,796

$9,800

$11,940

$14,381

$17,117

$20,130

$23,392

Flowers/cards/gifts Flowers Cards Gift cards and gift certificates

$4,223 $778 $303 $3,143

$5,469 $1,129 $440 $3,900

$6,811 $1,487 $599 $4,725

$8,344 $1,833 $723 $5,788

$10,322 $2,298 $846 $7,178

$12,374 $2,787 $968 $8,619

$14,407 $3,270 $1,086 $10,051

$16,346 $3,721 $1,196 $11,429

$18,147 $4,119 $1,294 $12,734

Computer hardware/software Computer hardware Computer software Computer peripherals

Cosmetics and fragrances

$278

$406

$565

$760

$952

$1,139

$1,310

$1,459

$1,585

Over-the-counter personal care

$519

$736

$982

$1,292

$1,621

$1,994

$2,401

$2,830

$3,269

Home furnishings Furniture Home décor and crafts Linens

$4,271 $1,578 $2,044 $649

$5,953 $2,210 $2,916 $828

$7,828 $3,045 $3,770 $1,013

$10,204 $4,112 $4,929 $1,163

$12,540 $5,191 $6,031 $1,318

$15,041 $6,419 $7,167 $1,456

$17,650 $7,770 $8,305 $1,575

$20,315 $9,209 $9,429 $1,678

$22,996 $10,696 $10,535 $1,766

Appliances and tools Tools/hardware Garden supplies Major appliances Small appliances

$2,631 $436 $416 $825 $955

$3,670 $726 $655 $1,043 $1,246

$4,765 $1,120 $916 $1,209 $1,519

$5,904 $1,574 $1,203 $1,406 $1,720

$7,046 $1,992 $1,482 $1,594 $1,978

$8,261 $2,501 $1,809 $1,749 $2,203

$9,561 $3,112 $2,183 $1,873 $2,394

$10,965 $3,832 $2,604 $1,971 $2,557

$12,487 $4,669 $3,070 $2,049 $2,698

Office supplies

$2,721

$3,446

$4,330

$5,317

$6,279

$7,544

$8,880

$10,259

$11,656

$194

$294

$432

$527

$705

$928

$1,199

$1,517

$1,879

Jewelry/luxury goods

$1,561

$2,388

$3,247

$4,049

$4,799

$5,627

$6,522

$7,469

$8,452

Music/video Music Video

$4,658 $1,184 $3,474

$5,553 $1,344 $4,209

$6,667 $1,536 $5,131

$8,189 $1,796 $6,392

$9,945 $2,100 $7,845

$11,753 $2,329 $9,425

$13,656 $2,562 $11,094

$15,614 $2,798 $12,816

$17,593 $3,031 $14,562

Sporting goods and apparel Sporting goods and equipment Sporting apparel

$2,543 $1,701 $841

$3,559 $2,372 $1,188

$4,647 $3,009 $1,638

$5,758 $3,639 $2,119

$6,835 $4,228 $2,607

$8,021 $4,883 $3,138

$9,301 $5,602 $3,699

$10,654 $6,382 $4,273

$12,060 $7,217 $4,843

Tickets Movie tickets Event tickets

$1,963 $297 $1,666

$2,832 $468 $2,364

$3,916 $655 $3,261

$5,115 $841 $4,275

$6,390 $1,026 $5,364

$7,897 $1,238 $6,659

$9,649 $1,477 $8,172

$11,651 $1,741 $9,910

$13,903 $2,028 $11,874

Toys/video games Toys Baby products Video games

$4,006 $2,130 $779 $1,097

$5,076 $2,663 $1,015 $1,399

$6,175 $3,142 $1,305 $1,728

$7,451 $3,728 $1,607 $2,117

$8,963 $4,402 $1,935 $2,625

$10,444 $5,035 $2,258 $3,152

$11,824 $5,591 $2,557 $3,675

$13,060 $6,055 $2,825 $4,179

$14,139 $6,425 $3,057 $4,656

$4,602 $62,960

$5,011 $77,691

$5,457 $95,731

$5,942 $115,848

$6,368 $137,506

$6,877 $160,691

$7,490 $184,994

$8,227 $210,160

$9,100 $235,991

$5,129

$7,173

$11,672

$15,930

$19,028

$22,250

$25,470

$28,568

$31,446

Pet supplies

Other* General merchandise subtotal Auto/auto parts Food/beverage Travel Airline tickets Car rentals Full-service travel agents Hotel reservations Auto/grocery/travel subtotal Total U.S. Online Retail

$3,424

$4,031

$4,931

$6,227

$7,236

$8,380

$9,671

$11,118

$12,728

$50,466 $32,379 $2,086 $773 $15,229 $59,020

$57,118 $35,810 $2,430 $985 $17,893 $68,322

$64,714 $39,604 $2,832 $1,255 $21,023 $81,316

$73,400 $43,800 $3,300 $1,600 $24,700 $95,557

$84,600 $48,800 $4,000 $2,200 $29,600 $110,864

$96,500 $54,200 $4,600 $2,800 $34,900 $127,130

$108,700 $60,100 $5,200 $3,300 $40,100 $143,841

$119,100 $63,700 $5,800 $3,700 $45,900 $158,786

$129,413 $66,885 $6,380 $4,052 $52,097 $173,587

$121,980

$146,013

$177,047

$211,405

$248,370

$287,821

$328,836

$368,946

$409,578

Note: 2006–11 estimates are pulled directly from Forrester’s five-year forecast. 2003–05 numbers are Lehman estimates derived using growth curves provided by Forrester in both the October 2006 report as well as the previous report from September 2005. Source: Forrester Research, Lehman Brothers estimates

58

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Figure 71: U.S. E-Commerce Growth Rates by Category, 2004–11E 2004

2005

2006E

2007E

2008E

2009E

2010E

2011E

Apparel General Apparel Accessories Footwear

23% 18% 18% 55%

31% 30% 23% 37%

23% 22% 25% 29%

19% 18% 24% 22%

17% 17% 20% 18%

15% 15% 17% 14%

14% 14% 14% 12%

12% 13% 11% 9%

Books Trade/consumer Academic

8% 5% 14%

8% 7% 12%

11% 10% 13%

11% 11% 11%

9% 9% 9%

7% 7% 7%

5% 5% 5%

4% 4% 4%

Computer hardware/software Computer hardware Computer software Computer peripherals

10% 10% 13% 6%

11% 10% 17% 8%

12% 12% 13% 8%

13% 13% 16% 9%

11% 11% 14% 7%

10% 10% 13% 6%

9% 9% 12% 5%

9% 9% 11% 4%

Consumer electronics

27%

35%

26%

22%

20%

19%

18%

16%

Flowers/cards/gifts Flowers Cards Gift cards and gift certificates

29% 45% 45% 24%

25% 32% 36% 21%

23% 23% 21% 23%

24% 25% 17% 24%

20% 21% 14% 20%

16% 17% 12% 17%

13% 14% 10% 14%

11% 11% 8% 11%

Cosmetics and fragrances

46%

39%

34%

25%

20%

15%

11%

9%

Over-the-counter personal care

42%

33%

32%

26%

23%

20%

18%

15%

Home furnishings Furniture Home décor and crafts Linens

39% 40% 43% 28%

31% 38% 29% 22%

30% 35% 31% 15%

23% 26% 22% 13%

20% 24% 19% 10%

17% 21% 16% 8%

15% 19% 14% 7%

13% 16% 12% 5%

Appliances and tools Tools/hardware Garden supplies Major appliances Small appliances

39% 67% 58% 26% 30%

30% 54% 40% 16% 22%

24% 41% 31% 16% 13%

19% 27% 23% 13% 15%

17% 26% 22% 10% 11%

16% 24% 21% 7% 9%

15% 23% 19% 5% 7%

14% 22% 18% 4% 6%

Office supplies

27%

26%

23%

18%

20%

18%

16%

14%

Pet supplies

52%

47%

22%

34%

32%

29%

27%

24%

Jewelry/luxury goods

53%

36%

25%

19%

17%

16%

15%

13%

Music/video Music Video

19% 14% 21%

20% 14% 22%

23% 17% 25%

21% 17% 23%

18% 11% 20%

16% 10% 18%

14% 9% 16%

13% 8% 14%

Sporting goods and apparel Sporting goods and equipment Sporting apparel

40% 39% 41%

31% 27% 38%

24% 21% 29%

19% 16% 23%

17% 15% 20%

16% 15% 18%

15% 14% 15%

13% 13% 13%

Tickets Movie tickets Event tickets

44% 58% 42%

38% 40% 38%

31% 28% 31%

25% 22% 25%

24% 21% 24%

22% 19% 23%

21% 18% 21%

19% 16% 20%

Toys/video games Toys Baby products Video games

27% 25% 30% 28%

22% 18% 29% 24%

21% 19% 23% 23%

20% 18% 20% 24%

17% 14% 17% 20%

13% 11% 13% 17%

10% 8% 10% 14%

8% 6% 8% 11%

Other* General merchandise subtotal

9% 23%

9% 23%

9% 21%

7% 19%

8% 17%

9% 15%

10% 14%

11% 12%

Auto/auto parts

40%

63%

36%

19%

17%

14%

12%

10%

Food/beverage

18%

22%

26%

16%

16%

15%

15%

14%

Travel Airline tickets Car rentals Full-service travel agents Hotel reservations Auto/grocery/travel subtotal

13% 11% 17% 27% 17% 16%

13% 11% 17% 27% 17% 19%

13% 11% 17% 27% 17% 18%

15% 11% 21% 38% 20% 16%

14% 11% 15% 27% 18% 15%

13% 11% 13% 18% 15% 13%

10% 6% 12% 12% 14% 10%

9% 5% 10% 10% 14% 9%

19.7%

21.3%

19.4%

17.5%

15.9%

14.2%

12.2%

11.0%

Online % Growth

Total U.S. Online Retail

Source: Forrester Research, Lehman Brothers estimates

April 07, 2008

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Figure 72: U.S. E-Commerce as a Percentage of Total U.S. Retail, 2003–11E 2003

2004

2005

2006E

2007E

2008E

2009E

2010E

2011E

Apparel General Apparel Accessories Footwear

3% 3% 8% 4%

4% 4% 9% 6%

5% 5% 11% 8%

6% 5% 13% 10%

8% 6% 15% 12%

9% 7% 17% 14%

10% 8% 19% 15%

11% 9% 20% 16%

12% 11% 22% 17%

Books Trade/consumer Academic

14% 16% 11%

15% 17% 12%

16% 17% 14%

17% 19% 15%

19% 20% 16%

20% 22% 17%

21% 23% 18%

22% 23% 19%

22% 24% 19%

Computer hardware/software Computer hardware Computer software Computer peripherals

47% 50% 38% 38%

48% 51% 39% 39%

49% 52% 42% 41%

51% 54% 43% 43%

53% 56% 45% 45%

55% 58% 47% 47%

56% 59% 48% 48%

56% 59% 49% 49%

57% 60% 49% 49%

Consumer electronics

8%

9%

12%

14%

16%

18%

20%

22%

24%

Flowers/cards/gifts Flowers Cards Gift cards and gift certificates

8% 4% 4% 11%

10% 6% 6% 13%

12% 8% 8% 15%

14% 9% 9% 18%

16% 11% 11% 21%

19% 14% 12% 24%

22% 16% 14% 26%

24% 18% 15% 28%

25% 20% 16% 30%

Cosmetics and fragrances

3%

4%

6%

8%

9%

11%

12%

13%

14%

Over-the-counter personal care

2%

3%

4%

5%

6%

7%

8%

9%

10%

Home furnishings Furniture Home décor and crafts Linens

4% 3% 5% 8%

5% 4% 6% 10%

7% 5% 7% 12%

8% 7% 9% 14%

9% 8% 10% 15%

11% 10% 11% 16%

12% 11% 12% 17%

13% 12% 13% 18%

14% 14% 14% 19%

Appliances and tools Tools/hardware Garden supplies Major appliances Small appliances

2% 1% 1% 7% 15%

3% 1% 2% 8% 19%

4% 2% 2% 9% 23%

4% 2% 3% 11% 25%

5% 3% 3% 12% 28%

5% 3% 3% 13% 30%

6% 4% 4% 14% 32%

6% 4% 4% 14% 33%

7% 5% 5% 14% 33%

Office supplies

6%

7%

8%

9%

11%

12%

14%

15%

16%

Pet supplies

1%

1%

2%

2%

3%

3%

4%

5%

5%

Jewelry/luxury goods

3%

5%

6%

7%

9%

10%

11%

13%

14%

Music/video Music Video

10% 9% 11%

12% 11% 12%

13% 12% 14%

16% 14% 16%

18% 16% 19%

20% 17% 21%

23% 19% 24%

25% 21% 26%

27% 23% 28%

Sporting goods and apparel Sporting goods and equipment Sporting apparel

3% 3% 4%

4% 4% 5%

5% 5% 6%

7% 6% 8%

8% 7% 9%

9% 8% 11%

10% 9% 12%

11% 10% 14%

12% 11% 15%

Tickets Movie tickets Event tickets

6% 3% 6%

7% 5% 9%

10% 6% 11%

12% 7% 13%

14% 9% 15%

16% 10% 18%

18% 11% 20%

20% 13% 23%

22% 14% 25%

Toys/video games Toys Baby products Video games

10% 10% 9% 11%

12% 13% 12% 13%

15% 15% 15% 15%

18% 18% 18% 18%

21% 21% 21% 21%

24% 24% 24% 24%

26% 26% 26% 26%

28% 28% 28% 28%

30% 30% 30% 30%

Other* General merchandise subtotal

7%

8%

9%

11%

12%

14%

15%

17%

18%

Auto/auto parts

1%

1%

1%

2%

2%

3%

3%

3%

4%

Food/beverage

1%

1%

1%

1%

1%

1%

2%

2%

2%

Travel Airline tickets Car rentals Full-service travel agents Hotel reservations Auto/grocery/travel subtotal

21% 27% 12% 11% 16% 4%

23% 30% 14% 13% 18% 4%

26% 32% 16% 17% 21% 5%

29% 35% 19% 21% 25% 6%

34% 39% 22% 29% 29% 7%

38% 43% 26% 36% 34% 8%

42% 47% 28% 42% 38% 9%

46% 49% 31% 47% 43% 9%

49% 51% 34% 50% 48% 10%

U.S. Online as a % of Total U.S. Retail

4.9%

5.7%

6.8%

7.9%

9.0%

10.2%

11.3%

12.4%

13.4%

Online as % of Total Category

Source: Forrester Research, Lehman Brothers estimates

60

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Figure 73: U.S. Department of Commerce E-Commerce Data, by Quarter, 2000–4Q07 ($ in millions) Total Retail Spend

1Q00

2Q00

3Q00

4Q00

2000

1Q01

2Q01

3Q01

4Q01

2001

1Q02

2Q02

3Q02

4Q02

2002

696,048

753,211

746,875

792,622

2,988,756

704,757

779,011

756,128

827,829

3,067,725

717,302

790,486

792,657

833,877

3,134,322 2.2%

Y/Y Growth

NA

NA

NA

NA

NA

1.3%

3.4%

1.2%

4.4%

2.6%

1.8%

1.5%

4.8%

0.7%

Q/Q Growth

-9.5%

8.2%

-0.8%

6.1%

NA

-11.1%

10.5%

-2.9%

9.5%

NA

-13.4%

10.2%

0.3%

5.2%

NA

E-commerce Spend

5,624

6,139

6,993

9,212

27,968

8,062

8,040

8,006

11,188

35,296

10,043

10,568

11,302

14,906

46,819 33%

Y/Y Growth

NA

NA

NA

NA

NA

43.3%

31.0%

14.5%

21.5%

26%

24.6%

31.4%

41.2%

33.2%

Q/Q Growth

5.8%

9.2%

13.9%

31.7%

NA

-12.5%

-0.3%

-0.4%

39.7%

NA

-10.2%

5.2%

6.9%

31.9%

NA

0.8%

0.8%

0.9%

1.2%

0.9%

1.1%

1.0%

1.1%

1.4%

1.2%

1.4%

1.3%

1.4%

1.8%

1.5%

E-Commerce as % of Retail

Total Retail Spend

1Q03

2Q03

3Q03

4Q03

2003

1Q04

2Q04

3Q04

4Q04

2004

1Q05

2Q05

3Q05

4Q05

2005

741,060

819,232

830,692

874,493

3,265,477

794,720

870,834

872,340

936,446

3,474,340

835,280

931,513

939,788

986,849

3,693,430 6.3%

Y/Y Growth

3.3%

3.6%

4.8%

4.9%

4.2%

7.2%

6.3%

5.0%

7.1%

6.4%

5.1%

7.0%

7.7%

5.4%

Q/Q Growth

-11.1%

10.5%

1.4%

5.3%

NA

-9.1%

9.6%

0.2%

7.3%

NA

-10.8%

11.5%

0.9%

5.0%

NA

E-commerce Spend

12,984

13,629

14,607

18,795

60,015

17,074

17,378

18,321

23,571

76,344

20,839

21,467

22,556

28,416

93,278

Y/Y Growth

29.3%

29.0%

29.2%

26.1%

28%

31.5%

27.5%

25.4%

25.4%

27%

22.1%

23.5%

23.1%

20.6%

22.2%

Q/Q Growth

-12.9%

5.0%

7.2%

28.7%

NA

-9.2%

1.8%

5.4%

28.7%

NA

-11.6%

3.0%

5.1%

26.0%

NA

1.8%

1.7%

1.8%

2.1%

1.8%

2.1%

2.0%

2.1%

2.5%

2.2%

2.5%

2.3%

2.4%

2.9%

2.5%

4Q07

2007

E-Commerce as % of Retail

Total Retail Spend

1Q06

2Q06

3Q06

4Q06

2006

1Q07

2Q07

3Q07

899,329

993,153

984,776

1,027,047

3,904,305

934,619

1,030,508

1,016,550

1,078,565 4,060,242

Y/Y Growth

7.7%

6.6%

4.8%

4.1%

5.7%

3.9%

3.8%

3.2%

5.0%

Q/Q Growth

-8.9%

10.4%

-0.8%

4.3%

NA

-9.0%

10.3%

-1.4%

6.1%

NA

E-commerce Spend

25,846

26,363

27,092

35,322

114,623

30,624

31,828

32,234

41,758

136,444

Y/Y Growth

24.0%

22.8%

20.1%

24.3%

22.9%

18.5%

20.7%

19.0%

18.2%

19.0%

Q/Q Growth

-9.0%

2.0%

2.8%

30.4%

NA

-13.3%

3.9%

1.3%

29.5%

NA

2.9%

2.7%

2.8%

3.4%

2.9%

3.3%

3.1%

3.2%

3.9%

3.4%

E-Commerce as % of Retail

4.0%

Source: U.S. Department of Commerce

Figure 74: U.S. Department of Commerce E-Commerce Data, by Quarter, 2000–4Q07 $45,000 $40,000

Online Sales (MM)

$35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000

1Q 00 2Q 00 3Q 00 4Q 00 1Q 01 2Q 01 3Q 01 4Q 01 1Q 02 2Q 02 3Q 02 4Q 02 1Q 03 2Q 03 3Q 03 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 2Q 07 3Q 07 4Q 07

$0

Source: U.S. Department of Commerce

Figure 75: U.S. E-Commerce as a Percentage of Total U.S. Retail, by Quarter, 2000–4Q07 4.5% 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1Q00 2Q00 3Q00 4Q00 1Q01 2Q01 3Q01 4Q01 1Q02 2Q02 3Q02 4Q02 1Q03 2Q03 3Q03 4Q03 1Q04 2Q04 3Q04 4Q04 1Q05 2Q05 3Q05 4Q05 1Q06 2Q06 3Q06 4Q06 1Q07 2Q07 3Q07 4Q07

Source: U.S. Department of Commerce

April 07, 2008

61

Lehman Brothers

Internet Data Book

April 2008

Figure 76: Top U.S. Online Retailers by Revenue ($ in millions) (1–50) Rank 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

Company Amazon.com Inc. Staples Inc. Office Depot Inc. Dell Inc. HP Home & Home Office Office Max Inc. Sears Holding Corp. CDW Corp. SonyStyle.com Newegg.com Best Buy Co. J.C. Penney Co. Inc. Wal-Mart Stores Inc. QVC Inc. Apple Computer Inc. Victoria's Secret Direct Circuit City Stores Inc. Netflix Inc Target Corp. Williams-Sonoma Inc. Costco Wholesale Corp. Quixtar Inc. L.L. Bean Inc. Systemax Inc. Overstock.com Inc. IAC/InterActiveCorp. Gap Inc. Redcats USA Avon Products Inc. Macy's Group Zappos.com Inc PC Connection Inc. BarnesandNoble.com 1-800-Flowers.com Inc. Drugstore.com Inc. Neiman Marcus Group The Home Depot Inc. Buy.com Inc. Toys "R" Us Inc. Nordstrom Inc. Scholastic Corp. CompUSA Inc. Peapod LLC Foot Locker Inc. Oriental Trading Co. Coldwater Creek Inc. Saks Fifth Avenue Musician's Friend Inc. Blue Nile Inc. FTD Inc.

Source: Internet Retailer, 2007

62

April 07, 2008

2004 6,921 3,000 3,100 3,257 2,691 2,200 1,740 1,526 1,597 1,000 959 812 782 739 547 158 577 506 756 561 377 748 523 515 495 303 563 401 456 300 184 271 420 307 360 242 164 291 386 201 220 268 183 212 160 162 135 169 169 181

2005 8,490 3,800 3,800 3,724 2,829 2,567 2,160 1,769 1,625 1,300 1,267 1,039 1,050 1,017 817 870 832 688 897 766 534 800 747 650 804 614 595 475 567 450 370 383 440 361 399 314 352 346 427 290 270 293 240 243 213 198 187 220 203 216

2006 10,710 4,900 4,300 3,965 3,055 2,849 2,376 2,001 1,690 1,500 1,425 1,300 1,260 1,257 1,136 1,097 1,000 997 986 927 880 880 825 819 796 792 730 720 612 608 597 514 433 430 416 406 404 397 384 377 342 316 300 279 264 264 252 252 252 249

Lehman Brothers

Internet Data Book

April 2008

Figure 77: Top U.S. Online Retailers by Revenue ($ in millions) (51–100) Rank 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

Company Blockbuster Inc. Crate & Barrel Spiegel Brands Inc. Gateway Inc. Eddie Bauer American Eagle Outfitters FreshDirect LLC Army & Air Force Lillian Vernon Corp. Disney Direct Recreational Equipment The Talbots Inc. J. Crew Group Inc. ShopNBC.com American Girl Xtraplus Corp Abercrombie & Fitch Follett Higher Ed. Lowe's Cos. Inc. Abebooks Inc. Walgreen Co. Etronics Inc. PC Mall Inc. Hanover Direct Inc. Harry and David Northern Tool + Equip. Nike Inc. Bass Pro Outdoor VistaPrint Cabela's Inc U.S. Auto Parts Network Schwan's Home CVS Corp. MLB Advanced Media Drs. Foster & Smith Inc. Bidz.com Inc. Market Day Corp. SmartBargains.com Crutchfield Corp. dELiA*s Inc. 1-800 Contacts Inc. eBags.com Shutterfly Inc. RealPlayer Music Store Sierra Trading Post Inc. Restoration Hardware J&R Electronics Inc. Tiffany & Co. Palm Inc. Charming Shoppes Inc.

2004 8 161 191 419 222 65 120 126 108 137 111 83 122 131 N/A N/A 110 83 110 130 113 100 139 114 90 104 29 105 59 91 36 120 93 70 90 65 99 92 108 80 106 73 N/A 49 27 54 85 100 93 30

2005 143 195 204 297 229 130 150 162 153 184 164 106 160 159 174 170 159 134 149 150 143 130 162 141 96 131 128 130 91 114 98 127 113 116 115 90 118 111 117 106 119 103 84 98 98 76 100 110 118 59

2006 248 234 230 223 218 200 200 198 198 198 195 191 189 177 176 175 174 174 174 170 170 169 168 168 166 165 154 153 152 147 145 137 136 135 133 132 131 127 125 125 124 124 123 123 123 122 120 120 120 118

Source: Internet Retailer, 2007

April 07, 2008

63

Lehman Brothers

Internet Data Book

April 2008

Figure 78: Top U.S. Online Retailers’ Revenue Growth Rates (1–50) Rank 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

Company Amazon.com Inc. Staples Inc. Office Depot Inc. Dell Inc. HP Home & Home Office Office Max Inc. Sears Holding Corp. CDW Corp. SonyStyle.com Newegg.com Best Buy Co. J.C. Penney Co. Inc. Wal-Mart Stores Inc. QVC Inc. Apple Computer Inc. Victoria's Secret Direct Circuit City Stores Inc. Netflix Inc Target Corp. Williams-Sonoma Inc. Costco Wholesale Corp. Quixtar Inc. L.L. Bean Inc. Systemax Inc. Overstock.com Inc. IAC/InterActiveCorp. Gap Inc. Redcats USA Avon Products Inc. Macy's Group Zappos.com Inc PC Connection Inc. BarnesandNoble.com 1-800-Flowers.com Inc. Drugstore.com Inc. Neiman Marcus Group The Home Depot Inc. Buy.com Inc. Toys "R" Us Inc. Nordstrom Inc. Scholastic Corp. CompUSA Inc. Peapod LLC Foot Locker Inc. Oriental Trading Co. Coldwater Creek Inc. Saks Fifth Avenue Musician's Friend Inc. Blue Nile Inc. FTD Inc.

Source: Internet Retailer, 2007

64

April 07, 2008

2005 23% 27% 23% 14% 5% 17% 24% 16% 2% 30% 32% 28% 34% 38% 49% 452% 44% 36% 19% 37% 42% 7% 43% 26% 63% 103% 6% 18% 24% 50% 101% 41% 5% 17% 11% 30% 115% 19% 11% 44% 23% 9% 31% 15% 33% 22% 38% 30% 20% 19%

2006 26% 29% 13% 6% 8% 11% 10% 13% 4% 15% 12% 25% 20% 24% 39% 26% 20% 45% 10% 21% 65% 10% 10% 26% -1% 29% 23% 52% 8% 35% 61% 34% -2% 19% 4% 29% 15% 15% -10% 30% 27% 8% 25% 15% 24% 33% 35% 14% 24% 15%

Lehman Brothers

Internet Data Book

April 2008

Figure 79: Top U.S. Online Retailers’ Revenue Growth Rates (51–100) Rank 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

Company Blockbuster Inc. Crate & Barrel Spiegel Brands Inc. Gateway Inc. Eddie Bauer American Eagle Outfitters FreshDirect LLC Army & Air Force Lillian Vernon Corp. Disney Direct Recreational Equipment The Talbots Inc. J. Crew Group Inc. ShopNBC.com American Girl Xtraplus Corp Abercrombie & Fitch Follett Higher Ed. Lowe's Cos. Inc. Abebooks Inc. Walgreen Co. Etronics Inc. PC Mall Inc. Hanover Direct Inc. Harry and David Northern Tool + Equip. Nike Inc. Bass Pro Outdoor VistaPrint Cabela's Inc U.S. Auto Parts Network Schwan's Home CVS Corp. MLB Advanced Media Drs. Foster & Smith Inc. Bidz.com Inc. Market Day Corp. SmartBargains.com Crutchfield Corp. dELiA*s Inc. 1-800 Contacts Inc. eBags.com Shutterfly Inc. RealPlayer Music Store Sierra Trading Post Inc. Restoration Hardware J&R Electronics Inc. Tiffany & Co. Palm Inc. Charming Shoppes Inc.

2005 1600% 21% 7% -29% 3% 100% 25% 29% 41% 35% 48% 28% 31% 21% N/A N/A 45% 61% 35% 15% 27% 30% 17% 24% 7% 26% 342% 24% 55% 25% 173% 5% 21% 67% 28% 38% 20% 20% 8% 32% 12% 41% N/A 100% 259% 43% 18% 10% 27% 96%

2006 74% 20% 13% -25% -5% 54% 33% 22% 30% 8% 19% 80% 18% 11% 1% 3% 9% 30% 17% 13% 19% 30% 4% 19% 73% 26% 20% 18% 67% 29% 47% 8% 20% 16% 16% 47% 11% 15% 7% 18% 5% 20% 47% 26% 25% 60% 20% 9% 2% 101%

Source: Internet Retailer, 2007

April 07, 2008

65

Lehman Brothers

Internet Data Book

April 2008

Figure 80: Top U.S. Online Retailers – Online Revenue as a Percentage of Total Revenue ($ in millions) (1–50) Rank 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

Company Amazon.com Inc. Staples Inc. Office Depot Inc. Dell Inc. HP Home & Home Office Office Max Inc. Sears Holding Corp. CDW Corp. SonyStyle.com Newegg.com Best Buy Co. J.C. Penney Co. Inc. Wal-Mart Stores Inc. QVC Inc. Apple Computer Inc. Limited Brands Inc. Circuit City Stores Inc. Netflix Inc Target Corp. Williams-Sonoma Inc. Costco Wholesale Corp. Quixtar Inc. L.L. Bean Inc. Systemax Inc. Overstock.com Inc. IAC/InterActiveCorp. Gap Inc. Redcats USA Avon Products Inc. Macy's Group Inc. Zappos.com Inc PC Connection Inc. BarnesandNoble.com 1-800-Flowers.com Inc. Drugstore.com Inc. Neiman Marcus Group The Home Depot Inc. Buy.com Inc. Toys "R" Us Inc. Nordstrom Inc. Scholastic Corp. CompUSA Inc. Peapod LLC Foot Locker Inc. Oriental Trading Co. Coldwater Creek Inc. Saks Fifth Avenue Musician's Friend Inc. Blue Nile Inc. FTD Inc.

Source: Internet Retailer, 2007

66

April 07, 2008

2006 Online Revenue $10,710 4,900 4,300 3,965 3,055 2,849 2,376 2,001 1,690 1,500 1,425 1,300 1,260 1,257 1,136 1,097 1,000 997 986 927 880 880 825 819 796 792 730 720 612 608 597 514 433 430 416 406 404 397 384 377 342 316 300 279 264 264 252 252 252 249

2006 Total Revenue $10,710 18,200 15,000 57,900 91,658 8,966 55,000 6,800 63,541 1,500 30,800 19,903 348,650 7,074 19,315 10,671 12,430 997 59,490 3,728 60,151 1,118 1,500 2,345 796 2,933 15,943 1,708 8,764 26,970 597 1,636 5,300 782 416 4,106 90,800 397 11,275 8,600 2,284 4,700 288 5,750 400 1,050 2,940 2,030 252 465

Online as % of Total Rev. 100.0% 26.9% 28.7% 6.8% 3.3% 31.8% 4.3% 29.4% 2.7% 100.0% 4.6% 6.5% 0.4% 17.8% 5.9% 10.3% 8.0% 100.0% 1.7% 24.9% 1.5% 78.7% 55.0% 34.9% 100.1% 27.0% 4.6% 42.2% 7.0% 2.3% 100.0% 31.4% 8.2% 55.0% 99.9% 9.9% 0.4% 100.1% 3.4% 4.4% 15.0% 6.7% 104.2% 4.9% 66.0% 25.1% 8.6% 12.4% 99.8% 53.5%

Lehman Brothers

Internet Data Book

April 2008

Figure 81: Top U.S. Online Retailers – Online Revenue as a Percentage of Total Revenue ($ in millions) (51–100) Rank 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

Company Blockbuster Inc. Crate & Barrel Spiegel Brands Inc. Gateway Inc. Eddie Bauer American Eagle Outfitters FreshDirect LLC Army & Air Force Lillian Vernon Corp. Disney Direct Recreational Equipment The Talbots Inc. J. Crew Group Inc. ShopNBC.com American Girl Xtraplus Corp Abercrombie & Fitch Follett Higher Ed. Lowe's Cos. Inc. Abebooks Inc. Walgreen Co. Etronics Inc. PC Mall Inc. Hanover Direct Inc. Harry and David Northern Tool + Equip. Nike Inc Bass Pro Outdoor VistaPrint Cabela's Inc U.S. Auto Parts Network Schwan's Home CVS Corp. MLB Advanced Media Drs. Foster & Smith Inc. Bidz.com Inc. Market Day Corp. SmartBargains.com Crutchfield Corp. dELiA*s Inc. 1-800 Contacts Inc. eBags.com Shutterfly Inc. RealPlayer Music Store Sierra Trading Post Restoration Hardware J&R Electronics Tiffany & Co. Palm Inc. Charming Shoppes

2006 Online Revenue 248 234 230 223 218 200 200 198 198 198 195 191 189 177 176 175 174 174 174 170 170 169 168 168 166 165 154 153 152 147 145 137 136 135 133 132 131 127 125 125 124 124 123 123 123 122 120 120 120 118

2006 Total Revenue 4,030 1,100 459 3,981 1,013 2,794 200 8,474 398 2,511 1,164 2,231 1,152 764 440 175 3,318 2,000 46,900 170 47,409 169 1,006 416 598 750 15,000 1,915 152 2,060 145 4,000 43,814 264 228 132 131 111 211 258 249 103 123 395 250 713 400 2,648 1,579 3,068

Online as % of Total Rev. 6.2% 21.3% 50.0% 5.6% 21.5% 7.2% 100.0% 2.3% 49.9% 7.9% 16.8% 8.5% 16.4% 23.2% 40.0% 100.0% 5.2% 8.7% 0.4% 100.0% 0.4% 100.0% 16.7% 40.3% 27.8% 22.0% 1.0% 8.0% 100.1% 7.1% 99.8% 3.4% 0.3% 51.0% 58.3% 100.0% 100.4% 114.7% 59.2% 48.3% 49.9% 120.6% 100.3% 31.1% 49.2% 17.2% 30.0% 4.5% 7.6% 3.9%

Source: Internet Retailer, 2007

April 07, 2008

67

Lehman Brothers

Internet Data Book

April 2008

Figure 82: Top U.S. Online Retailers – Apparel/Accessories ($ in millions) Rank Company

2004

2005

2006

$158

$870

$1,097

L.L. Bean Inc.

523

747

825

Gap Inc.

563

595

730

4

Redcats USA

401

475

720

5

Zappos.com Inc.

184

370

597

6

Neiman Marcus Group

242

314

406

7

Nordstrom Inc.

201

290

377

8

Foot Locker Inc.

212

243

279

9

Coldwater Creek Inc.

162

189

264

10

Saks Fifth Avenue

135

187

252

11

Spiegel Brands Inc.

191

204

230

12

Eddie Bauer

222

229

218

13

American Eagle Outfitters

65

130

200

1

Victoria's Secret Direct

2 3

14

The Talbots Inc.

83

106

191

15

J. Crew Group Inc.

122

160

189

16

Abercrombie & Fitch

110

159

191

17

Hanover Direct Inc.

114

141

168

18

Nike Inc.

29

128

154

19

dELiA*s Inc.

80

106

125

20

eBags.com

73

103

124

21

Sierra Trading Post Inc.

27

98

123

22

Charming Shoppes Inc.

30

59

118

23

Ralph Lauren Media LLC

50

85

114

24

Ann Taylor Stores Corp.

45

51

96

25

Blair Corp.

61

79

94

26

YOOX Group

9

63

84

27

Fingerhut Direct Marketing Inc.

39

52

82

28

Onlineshoes.com

n/a

49

80

29

Blue fly Inc.

44

59

77

30

eLuxury.com

51

62

75

31

NormThomson Outfitter Inc.

61

70

74

32

The Orvis Co. Inc.

57

63

70

34

The Finish Line Inc.

42

60

64

33

ShoeMall.com (Mason Companies Inc.)

36

44

64

35

Shoes.com Inc.

18

35

63

36

Urban Outfitters Inc.

41

52

61

37

Frederick's of Hollywood Inc.

38

48

56

38

Hanna Anderson Corp.

43

47

55

39

Road Runner Sports Inc.

48

51

54

40

Coach Inc.

33

42

54

41

Fossil Inc.

25

36

41

42

Burlington Coat Factory Warehouse Corp.

35

37

39

Source: Internet Retailer, 2007

68

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 83: Top U.S. Online Retailers – Computers/Electronics ($ in millions) Rank Company

2004

2005

2006

$3,257

$3,724

$3,965

HP Home & Home Office

2,691

2,829

3,055

CDW Corp.

1,526

1,769

2,001

4

SonyStyle.com

1,597

1,625

1,690

5

Newegg.com

1,000

1,300

1,500

6

Best Buy Co.

959

1,267

1,425

7

Apple Computer Inc.

547

817

1,136

8

Circuit City Stores Inc.

577

832

1,000

9

Systemax Inc.

515

650

819

10

PC Connection Inc.

271

383

514

11

CompUSA Inc.

268

293

316

12

Gateway Inc.

419

297

223

13

Xtraplus Corp.

n/a

170

175

14

Etronics Inc.

100

130

169

1

Dell Inc.

2 3

15

PC Mall Inc.

139

162

168

16

Crutchfield Corp.

108

117

125

17

J&R Electronics Inc.

85

100

120

18

Palm Inc.

93

118

120

19

Accoona Corp.

n/a

109

115

20

eCOST.com Inc.

178

173

101

21

Ritz Interactive

86

83

99

22

B&H Photo-Video-Pro Audio

54

67

84

23

OneCall.com (Huppins Hifi, Photo and Video Inc.)

61

70

73

24

Comp-U-Plus

65

72

68

25

Abt Electronics Inc.

40

52

62

26

Panasonic Corp. of North America

n/a

50

60

27

Computer Geeks

37

45

52

28

RadioShack

35

44

50

29

Outpost.com (Fry's Electonics Inc.)

36

41

44

30

SuperMediaStore.com

16

24

33

Source: Internet Retailer, 2007

Figure 84: Top U.S. Online Retailers – Media (Books/CDs/DVDs) ($ in millions) Rank Company 1

Netflix Inc

2004

2005

2006

$506

$688

$997

2

BarnesandNoble.com

420

440

433

3

Scholastic Corp.

220

270

342

4

Blockbuster Inc.

8

147

248

5

Follett Higher Ed.

83

134

174

6

Abebooks Inc.

130

150

170

7

Napster Inc.

35

85

109

8

Alibris Inc.

61

79

94

9

Infinity Resources

60

80

92

10

Audible.com

n/a

63

82

11

Indigo books & Music

45

55

72

12

eCampus.com (A Book Co. LLC)

40

44

46

13

CD Universe (CLBL Inc.)

30

34

44

14

TimeLife.com

26

32

41

15

DVD empire

29

32

33

Source: Internet Retailer, 2007

April 07, 2008

69

Lehman Brothers

Internet Data Book

April 2008

Figure 85: Top U.S. Online Retailers – Flowers/Gifts ($ in millions) Rank Company

2004

2005

2006

$307

$361

$430

FTD Inc.

181

216

249

Red Enevelope Inc.

57

75

91

4

Hallmark Cards

78

82

89

5

Potpourri Group Inc.

31

52

69

6

American Greeting Corp.

36

58

65

7

Celebrate Express Inc.

31

41

59

8

The Vermont Teddy Bear Co.

32

41

51

9

PersonalCreations.com (PC Acquisitions)

36

40

44

10

The Yankee Candle Co. Inc.

7

13

14

1

1-800-Flowers.com Inc.

2 3

Source: Internet Retailer, 2007

Figure 86: Top U.S. Online Retailers – Food/Drugs ($ in millions) Rank Company

2004

2005

2006

$360

$399

$416

Peapod LLC

183

240

300

FreshDirect LLC

120

150

200

4

Walgreen Co.

113

143

170

5

Harry and David

90

96

166

6

Schwan's Home

120

127

137

7

CVS Corp.

93

113

136

8

Market Day Corp.

99

118

131 106

1

Drugstore.com Inc.

2 3

9

Omaha Steaks

80

97

10

NBTY Inc.

42

56

67

11

SimonDelivers.com

64

65

60

12

Safeway Inc.

36

43

46

13

Wine.com

36

39

41

Source: Internet Retailer, 2007

Figure 87: Top U.S. Online Retailers – Hardware/Home Improvement ($ in millions) Rank Company

2005

2006

$352

$404

The Home Depot Inc.

2

Lowe's Cos. Inc.

110

149

174

3

Northern Tool + Equip.

104

131

165

4

Improvement Direct Inc.

21

35

57

5

iFloor.com (Smooth Corp.)

47

50

54

6

Decorative Product Source Inc.

24

40

51

Source: Internet Retailer, 2007

70

2004 $164

1

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 88: Top U.S. Online Retailers – Health/Beauty ($ in millions) Rank Company

2004

2005

2006

$748

$800

$880

1

Quixtar Inc.

2

Avon Products Inc.

456

567

612

3

1-800 Contacts Inc.

106

119

124

4

Sephora USA LLC

57

85

111

5

Coastal Contacs

31

67

81

6

Bodybuilding.com (Higher Power Inc.)

33

47

65

7

Vitacost.com Inc.

27

37

60

Source: Internet Retailer, 2007

Figure 89: Top U.S. Online Retailers – Housewares/Home Furnishings ($ in millions) Rank Company

2004

2005

2006

$561

$766

$927

Crate & Barrel

161

195

234

3

Lillian Vernon Corp.

108

153

198

4

Restoration Hardware

54

76

122

5

Art.com Inc.

34

108

117

6

CSN Stores Inc.

n/a

64

110

7

HomeDecor Products Inc

50

79

107

1

Williams-Sonoma Inc.

2

8

Bed Bath & Beyond Inc.

62

71

79

9

AJ Madison Inc.

42

57

74

10

Lamps Plus Inc.

38

48

74

11

Brookstone Inc.

45

50

68

12

Linens 'n Things Inc.

45

55

65

13

Furniture.com Inc

43

54

60

14

Thompson and Company of Tampa Inc.

53

62

59

15

Replacements Ltd.

n/a

42

52

Source: Internet Retailer, 2007

Figure 90: Top U.S. Online Retailers – Jewelry ($ in millions) Rank Company

2004

2005

2006

$169

$203

$252

65

90

132

100

110

120

1

Blue Nile Inc.

2

Bidz.com Inc.

3

Tiffany & Co.

4

Ross-Simons Inc.

52

63

73

5

Jewelry Television (America's Collectible Network)

30

39

70

6

Ice.com

25

34

49

7

Zale Corp.

18

25

45

Source: Internet Retailer, 2007

April 07, 2008

71

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Figure 91: Top U.S. Online Retailers – Mass Merchant/Department Store ($ in millions) Rank Company 1

Amazon.com Inc.

2004

2005

2006

$6,921

$8,490

$10,710

2

Sears Holding Corp.

1,740

2,160

2,376

3

J.C. Penney Co. Inc.

812

1,039

1,300

4

Wal-Mart Stores Inc.

782

1,050

1,260

5

QVC Inc.

739

1,017

1,257

6

Target Corp.

756

897

986

7

Costco Wholesale Corp.

377

534

880

8

Overstock.com Inc.

495

804

796

9

IAC/InterActiveCorp.

303

614

792

10

Macy's Group Inc.

300

450

608

11

Buy.com Inc.

291

346

397

12

Army & Air Force

126

162

198

13

ShopNBC.com

131

159

184

14

SmartBargains.com

92

111

127

15

NetShops Inc,

24

66

115

16

CafePress.com

69

87

95

17

Direct Marketing Services Inc.

45

55

69

18

The Shopping Channel, A Division of Roger Media

45

58

66

19

Kohl's Corp.

21

29

32

20

Boscov's Department Store LLC

16

20

25

Source: Internet Retailer, 2007

Figure 92: Top U.S. Online Retailers – Office Supplies ($ in millions) Rank Company

2005

2006

$3,800

$4,900

Staples Inc.

2

Office Depot Inc.

3,100

3,800

4,300

3

Office Max Inc.

2,200

2,567

2,849

4

Franklin Covey Co.

39

40

42

Source: Internet Retailer, 2007

72

2004 $3,000

1

April 07, 2008

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Internet Data Book

April 2008

Figure 93: Top U.S. Online Retailers – Specialty/Non-Apparel ($ in millions) Rank Company

2004

2005

2006

$160

$213

$264

Musician's Friend Inc.

169

220

252

Disney Direct

137

184

198

4

VistaPrint

59

91

152

5

U.S. Auto Parts Network

36

98

145

6

MLB Advanced Media

70

116

135

7

Drs. Foster & Smith Inc.

90

115

133

8

Shutterfly

n/a

84

123

1

Oriental Trading Co.

2 3

9

RealPlayer Music Store

49

98

123

10

J.C. Whitney & Co.

82

90

101

11

PetMed Express Inc.

56

72

99

12

The Sharper Image

116

107

85

13

National Football League

53

46

70

14

PetSmart Inc.

39

49

54

15

AutoZone

33

47

52

16

PETCO Animal Supplies Inc.

43

44

48

17

Chelsea & Scott Ltd.

37

45

47

18

Discovery Communications Inc.

26

34

46

19

NASCAR.com Superstore

37

41

45

20

American Musical Supply Inc.

31

37

44

Source: Internet Retailer, 2007

Figure 94: Top U.S. Online Retailers – Sporting Goods ($ in millions) Rank Company

2004

2005

2006

1

Recreational Equipment

111

164

$195

2

Bass Pro Outdoor

105

130

153

3

Cabela's Inc

91

114

147

4

Backcountry.com

27

52

82

5

Dick's Sporting Goods Inc,

46

60

75

6

The Sports Authority Inc.

51

55

59

7

Gear Direct.com (Speciality Sports Ventures)

26

53

53

8

Golfsmith International Holdings

21

34

37

9

Callaway Golf Interactive

22

26

32

10

Team Express Inc.

15

21

31

Source: Internet Retailer, 2007

Figure 95: Top U.S. Online Retailers – Toys-Hobbies ($ in millions) Rank Company

2004

2005

2006

$386

$427

$384

American Girl

n/a

174

176

eToys Direct Inc.

38

105

118

1

Toys "R" Us Inc.

2 3

Source: Internet Retailer, 2007

April 07, 2008

73

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Figure 96: Top 100 Online Retail Satisfaction Index (1–50) Rank 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

Website Netflix.com QVC.com Amazon.com BN.com DrsFosterSmith.com AmericanGirl.com MarketDay.com LLBean.com HSN.com TigerDirect.com Zappos.com Apple.com Cabelas.com MusiciansFriend.com OrientalTrading.com Schwans.com Newegg.com Avon.com Dell.com Blockbuster.com Shutterfly.com VictoriasSecret.com Quixtar.com BassPro.com Crutchfield.com VistaPrint.com Drugstore.com JCPenney.com Overstock.com shopping.hp.com Target.com 1800Contacts.com AAFES.com DisneyDirect.com eBags.com HarryandDavid.com Walgreens.com Williams-Sonoma.com Staples.com Walmart.com ColdwaterCreek.com NorthernTool.com Scholastic.com OfficeDepot.com CircuitCity.com AbeBooks.com CrateandBarrel.com Domestications.com EddieBauer.com LillianVernon.com

Source: ForSee Results

74

April 07, 2008

Satisfaction Score 2006 2007 85 85 82 85 83 83 78 82 N/A 81 N/A 79 N/A 79 80 79 78 79 78 79 78 79 77 79 N/A 78 N/A 78 N/A 78 N/A 78 82 78 76 78 76 78 N/A 77 N/A 77 N/A 77 78 77 N/A 76 N/A 76 N/A 76 78 76 76 76 76 76 74 76 73 76 N/A 75 N/A 75 N/A 75 N/A 75 N/A 75 N/A 75 79 75 77 75 74 75 N/A 74 N/A 74 N/A 74 75 74 73 74 N/A 73 N/A 73 N/A 73 N/A 73 N/A 73

% change 0% 4% 0% 5% N/A N/A N/A -1% 1% 1% 1% 3% N/A N/A N/A N/A -5% 3% 3% N/A N/A N/A -1% N/A N/A N/A -3% 0% 0% 3% 4% N/A N/A N/A N/A N/A N/A -5% -3% 1% N/A N/A N/A -1% 1% N/A N/A N/A N/A N/A

Lehman Brothers

Internet Data Book

April 2008

Figure 97: Top 100 Online Retail Satisfaction Index (51–94) Rank 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

Website Nike.com Peapod.com REI.com Talbots.com Chadwicks.com Nordstrom.com AE.com CVS.com FootLocker.com JCrew.com LaneBryant.com Gap.com Sears.com Costco.com dELiAs.com FTD.com OfficeMax.com Palm.com SmartBargains.com Spiegel.com 1800Flowers.com BestBuy.com Buy.com CompUSA.com ToysRUs.com Abercrombie.com Bidz.com BlueNile.com CDW.com efollett.com eToys.com FreshDirect.com Lowes.com SaksFifthAvenue.com Shop.MLB.com Gateway.com SonyStyle.com HomeDepot.com ShopNBC.com NeimanMarcus.com Macys.com Etronics.com PCConnection.com PCMall.com

Satisfaction Score 2006 2007 N/A 73 N/A 73 N/A 73 N/A 73 78 73 77 73 N/A 72 N/A 72 N/A 72 N/A 72 N/A 72 73 72 73 72 71 72 N/A 71 N/A 71 N/A 71 N/A 71 N/A 71 N/A 71 76 71 73 71 71 71 71 71 71 71 N/A 70 N/A 70 N/A 70 N/A 70 N/A 70 N/A 70 N/A 70 N/A 70 N/A 70 N/A 70 71 70 69 70 N/A 69 N/A 69 76 69 69 69 N/A 68 N/A 67 N/A 67

% change N/A N/A N/A N/A -6% -5% N/A N/A N/A N/A N/A -1% -1% 1% N/A N/A N/A N/A N/A N/A -7% -3% 0% 0% 0% N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A -1% 1% N/A N/A -9% 0% N/A N/A N/A

Source: ForeSee Results

April 07, 2008

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Company Information and Models

April 07, 2008

77

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Figure 98: Yahoo! Snapshot Strengths

Biggest Concerns

- #1 in branded advertising, #2 in search, making Yahoo! well positioned to capitalize on the secular growth drivers of the Internet.

- Portal conundrum, what does Yahoo! want to be, and are its organizational changes sufficient to focus it around a few key strategic initiatives?

- One of the largest platforms on the web with over 500 million users worldwide, giving Yahoo! scale, reach, and frequency of use.

- Display: Can premium display return to its historic levels of growth given the increasing popularity of user generated content, verticalization, and the willingness of advertisers to distribute ad dollars across premium and non-premium content? More display going through networks?

- Diversified business model with a full suite of offerings including branded, network, search, and subscription services leading to multiple cross-selling opportunities.

- Search: Continuing share declines, increasing distribution costs leading to higher TAC, and limited overseas exposure may limit Yahoo!'s monetization improvements from Panama.

- Continued search and monetization improvements across its core O&O sites (US RPS +20% in 4Q07) as Yahoo! improves ad relevancy and, importantly, monetization with Panama.

- Will its estimated $275 million in incremental '08 investment spending around its display platform be sufficient to touch 20% of the online advertising demand over the next few years?

- Display partnerships with eBay, Comcast, the newspaper consortium, and others extend Yahoo!'s premium display network and likely have lower TAC than search partnerships.

- Continued brain drain toward start-ups and other Internet companies.

- Balance sheet has $2.5B in cash, plus ~$9.00 per share in Yahoo! Japan, Alibaba, and cash.

- Non-premium page views are growing fastest, and although monetization is improving, they are impacting overall display growth.

What to Watch For

Guidance

- Whether Yahoo! can offset the impact of lower Fees revenue due to its renegotiated broadband partnerships (namely AT&T) and a shrinking affiliate business through continued strong results in its core O&O search and display business where display grew 19% and search grew 15% in 4Q07. - Can Yahoo! position itself for growth in EBITDA and have positive operating leverage in 2009 amid its investments in 2008? - Has Yahoo!'s new strategic focus on: 1. starting points; 2. becoming a 'must buy' for advertisers; and 3. delivering industry leading platforms, led to user growth, and increased advertiser spend and fee growth. - Can Panama lead to sustainable double digit RPS growth going forward? RPS on Yahoo!'s U.S. O&O sites grew 20% in 4Q07. - Whether Yahoo! can gain search share or will it continue to lose share to Google?

- If Yahoo!'s display biz can build upon its distribution relationships with eBay, Comcast, Bebo, and the newspaper consortium, in addition to its acquisition of Blue Lithium, and sign other display syndication deals. - Whether Yahoo! can continue to successfully accelerate its non-premium CPMs by adding its non-premium (and some premium) inventory to the Right Media exchange while growing overall CPMs without flooding the exchange.

1Q08

2008

Revenues excluding TAC Other cost of revenues

$1,280 - $1,380 $250-$280

$5,350-$5,950 $1,030-$1,150

Gross Profit Implied Operating Expenses

$1,030 - $1,100 $900-$990

$4,320-$4,800 $3,398-$3,488

Operating Income Depreciation & Amortization

$100-$110 $160-$180

$545-$655 $670-$750

Stock compensation expense EBITDA

$140-$160 $400-$450

$510-$570 $1,725-$1,975

31.3% - 32.0% - 32.6%

32.2% - 32.7% - 33.2%

Implied EBITDA Margin (low-mid-high)

Cash Flow from Operations Free Cash Flow

- Greater investment in: advertising platforms (Panama, RightMedia, and Blue Lithium); product development (SmartAds, Yahoo! Mail, mobile, and marketing); partnerships (beyond eBay, Comcast, and the newspapers); and talent.

Free Cash Conversion of EBITDA

- Whether Yahoo! will open up its home-page to potential third party content providers and applications.

Capex

- Whether the impact of continued restructuring and reorganization strategies improves Yahoo!'s competitive edge, speed of innovation, and technology focus.

- Whether Yahoo!'s strategy of combining its search and display sales teams can drive greater cross-selling and increased CPMs. - Whether there will be additional structural changes as part of Yahoo!'s continual review of its business model and projects.

Source: Company reports, Lehman Brothers estimates

78

April 07, 2008

$1,075-$1,225 $850-$1,000 79.1% - 80.4% - 81.6%

$675-$775

Lehman Brothers

Internet Data Book

April 2008

Figure 99: Yahoo! Income Statement, 2005–09E ($ in millions, except per share data) Gross Revenues Traffic Acquisition Costs (TAC) Net Revenues excluding TAC Other cost of revenues Gross profit Operating expenses Sales & marketing Product development General & administrative Payroll taxes on option exercises Stock compensation expense Amortization of intangibles Restructuring costs Acquisition costs Total operating expenses Operating income Other income, net Income before taxes, acctg change Provision for income taxes Effective tax rate Earnings in equity interests Minority interest GAAP Net Income (loss) bf Cum. Effect Accounting change/One-time items GAAP Net income (loss) GAAP Net income (loss) per share Basic shares outstanding Diluted shares outstanding Pro Forma Net Income Reconciliation: GAAP Net Income Stock compensation expense Amortization of intangibles Tax effect Non-recurring items Pro Forma Net income (loss) Pro Forma Net income (loss) per share

2005A $5,257.7 $1,561.7 $3,695.9 534.5 3,161.5

2006A $6,425.7 $1,865.9 $4,559.8 803.2 3,756.6

1,025.2 547.1 319.7 52.5 109.2 2,053.7 1,107.7 1,435.9 2,543.6 767.8 30.2% 128.2 (7.8) 1,896.2 (1,030.8) 865.4 $0.58

1,167.2 688.3 410.4 424.9 124.8 2,815.6 941.0 157.0 1,098.0 458.0 41.7% 112.1 (0.7) 751.4 751.4 $0.52

1,400.4 1,486.5

1,388.7 1,457.9

865.4 52.5 109.2 (64.7) 962.4 $0.65

751.4 424.9 124.8 (210.2) (24.3) 1,066.6 $0.73

3/07A $1,671.9 $488.8 $1,183.1 222.9 960.2 317.2 191.2 115.7 140.0 27.1 791.2 169.0 35.5 204.5 92.4 45.2% 29.1 1.2 142.4 142.4 $0.10 1,352.5 1,418.2

142.4 140.0 27.1 (66.8) 242.7 $0.17

6/07A $1,697.9 $454.2 $1,243.8 226.5 1,017.3 338.3 216.6 123.4 128.8 25.2 832.3 185.0 30.7 215.7 87.7 40.7% 32.1 0.5 160.6 160.6 $0.11 1,339.6 1,403.8

160.6 128.8 25.2 (61.6) 252.9 $0.18

9/07A $1,767.5 $484.9 $1,282.6 252.7 1,029.9 340.6 223.1 140.5 145.5 30.0 879.7 150.2 43.7 193.9 78.7 40.6% 36.5 (0.5) 151.3 151.3 $0.11 1,335.1 1,395.1

151.3 145.5 30.0 (70.2) 256.6 $0.18

12/07A $1,832.0 $428.9 $1,403.1 269.3 1,133.8 367.8 235.1 156.7 158.1 24.8 942.6 191.2 44.1 235.3 78.5 33.4% 52.9 (4.0) 205.7 205.7 $0.15 1,328.8 1,394.7

205.7 158.1 24.8 (73.2) 315.5 $0.23

2007A $6,969.3 $1,856.7 $5,112.6 971.4 4,141.1 1,363.9 866.0 536.3 572.4 107.1 3,445.7 695.4 154.0 849.4 337.3 39.7% 150.7 (2.9) 660.0 660.0 $0.47 1,339.0 1,402.9

660.0 572.4 107.1 (271.8) 1,067.7 $0.76

3/08E $1,773.5 $444.3 $1,329.3 272.5 1,056.8 358.9 264.5 156.9 140.0 28.0 948.3 108.5 24.7 133.1 59.9 45.0% 33.0 106.2 106.2 $0.08 1,344.0 1,399.7

106.2 140.0 28.0 (67.2) 207.0 $0.15

6/08E $1,795.6 $426.3 $1,369.3 278.0 1,091.4 362.9 280.7 143.8 130.0 33.0 950.4 141.0 23.2 164.2 73.9 45.0% 33.0 123.3 123.3 $0.09 1,349.0 1,404.7

123.3 130.0 33.0 (65.2) 221.1 $0.16

9/08E $1,850.1 $447.9 $1,402.3 290.3 1,112.0

12/08E $1,957.3 $413.1 $1,544.2 316.6 1,227.7

370.9 287.5 140.2 135.0 33.0 966.6 145.4 21.9 167.3 75.3 45.0% 33.0 125.0 125.0 $0.09 1,354.0 1,409.7

125.0 135.0 33.0 (67.2) 225.8 $0.16

2008E $7,376.6 $1,731.5 $5,645.1 1,157.3 4,487.8

2009E $8,044.1 $1,629.1 $6,415.0 1,347.2 5,067.9

406.1 315.0 151.3 150.0 33.0 1,055.5 172.2 24.3 196.5 88.4 45.0% 33.0 141.1 141.1 $0.10

1,498.8 1,147.7 592.2 555.0 127.0 3,920.8 567.1 94.0 661.1 297.5 45.0% 132.0 495.6 495.6 $0.35

1,712.8 1,347.2 705.7 527.3 133.4 4,426.2 641.7 125.6 767.3 306.9 40.0% 143.9 604.2 604.2 $0.42

1,359.0 1,414.7

1,351.5 1,407.2

1,366.5 1,422.2

141.1 150.0 33.0 (73.2) 250.9 $0.18

495.6 555.0 127.0 (272.8) 904.8 $0.64

604.2 527.3 133.4 (264.2) 1,000.6 $0.70

Diluted shares outstanding

1,486.5

1,457.9

1,418.2

1,403.8

1,395.1

1,394.7

1,402.9

1,399.7

1,404.7

1,409.7

1,414.7

1,407.2

1,422.2

EBITDA Reconciliation Operating income (reported) Depreciation & amortization Stock compensation expense EBITDA

1,107.7 397.1 52.5 1,557.3

941.0 540.0 424.9 1,905.9

169.0 151.0 140.0 460.0

185.0 159.9 128.8 473.6

150.2 170.6 145.5 466.3

191.2 177.7 158.1 527.1

695.4 659.2 572.4 1,927.0

108.5 178.0 140.0 426.5

141.0 180.0 130.0 451.0

145.4 185.0 135.0 465.4

172.2 185.0 150.0 507.2

567.1 728.0 555.0 1,850.1

641.7 840.0 527.3 2,008.9

2005A Yr/Yr Growth Net revenues Gross profit Sales and marketing Product development General and administrative Total operating expenses Operating income EBITDA GAAP EPS Pro Forma EPS Sequential Growth Net revenues % of Revenues Other cost of revenues (non-TAC) Sales & marketing Product development General and administrative Margins Gross margin Operating margin EBITDA Operating Leverage/Flow-through

2006A

3/07A

6/07A 10.8% 9.2% 17.7% 25.5% 13.8% 18.5% -19.4% 3.7% 2.8% 8.8%

9/07A 14.4% 14.3% 18.0% 36.2% 52.8% 25.9% -25.8% -1.6% -1.3% 12.2%

12/07A

42.7% 42.3% 31.8% 48.4% 21.7% 33.0% 63.2% 52.4% 62.9% 56.8%

23.4% 18.8% 13.8% 25.8% 28.4% 37.1% -15.1% 22.4% -11.5% 13.0%

8.8% 5.4% 8.5% 6.3% 18.2% 11.5% -16.0% 5.8% -6.2% 4.9%

14.3% 11.9% 23.0% 36.6% 39.8% 33.6% -37.9% -2.5% -22.1% -6.1%

-3.7%

5.1%

3.1%

9.4%

14.5% 27.7% 14.8% 8.6%

17.6% 25.6% 15.1% 9.0%

18.8% 26.8% 16.2% 9.8%

18.2% 27.2% 17.4% 9.9%

19.7% 26.6% 17.4% 11.0%

85.5% 30.0% 42.1% 48.4%

82.4% 20.6% 41.8% 40.4%

81.2% 14.3% 38.9% 26.3%

81.8% 14.9% 38.1% 13.8%

80.3% 11.7% 36.4% -4.6%

2007A

3/08E

6/08E

12.1% 10.2% 16.9% 25.8% 30.7% 22.4% -26.1% 1.1% -8.7% 4.0%

12.4% 10.1% 13.2% 38.4% 35.5% 19.9% -35.8% -7.3% -24.4% -13.6%

10.1% 7.3% 7.3% 29.6% 16.5% 14.2% -23.8% -4.8% -23.3% -12.6%

-5.3%

19.2% 26.2% 16.8% 11.2%

19.0% 26.7% 16.9% 10.5%

20.5% 27.0% 19.9% 11.8%

80.8% 13.6% 37.6% -7.6%

81.0% 13.6% 37.7% 3.8%

79.5% 8.2% 32.1% -22.9%

79.7% 10.3% 32.9% -18.0%

9/08E

12/08E

9.3% 8.0% 8.9% 28.9% -0.2% 9.9% -3.2% -0.2% -18.2% -12.9%

10.1% 8.3% 10.4% 34.0% -3.4% 12.0% -10.0% -3.8% -32.4% -21.6%

3.0%

2.4%

10.1%

20.3% 26.5% 20.5% 10.5%

20.7% 26.5% 20.5% 10.0% 79.3% 10.4% 33.2% -0.8%

2008E

2009E

10.4% 8.4% 9.9% 32.5% 10.4% 13.8% -18.5% -4.0% -25.1% -15.5%

13.6% 12.9% 14.3% 17.4% 19.2% 12.9% 13.2% 8.6% 20.6% 9.4%

20.5% 26.3% 20.4% 9.8%

20.5% 26.6% 20.3% 10.5%

21.0% 26.7% 21.0% 11.0%

79.5% 11.1% 32.8% -14.1%

79.5% 10.0% 32.8% -14.5%

79.0% 10.0% 31.3% 20.6%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

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Figure 100: Yahoo! Revenue Analysis, 2005–09E ($ in millions, except per share data) Total Revenue Excluding TAC Y/Y growth Q/Q growth

2005A 3,695.9 42.7%

2006A 4,559.8 23.4%

3/07A 1,183.1 8.8% -3.7%

6/07A 1,243.8 10.8% 5.1%

9/07A 1,282.6 14.4% 3.1%

12/07A 1,403.1 14.3% 9.4%

2007A 5,112.6 12.1%

3/08E 1,329.3 12.4% -5.3%

6/08E 1,369.3 10.1% 3.0%

9/08E 1,402.3 9.3% 2.4%

12/08E 1,544.2 10.1% 10.1%

2008E 5,645.1 10.4%

2009E 6,415.0 13.6%

4,594.0 1561.7 3,032.3 40.8%

5,627.2 1865.9 33.2% 3,761.3 24.0%

1,468.6 488.8 33.3% 979.8 8.7%

1,570.8 444.3 28.3% 1,126.6 15.0% -3.0% 84.8%

1,622.3 426.3 26.3% 1,196.1 15.9% 6.2% 87.3%

1,672.4 447.9 26.8% 1,224.5 15.7% 2.4% 87.3%

1,765.1 413.1 23.4% 1,352.0 16.4% 10.4% 87.6%

7,217.1 1629.1 22.6% 5,588.0 14.1%

82.8%

1,590.0 428.8 27.0% 1,161.1 14.4% 9.7% 82.8%

6,630.6 1731.5 26.1% 4,899.2 15.8%

82.5%

1,541.6 482.9 31.3% 1,058.7 16.1% 2.6% 82.5%

6,086.2 1854.7 30.5% 4,231.6 12.5%

82.0%

1,486.0 454.2 30.6% 1,031.9 10.6% 5.3% 83.0%

86.8%

87.1%

2,413.6 19.51 0.8% 2,394.1 41.9%

3,070.7 39.7 1.3% 3,031.0 26.6%

921.2 24.4 2.6% 896.8 22.3% 1.9% 84.7%

1,035.4 25.7 2.5% 1,009.7 20.0% 12.6% 87.0%

1,010.3 26.2 2.6% 984.1 21.6% -2.5% 87.4%

1,096.7 32.4 3.0% 1,064.4 21.0% 8.2% 89.0%

1,121.5 33.2 3.0% 1,088.3 21.4% 2.3% 88.9%

1,259.9 33.7 2.7% 1,226.3 21.4% 12.7% 90.7%

4,488.4 125.4 2.8% 4,363.1 21.4%

5,235.4 154.1 2.9% 5,081.2 16.5%

80.6%

892.6 12.8 1.4% 879.8 17.9% 8.7% 85.3%

3,668.8 73.5 2.0% 3,595.3 18.6%

79.0%

819.7 10.7 1.3% 809.0 13.9% -3.9% 82.6%

89.1%

90.9%

1,016.6 19.5 1.9% 997.1 52.7%

1,248.0 39.7 3.2% 1,208.3 21.2%

339.2 10.7 3.2% 328.5 8.2% 8.5%

407.8 12.8 3.1% 395.0 27.2% 20.2%

414.4 24.4 5.9% 390.0 33.9% -1.3%

420.7 25.7 6.1% 395.0 30.4% 1.3%

1,582.1 73.5 4.6% 1,508.6 24.8%

444.4 26.2 5.9% 418.2 27.3% 5.9%

522.0 32.4 6.2% 489.6 23.9% 17.1%

526.3 33.2 6.3% 493.1 26.4% 0.7%

534.2 33.7 6.3% 500.6 26.7% 1.5%

2,026.9 125.4 6.2% 1,901.5 26.0%

2,371.4 154.1 6.5% 2,217.3 16.6%

1,099.7 35.6%

1,465.1 33.2%

383.6 20.6% -10.4%

397.8 13.0% 3.7%

423.8 18.8% 6.5%

503.1 19.4% 18.7%

1,708.3 16.6%

460.3 20.0% -8.5%

481.3 21.0% 4.6%

506.5 19.5% 5.2%

606.3 20.5% 19.7%

2,054.4 20.3%

2,424.1 18.0%

166.4 131.0 297.4 33.1%

189.6 168.0 357.6 20.3%

50.6 46.3 96.9 11.9% -12.3%

51.5 35.5 86.9 8.7% -10.3%

49.0 34.0 83.0 3.0% -4.6%

50.0 61.6 111.6 1.0% 34.5%

201.0 177.4 378.4 5.8%

55.1 50.5 105.6 9.0% -5.4%

55.1 38.3 93.4 7.4% -11.6%

52.4 36.4 88.8 7.0% -4.9%

53.5 65.9 119.4 7.0% 34.5%

216.1 191.1 407.2 7.6%

233.4 206.4 439.8 8.0%

2,180.4 1,542.2 638.2 36.6%

2,556.5 1,826.3 71.4% 730.2 14.4%

620.4 458.5 73.9% 161.9 -9.1% 6.4% 15.3%

554.6 403.2 72.7% 151.4 -12.9% -6.5% 13.0%

560.5 418.0 74.6% 142.5 -16.6% -5.9% 12.6%

525.6 393.9 74.9% 131.7 -13.4% -7.6% 11.0%

550.9 414.7 75.3% 136.2 -15.9% 3.4% 11.1%

505.2 379.4 75.1% 125.7 -17.0% -7.7% 9.3%

2,142.2 1,606.1 75.0% 536.1 -15.7%

1,981.8 1,474.9 74.4% 506.8 -5.5%

19.4%

593.5 441.4 74.4% 152.1 -18.7% -11.0% 14.7%

2,417.4 1,781.2 73.7% 636.2 -12.9%

21.0%

648.9 478.1 73.7% 170.8 -10.7% -1.7% 17.4%

10.9%

9.1%

2,558.3 1,826.3 71.4% 732.0 NA

644.1 476.4 74.0% 167.7 -12.4% -4.5%

586.4 438.3 74.7% 148.1 -20.8% -11.7%

609.9 453.7 74.4% 156.2 -12.3% 5.5%

539.3 395.8 73.4% 143.4 -18.3% -8.2%

2,379.6 1,764.2 74.1% 615.4 -15.9%

541.1 408.5 75.5% 132.6 -20.9% -7.6%

504.3 383.2 76.0% 121.0 -18.3% -8.7%

524.5 401.2 76.5% 123.3 -21.1% 1.8%

474.6 363.5 76.6% 111.0 -22.6% -9.9%

2,044.4 1,556.5 76.1% 487.9 -20.7%

1,840.0 1,398.4 76.0% 441.6 -9.5%

0.3 0.0

3.9 1.64 42.0% 0.3% 2.3 NA NA

7.1 3.13 44.0% 0.7% 4.0 NA 77%

10.5 4.85 46.0% 1.1% 5.7 NA 43%

15.3 7.34 48.0% 1.8% 8.0 2398.7% 40%

36.9 17.0 46.0% 1.0% 19.9 NA

19.5 9.54 49.0% 2.3% 9.9 339.7% 25%

21.4 10.68 50.0% 2.7% 10.7 167.9% 8%

26.4 13.45 51.0% 3.2% 12.9 126.9% 21%

30.6 15.91 52.0% 4.2% 14.7 84.6% 14%

97.8 49.6 50.7% 3.1% 48.2 142.3%

141.8 76.57 54.0% 5.2% 65.2 35.3%

MARKETING SERVICES Total Marketing Services Gross Revenue Total Traffic Acquisition Costs (TAC) TAC as a % of Total Yahoo! Gross Marketing Services Revenue Total Marketing Services Net Revenue Y/Y growth Q/Q growth Marketing services revenue as % of total OWNED & OPERATED SITES O&O Total Gross Revenue O&O Total TAC TAC as % of Yahoo O&O Gross Revenues O&O Total Net Revenue Y/Y growth Q/Q growth O&O Net Revs as % of Total Mktg Services Net Revs O&O SEARCH Gross O&O Search Revenue O&O Traffic Acquisition Costs % O&O TAC of Gross Revenue O&O Search Net Revenue Y/Y growth Q/Q growth O&O DISPLAY Y/Y growth Q/Q growth O&O OTHER Listings Kelkoo Total O&O Other Net Revenue Y/Y growth Q/Q growth AFFILIATE SITES Affiliate Total Gross Revenue Affiliate Total TAC TAC as % of Yahoo Affiliate Gross Revenues Affiliate Total Net Revenue Y/Y growth Q/Q growth Affiliate Net Revs as % of Total Mktg Services Net Revs AFFILIATE SEARCH Gross Affiliate Search Revenue Affiliate Search Traffic Acquisition Costs % Affiliate TAC of Gross Revenue Affiliate Search Net Revenue Y/Y growth Q/Q growth

2,180.4 1,542.2 638.2 36.6%

AFFILIATE DISPLAY ADVERTISING Gross Affiliate Display Revenue Affiliate Display Traffic Acquisition Costs % Affiliate Display TAC of Display Gross Revenue % Affiliate Display TAC of Overall Affiliate TAC Affiliate Display Net Revenue Y/Y growth Q/Q growth

-

82.8%

85.0%

15.0%

NA

0.0% 0.3 NA

53.9% 36.3% 9.8% 100.0%

51.6% 38.9% 9.5% 100.0%

50.7% 39.4% 9.9% 100.0%

52.6% 38.9% 8.4% 100.0%

51.6% 40.6% 7.8% 100.0%

46.4% 44.0% 9.6% 100.0%

50.2% 40.8% 8.9% 100.0%

48.9% 41.7% 9.4% 100.0%

51.1% 41.1% 7.8% 100.0%

50.3% 42.4% 7.2% 100.0%

45.2% 45.9% 8.8% 100.0%

48.8% 42.9% 8.3% 100.0%

47.6% 44.5% 7.9% 100.0%

41.6% 45.9% 12.4% 100.0%

39.9% 48.3% 11.8% 100.0%

40.6% 47.4% 12.0% 100.0%

44.9% 45.2% 9.9% 100.0%

43.5% 47.3% 9.3% 100.0%

39.1% 49.8% 11.1% 100.0%

42.0% 47.5% 10.5% 100.0%

42.5% 46.8% 10.7% 100.0%

46.0% 45.2% 8.8% 100.0%

45.3% 46.5% 8.2% 100.0%

40.8% 49.4% 9.7% 100.0%

43.6% 47.1% 9.3% 100.0%

43.6% 47.7% 8.7% 100.0%

100.0% 0.0% 100.0%

100.2% 0.0% 100.3%

98.2% 1.3% 99.5%

97.4% 2.6% 100.0%

96.5% 3.5% 100.0%

94.7% 5.3% 100.0%

96.7% 3.1% 99.9%

93.0% 7.0% 100.0%

91.9% 8.1% 100.0%

90.5% 9.5% 100.0%

88.3% 11.7% 100.0%

91.0% 9.0% 100.0%

87.1% 12.9% 100.0%

AT&T (SBC) Access Y/Y growth Monthly ARPU to Yahoo!

2005A 188.6 44.5% $3.00

2006A 244.9 29.9% $2.99

3/07A 66.2 17.1% $2.85

6/07A 67.1 11.5% $2.75

9/07A 69.1 9.6% $2.70

12/07A 71.0 9.0% $2.65

2007A 273.5 11.7% $2.73

3/08E 42.0 -36.6% $1.50

BT Access Y/Y growth Monthly ARPU to Yahoo!

62.2 226.4% $3.00

86.4 39.0% $2.99

22.7 11.7% $2.85

22.7 7.0% $2.75

23.1 4.3% $2.70

23.4 3.4% $2.65

91.9 6.5% $2.73

Rogers Cable Access Y/Y growth Monthly ARPU to Yahoo!

24.8 422.7% $3.00

32.6 31.4% $2.99

8.6 12.4% $2.85

8.6 8.3% $2.75

8.8 5.5% $2.70

0.8 -90.2% $0.25

Verizon Access Y/Y growth Monthly ARPU to Yahoo!

11.0 NA $3.00

56.3 NA $2.98

20.3 87.9% $2.85

23.5 83.2% $2.75

27.6 82.0% $2.70

Personals Y/Y growth ARPU

90.9 22.4% $18.00

105.8 16.4% $18.00

29.5 13.0% $18.00

30.3 13.0% $18.00

Other Premium Services Y/Y growth ARPU

108.0 31.2% $3.25

122.6 13.6% $3.22

30.7 3.4% $3.06

61.0 NA

74.4 21.9%

117.3 -6.5% 663.7 48.4%

75.5 -35.6% 798.5 20.3%

18.0%

17.5%

NET REVENUE SHARE BY SEGMENT Search Display Other Total Net Revenue O&O NET REVENUE SHARE BY SEGMENT Search Display Other Total O&O Net Revenue AFFILIATE NET REVENUE SHARE BY SEGMENT Search Display Total O&O Net Revenue

FEES

Musicmatch/Yahoo! Music Unlimited Y/Y growth Other Fees Revenue Y/Y growth Total Fees Revenue Y/Y growth Q/Q growth Fees revenues as % of total

Source: Company reports, Lehman Brothers estimates

80

April 07, 2008

7.3 -89.1% $0.25

7.6 -89.0% $0.25

12/08E 7.9 -88.9% $0.25

2008E 64.7 -76.3% $0.54

2009E 63.7 -1.6% $0.48

23.7 4.4% $2.60

24.0 5.5% $2.55

24.2 4.9% $2.50

24.4 4.4% $2.45

96.4 4.8% $2.52

104.0 8.0% $2.50

26.9 -17.5% $2.10

2.4 -71.7% $0.70

2.5 -71.0% $0.70

2.6 -70.9% $0.70

2.6 210.2% $0.70

10.1 -62.3% $0.70

12.0 18.5% $0.75

32.5 85.7% $2.65

103.9 84.6% $2.72

35.2 73.9% $2.60

37.0 57.4% $2.55

40.3 46.0% $2.50

40.9 25.9% $2.40

153.5 47.7% $2.51

194.3 26.6% $2.55

29.9 13.0% $18.00

29.8 13.0% $18.00

119.5 13.0% $18.00

33.0 12.0% $18.00

33.6 11.0% $18.00

32.9 10.0% $18.00

33.1 11.0% $18.00

132.7 11.0% $18.00

146.0 10.0% $18.00

31.1 3.5% $3.03

30.6 1.8% $2.98

34.2 4.0% $2.95

126.5 3.2% $3.00

30.9 0.8% $2.85

30.7 -1.1% $2.80

30.2 -1.3% $2.75

33.1 -3.0% $2.65

125.0 -1.2% $2.76

129.7 3.8% $2.65

18.2 16.0%

18.9 16.0%

22.3 16.0%

26.9 16.0%

86.3 16.0%

20.4 12.0%

21.1 12.0%

24.9 12.0%

30.1 12.0%

96.6 12.0%

107.2 11.0%

7.0

9.7 211.9 11.7% 4.3% 17.0%

12.5 223.9 6.6% 5.7% 17.5%

23.4 242.0 13.8% 8.1% 17.2%

52.5 -30.4% 881.0 10.3%

15.0

17.0 173.3 -18.2% -14.5% 12.7%

15.0 177.8 -20.6% 2.6% 12.7%

20.0 192.2 -20.6% 8.2% 12.4%

67.0 27.5% 746.0 -15.3%

70.0 827.0 10.9%

13.2%

12.9%

203.2 9.1% -4.5% 17.2%

17.2%

202.7 -0.3% -16.2% 15.2%

6/08E

9/08E

Lehman Brothers

Internet Data Book

April 2008

Figure 101: Yahoo! Cash Flow Statement, 2005–09E ($ in millions, except per share data) 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

Cash flows from operating activities Net income Adjustments Depreciation & amortization Tax benefits from stock-based compensation Excess tax benefits from stock-based compensation Cumulative effect of accounting change Earnings in equity interests Minority interests in ops of consolidated subsidiaries Noncash losses/impairments Other non-cash charges (including stock based compensation) Total Change in working capital Cash flows from operations

1,896.2

751.4

142.4

160.6

151.3

205.7

660.0

106.2

123.3

125.0

141.1

495.6

604.2

397.1 759.5 (128.2) 7.8 (1,215.2) (5.9) 1,711.4

540.0 529.7 (597.1) (112.1) 0.7 422.7 (163.7) 1,371.6

151.0 67.7 (52.1) (29.1) (1.2) 94.8 61.1 434.7

159.9 97.0 (82.4) (32.1) (0.5) 99.8 3.4 405.6

170.6 6.0 (36.5) 0.5 87.5 77.3 456.7

177.7 (94.5) 134.5 (52.9) 4.0 64.8 218.0 657.3

659.2 76.1 (150.7) 2.9 346.9 359.9 1,954.3

178.0 40.0 (120.0) (31.0) 140.0 (69.9) 243.3

180.0 40.0 (120.0) (31.0) 130.0 (14.6) 307.7

185.0 40.0 (120.0) (31.0) 135.0 (18.2) 315.9

185.0 40.0 (120.0) (31.0) 150.0 (51.6) 313.4

728.0 160.0 (480.0) (124.0) 555.0 (154.3) 1,180.3

840.0 160.0 (480.0) (143.9) 527.3 (90.8) 1,416.8

Cash flows from investing activities Acquisition of PP&E (Capex, net) Purchases of marketable securities Proceeds from sales and maturities of marketable securities Acquisitions, net of cash acquired Proceeds from sales of other investments Investments, net Other Net cash from investing activities

(408.9) (7,023.8) 7,342.0 (1,698.2) 1,006.1 (39.1) (821.9)

(689.1) (1,328.5) 1,951.3 (142.3) 14.9 (193.7)

(118.0) (570.3) 728.0 (11.6) (6.6) 21.5

(144.7) (422.8) 616.8 (24.4) (13.3) 11.6

(147.2) (112.0) 510.7 (319.5) (85.8) (153.8)

(192.4) 388.3 (618.1) (29.6) (451.8)

(602.3) (1,105.0) 2,243.7 (973.6) (135.3) (572.5)

(160.0) (160.0)

(180.0) (180.0)

(185.0) (185.0)

(200.0) (200.0)

(725.0) (725.0)

(848.3) (848.3)

746.8 (387.7) (611.4) 1.7 (250.6)

318.1 597.1 (1,782.1) (227.7) (1,094.6)

71.9 52.1 (595.0) (250.0) (721.0)

131.8 82.4 (420.1) (1.8) (207.7)

40.2 (350.1) (12.2) (322.1)

131.2 (134.5) (220.7) (2.7) (226.7)

375.1 (1,585.9) (250.0) (16.6) (1,477.4)

120.0 120.0

120.0 (749.6) (629.6)

120.0 120.0

120.0 120.0

480.0 (749.6) (269.6)

480.0 480.0

Cash flows from financing activities Proceeds from issuance of stock, net Excess tax benefits from stock-based compensation Repayment of Long Term Debt Repurchase of common stock Structured stock repurchases Other Net cash from financing activities Other (effect of exchange rate) Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP Average cash & marketable securities Estimated annual interest rate Interest income on cash balance Other (incl. Yahoo! Japan) Other income

(32.9) 606.0 823.7 1,429.6

1435.9 2005A

Working Capital Analysis: Changes in: Accounts receivable, net Prepaid expenses and other assets Accounts payable Accrued expenses and other liabilities Deferred revenue Changes in working capital

56.9 140.2 1,429.6 1,569.8

157.0 2006A

7.2

21.3

(260.8) 1,569.8 1,309.0

4.0

216.7 1,309.0 1,525.8

2.1 1,525.8 1,527.9

(14.0) 1,527.9 1,513.9

(55.9) 1,569.8 1,513.9

203.3 1,513.9 1,717.2

(501.9) 1,717.2 1,215.3

250.9 1,215.3 1,466.2

233.4 1,466.2 1,699.6

185.7 1,513.9 1,699.6

1,048.5 1,699.6 2,748.1

3,332.7 4.3% 35.5

3,139.8 3.9% 30.7

2,957.2 5.9% 43.7

2,563.1 6.9% 44.1

2,563.1 6.0% 154.0

2,465.1 4.0% 24.7

2,315.8 4.0% 23.2

2,190.3 4.0% 21.9

2,432.4 4.0% 24.3

2,456.3 3.8% 94.0

3,073.4 4.1% 125.6

35.5 3/07A

30.7 6/07A

43.7 9/07A

7.2

44.1 12/07A

39.7

154.0 2007A

-

24.7 3/08E

-

23.2 6/08E

-

21.9 9/08E

-

24.3 12/08E

-

94.0 2008E

-

125.6 2009E

(272.4) (35.3) 31.6 212.1 58.2 (5.9)

(185.2) (189.0) 30.4 175.9 4.2 (163.7)

40.2 13.4 31.0 (34.7) 11.3 61.1

3.2 (25.9) 0.1 18.9 7.2 3.4

(49.7) 73.6 (19.0) 66.6 5.9 77.3

(82.4) 72.1 33.0 134.0 61.2 218.0

(88.7) 133.2 45.1 184.8 85.6 359.9

71.9 (43.2) (75.7) (22.9) (69.9)

(36.5) (9.7) 28.0 3.6 (14.6)

(59.6) (4.0) 51.1 (5.6) (18.2)

(155.6) 11.3 67.7 25.1 (51.6)

(179.9) (45.7) 71.1 0.1 (154.3)

(227.2) 17.1 77.4 42.0 (90.8)

Free Cash Flow Reconciliation Cash flow from operations Capex Change in LT deferred revenue/other Excess tax benefits from stock-based compensation Reported Free Cash Flow % change Reported Free Cash Flow per share

1,711.4 (408.9) (10.7) 1,291.8 53.0% $0.87

1,371.6 (689.1) (12.9) 597.1 1,266.7 -1.9% $0.87

434.7 (118.0) 52.1 368.8 7.5% $0.26

405.6 (144.7) (15.2) 82.4 328.1 -8.3% $0.23

456.7 (147.2) 309.6 7.5% $0.22

657.3 (192.4) (134.5) 330.4 18.9% $0.24

1,954.3 (602.3) (15.2) 1,336.9 5.5% $0.95

243.3 (160.0) 120.0 203.3 -44.9% $0.15

307.7 (180.0) 120.0 247.7 -24.5% $0.18

315.9 (185.0) 120.0 250.9 -19.0% $0.18

313.4 (200.0) 120.0 233.4 -29.3% $0.17

1,180.3 (725.0) 0.0 480.0 935.3 -30.0% $0.66

1,416.8 (848.3) 480.0 1,048.5 12.1% $0.74

Normalized Free Cash Flow Calculation Reported Free Cash Flow Points program revenue Restructuring costs Acquisition Related Costs Contract Termination fee (proceeds) Asset disposal Dividends received Sale of land Tax effect on supplemental items Normalized Free Cash Flow % change Normalized Free Cash Flow per share FCF conversion as % of EBITDA FCF conversion as % of sales Capex as % of EBITDA

1,291.8 1,291.8 52.0% $0.87 82.9% 35.0% 26.3%

1,266.7 1,266.7 -1.9% $0.87 66.5% 27.8% 36.2%

368.8 368.8 7.5% $0.26 80.2% 31.2% 25.7%

328.1 328.1 -8.3% $0.23 69.3% 26.4% 30.5%

309.6 309.6 7.5% $0.22 66.4% 24.1% 31.6%

330.4 330.4 18.9% $0.24 62.7% 23.5% 36.5%

1,336.9 1,336.9 5.5% $0.95 69.4% 26.1% 31.3%

203.3 203.3 -44.9% $0.15 47.7% 15.3% 37.5%

247.7 247.7 -24.5% $0.18 54.9% 18.1% 39.9%

250.9 250.9 -19.0% $0.18 53.9% 17.9% 39.7%

233.4 233.4 -29.3% $0.17 46.0% 15.1% 39.4%

935.3 935.3 -30.0% $0.66 50.6% 16.6% 39.2%

1,048.5 1,048.5 12.1% $0.74 52.2% 16.3% 42.2%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

81

Lehman Brothers

Internet Data Book

April 2008

Figure 102: Yahoo! Discounted Cash Flow Analysis ($ in millions, except per share data) 1,000.0

1

2

3

4

5

6

7

Revenue % change

2005A 13.5 -99.5%

2006A 4,559.8 33676.0%

2007A 5,112.6 12.1%

2008E 5,645.1 10.4%

2009E 6,415.0 13.6%

2010E 7,171.0 11.8%

2011E 7,919.1 10.4%

2012E 8,725.0 10.2%

EBITDA % change

1,557.3 52.4%

1,905.9 22.4%

1,927.0 1.1%

1,850.1 -4.0%

2,008.9 8.6%

2,212.0 10.1%

2,428.9 9.8%

2,661.9 9.6%

Cash Taxes Capex Change in working capital Unlevered free cash flow % change

(51.0) (408.9) (5.9) 1,091.5 47.7%

(65.9) (689.1) (163.7) 987.2 -9.6%

(84.9) (602.3) 359.9 1,599.7 62.0%

(79.3) (725.0) (154.3) 891.5 -44.3%

(107.4) (848.3) (90.8) 962.4 8.0%

(146.8) (975.5) (78.1) 1,011.7 5.1%

(194.1) (1,092.5) (77.1) 1,065.2 5.3%

(247.8) (1,190.9) (77.6) 1,145.7 7.6%

2005 PV of Cash Flow Per Share

1,091.5 $0.73

885.4 $0.60

1,286.8 $0.87

643.1 $0.43

622.7 $0.42

587.0 $0.39

554.3 $0.37

534.7 $0.36

987.2 $0.68

1,434.7 $0.98

717.0 $0.49

694.3 $0.48

654.5 $0.45

618.1 $0.42

596.2 $0.41

1,599.7 $1.14

799.5 $0.57

774.1 $0.55

729.8 $0.52

689.1 $0.49

664.8 $0.47

891.5 $0.63

863.2 $0.61

813.8 $0.58

768.4 $0.55

741.2 $0.53

2006 PV of Cash Flow Per Share 2007 PV of Cash Flow Per Share 2008 PV of Cash Flow Per Share

Terminal EBITDA multiple Discount Rate Terminal value Implied Terminal FCF Multiple

#REF! 12.0x 11.5% 31,942.9 27.9

Present value of FCF Present value of terminal value Implied Firm Value

6,205.6 14,909.1 $21,114.6

5,702.1 16,623.6 $22,325.8

5,257.1 18,535.3 $23,792.5

4,078.0 20,666.9 $24,744.9

Plus: Cash Less: Debt Plus: Yahoo! Japan Plus: Alibaba Plus: Gmarket Plus: Google Equity Less: Minority Interest Implied Equity Value

3,999.8 750.0 4,694.9 1,600.0 68.2 $30,727.6

3,537.3 749.9 4,694.9 1,760.0 69.6 $31,637.6

2,363.5 0.0 5,051.3 3,600.0 103.4 $34,910.6

2,549.1 0.0 5,051.3 3,600.0 105.4 $36,050.8

12.0x 11.5% 31,942.9 27.9

12.0x 11.5% 31,942.9 27.9

Fully diluted shares outstanding

1,486.5

1,457.9

1,402.9

Equity Value Per Share

$20.67

$21.70

$24.88

Source: Company reports, Lehman Brothers estimates

82

April 07, 2008

12.0x 11.5% 31,942.9 27.9

1,407.2 $25.62

2007E-2012E CAGR 11.3%

6.7%

-6.5%

#REF!

Lehman Brothers

Internet Data Book

April 2008

Figure 103: Google Snapshot Strengths

Biggest Concerns

- Worldwide leader in search with 68%+ share, including 59% in the U.S. and 75%+ in Europe.

- Revenue growth is decelerating amid continued high expectations for Google's search business with little insight into the contribution from other growth initiatives.

- Strong monetization capability via relevancy-based model and continued enhancements to its quality score algorithm drive enhanced user satisfaction.

-That Google's quality initiatives do not result in an increase in CPC sufficient enough to offset a seemingly decline in sponsored clicks.

- Broad distribution network, including AOL and Ask, increases network traffic and stimulates keyword bidding market for Google Sites.

- EBITDA margins are likely to modestly decline as Google signs more network partners leading to higher TAC, launches new products such as Open Social, and mobile platform Android, continues to invest in capex, and adds new hires.

- Diversified growth within search: U.S. & International, Google Sites & Google Network , volume & monetization.

- Google has yet to materially monetize anything away from search, despite investments in Google Apps, mobile, and other forms of traditional advertising.

- Key Drivers: 1) market share gains; 2) international; 3) better monetization; 4) product extensions…halo effect.

- Capex spending: Projecting $3.1B in '08.

- Strong balance sheet: $11.6B in cash after factoring in DoubleClick acquisition in a consolidating, competitive, capex-intensive space.

- Industry pushback / integration risk related to Doubleclick acquisition.

- Focus on technology and user experience.

- Risk of employees leaving for start-ups.

What to Watch For

- That Google becomes too big to manage effectively and it loses speed and innovation.

- Google reported paid click and CPC growth to be announced on its 1Q08 earnings call scheduled for April 17.

- That anti-Google sentiment develops as Google gets too big, too strong, and has too much information.

- Continued search share gains in the U.S. and internationally, with international representing faster growth, although growth at a decelerating pace. - Continued monetization improvements from quality score updates, landing page tweaks, and more relevant ads as coverage decreases. - Whether Google can revert to International growth levels, specifically in the UK where revenue increased 5% Q/Q in 4Q07 vs. 11% Q/Q in 4Q06. Seasonality was more pronounced in 4Q07 than in previous years, although revenue growth in 1Q typically bounces back very strong. - Whether TAC continues to rise based on fixed cost distribution deals with MySpace, AOL, Ask, and others that are back-end loaded.

- Whether Google can effectively monetize social networking as it learns more about user behavior, while not being a principal, and privacy concerns ease.

- If Google can meaningfully build out its Search/Ads/Apps strategy and diversify its revenue streams.

- How quickly Google can integrate DoubleClick and DFP inventory with AdSense for Content and start taking share in display.

- If Google can contain new hire growth, which it did in 4Q07 adding ~900 new employees and successfully absorb the ~1200 net new DoubleClick employees. - Usage and monetization effects from Universal Search. - YouTube litigation & monetization: Where is its newly launched digital fingerprinting product adoption, and what is the video model?

Source: Company reports, Lehman Brothers estimates

April 07, 2008

83

Lehman Brothers

Internet Data Book

April 2008

Figure 104: Google Income Statement, 2005–09E ($ in millions, except per share data) 2005A $6,138.6 $2,114.9 $4,023.6 456.6 3,567.1

2006A $10,604.9 $3,308.8 $7,296.1 898.6 6,397.5

3/07A $3,664.0 $1,125.0 $2,538.9 341.0 2,197.9

6/07A $3,872.0 $1,147.9 $2,724.1 404.7 2,319.4

9/07A $4,231.4 $1,221.1 $3,010.2 437.4 2,572.8

12/07A $4,826.7 $1,439.8 $3,386.9 509.8 2,877.1

2007A $16,594.0 $4,933.9 $11,660.1 1,692.9 9,967.2

3/08E $5,107.9 $1,528.4 $3,579.5 536.9 3,042.6

6/08E $5,273.2 $1,522.0 $3,751.2 573.9 3,177.2

9/08E $5,567.2 $1,578.0 $3,989.2 610.3 3,378.8

12/08E $6,130.1 $1,746.7 $4,383.3 683.8 3,699.5

2008E $22,078.3 $6,375.2 $15,703.2 $2,405.0 13,298.2

2009E $27,708.6 $7,724.1 $19,984.5 3,197.5 16,787.0

484.0 439.7 335.3 200.7 1,459.8

941.1 790.1 658.2 458.1 2,847.5

287.6 275.3 230.0 183.9 976.7

375.1 319.2 278.9 241.5 1,214.8

418.1 350.9 288.0 198.0 1,255.0

469.4 384.2 337.5 245.3 1,436.4

1,550.2 1,329.6 1,134.4 868.6 4,882.8

497.6 415.2 364.4 250.6 1,527.7

536.4 457.6 386.4 277.6 1,658.0

570.5 490.7 402.9 271.3 1,735.3

640.0 517.2 447.1 311.2 1,915.5

2,244.4 1,880.8 1,600.8 1,110.6 6,836.6

3,037.6 2,538.0 2,018.4 1,239.0 8,833.1

Operating income PF Operating income

2,107.3 2,308.0

3,550.0 4,008.1

1,221.2 1,405.1

1,104.6 1,346.1

1,317.8 1,515.8

1,440.7 1,686.0

5,084.4 5,953.0

1,514.9 1,765.4

1,519.2 1,796.8

1,643.5 1,914.8

1,784.0 2,095.2

6,461.6 7,572.3

7,953.8 9,192.9

Other income, expense and other, net One-time items Income before taxes Provision for income taxes Effective tax rate

124.4 (90.0) 2,141.7 676.3 31.6%

461.0 4,011.0 933.6 23.3%

130.7 1,351.9 349.8 25.9%

137.1 1,241.7 316.6 25.5%

154.4 1,472.3 402.3 27.3%

167.3 1,608.0 401.6 25.0%

589.6 5,674.0 1,470.3 25.9%

160.8 1,675.6 454.1 27.1%

136.9 1,656.1 443.8 26.8%

150.2 1,793.8 484.3 27.0%

165.8 1,949.8 506.9 26.0%

613.7 7,075.3 1,889.2 26.7%

768.6 8,722.4 2,398.7 27.5%

GAAP Net Income (loss) GAAP Diluted Income (loss) per share

1,465.4 $5.02

3,077.4 $9.94

1,002.2 $3.18

925.1 $2.93

1,070.0 $3.38

1,206.4 $3.79

4,203.7 $13.29

1,221.5 $3.82

1,212.3 $3.77

1,309.4 $4.05

1,442.9 $4.44

5,186.1 $16.09

6,323.8 $19.20

Gross Revenues Traffic Acquisition Costs (TAC) Net Revenues excluding TAC Other cost of revenues Gross profit Operating expenses Research & development Sales & marketing General & administrative Stock compensation expense Total operating expenses

Diluted shares outstanding

291.9

309.5

314.9

315.5

316.6

317.9

316.2

319.9

321.4

322.9

324.9

322.3

329.3

Non-recurring items: Stock compensation expense One-time items Tax Effect PF Net Income (loss) PF Diluted Income (loss) per share Diluted shares outstanding

200.7 61.8 (83.2) 1,644.8 $5.64 291.9

458.1 (154.0) (100.3) 3,281.3 $10.60 309.5

183.9 (26.8) 1,159.3 $3.68 314.9

241.5 (43.0) 1,123.6 $3.56 315.5

198.0 (31.0) 1,236.9 $3.91 316.6

245.3 (42.3) 1,409.5 $4.43 317.9

868.6 (143.0) 4,929.3 $15.59 316.2

250.6 (45.1) 1,427.0 $4.46 319.9

277.6 (50.0) 1,439.9 $4.48 321.4

271.3 (48.8) 1,531.9 $4.74 322.9

311.2 (56.0) 1,698.1 $5.23 324.9

1,110.6 (199.9) 6,096.8 $18.92 322.3

1,239.0 (223.0) 7,339.8 $22.29 329.3

EBITDA Reconciliation Operating income (reported) Depreciation & amortization Stock compensation expense EBITDA

2,107.3 315.9 200.7 2,623.8

3,580.0 582.7 458.1 4,620.8

1,221.2 205.0 183.9 1,610.1

1,104.6 227.0 241.5 1,573.2

1,317.8 245.7 198.0 1,761.5

1,440.7 289.9 245.3 1,976.0

5,084.4 967.7 868.6 6,920.7

1,514.9 318.6 250.6 2,084.0

1,519.2 347.9 277.6 2,144.7

1,643.5 378.1 271.3 2,292.9

1,784.0 410.3 311.2 2,505.5

6,461.6 1,454.9 1,110.6 9,027.1

2005A YEAR/YEAR GROWTH Gross Revenues Traffic Acquisition Costs (TAC) Net Revenues Gross profit Total operating expenses Operating income PF Operating Income EBITDA GAAP EPS PF EPS SEQUENTIAL GROWTH Gross revenues Traffic Acquisition Costs (TAC) Net revenues EBITDA % OF NET REVENUES Other cost of revenues (non-TAC) Research & development Sales & marketing General & administrative Stock compensation expense % OF GROSS REVENUES Traffic Acquisition Costs (TAC) Other cost of revenues (non-TAC) Research & development Sales & marketing General & administrative Stock compensation expense MARGINS AS % OF NET REVENUES Gross margin Operating margin Net margin EBITDA Operating Leverage/Flow-through MARGINS AS % OF GROSS REVENUES Gross margin Operating margin Net margin EBITDA Operating Leverage/Flow-through

2006A

92.5% 72.1% 105.2% 106.0% 63.9% 150.5% 106.1% 105.0% 243.2% 131.3%

April 07, 2008

6/07A

9/07A

12/07A

62.6% 55.7% 65.8% 62.6% 60.3% 64.4% 63.9% 60.6% 63.4% 60.1%

57.7% 46.2% 63.0% 57.9% 85.8% 35.5% 45.6% 49.7% 26.1% 43.0%

57.3% 48.0% 61.5% 56.6% 76.3% 41.5% 47.0% 48.9% 43.1% 49.4%

50.6% 47.6% 51.9% 48.8% 64.6% 35.8% 41.1% 42.7% 15.4% 39.3%

14.3% 15.3% 13.9% 16.3%

5.7% 2.0% 7.3% -2.3%

9.3% 6.4% 10.5% 12.0%

14.1% 17.9% 12.5% 12.2%

2007A 56.5% 49.1% 59.8% 55.8% 71.5% 43.2% 48.5% 49.8% 33.7% 47.1%

3/08E

6/08E

9/08E

12/08E

39.4% 35.9% 41.0% 38.4% 56.4% 24.0% 25.6% 29.4% 20.0% 21.2%

36.2% 32.6% 37.7% 37.0% 36.5% 37.5% 33.5% 36.3% 28.6% 25.8%

31.6% 29.2% 32.5% 31.3% 38.3% 24.7% 26.3% 30.2% 20.0% 21.4%

27.0% 21.3% 29.4% 28.6% 33.4% 23.8% 24.3% 26.8% 17.0% 17.9%

5.8% 6.2% 5.7% 5.5%

3.2% -0.4% 4.8% 2.9%

5.6% 3.7% 6.3% 6.9%

10.1% 10.7% 9.9% 9.3%

2008E

2009E

33.1% 29.2% 34.7% 33.4% 40.0% 27.1% 27.2% 30.4% 21.0% 21.3%

25.5% 21.2% 27.3% 26.2% 29.2% 23.1% 21.4% 23.7% 19.3% 17.8%

11.3% 12.0% 10.9% 8.3% 5.0%

12.3% 12.9% 10.8% 9.0% 6.3%

13.4% 11.3% 10.8% 9.1% 7.2%

14.9% 13.8% 11.7% 10.2% 8.9%

14.5% 13.9% 11.7% 9.6% 6.6%

15.1% 13.9% 11.3% 10.0% 7.2%

14.5% 13.3% 11.4% 9.7% 7.4%

15.0% 13.9% 11.6% 10.2% 7.0%

15.3% 14.3% 12.2% 10.3% 7.4%

15.3% 14.3% 12.3% 10.1% 6.8%

15.6% 14.6% 11.8% 10.2% 7.1%

15.3% 14.3% 12.0% 10.2% 7.1%

16.0% 15.2% 12.7% 10.1% 6.2%

34.5% 7.4% 7.9% 7.2% 5.5% 3.3%

31.2% 8.5% 8.9% 7.5% 6.2% 4.3%

30.7% 9.3% 7.8% 7.5% 6.3% 5.0%

29.6% 10.5% 9.7% 8.2% 7.2% 6.2%

28.9% 10.3% 9.9% 8.3% 6.8% 4.7%

29.8% 10.6% 9.7% 8.0% 7.0% 5.1%

29.7% 10.2% 9.3% 8.0% 6.8% 5.2%

29.9% 10.5% 9.7% 8.1% 7.1% 4.9%

28.9% 10.9% 10.2% 8.7% 7.3% 5.3%

28.3% 11.0% 10.2% 8.8% 7.2% 4.9%

28.5% 11.2% 10.4% 8.4% 7.3% 5.1%

28.9% 10.9% 10.2% 8.5% 7.3% 5.0%

27.9% 11.5% 11.0% 9.2% 7.3% 4.5%

88.7% 52.4% 36.4% 65.2% 65.2%

87.7% 48.7% 42.2% 63.3% 61.0%

86.6% 48.1% 39.5% 63.4% 60.3%

85.1% 40.6% 34.0% 57.8% 49.6%

85.5% 43.8% 35.5% 58.5% 50.5%

84.9% 42.5% 35.6% 58.3% 51.1%

85.5% 43.6% 36.1% 59.4% 52.7%

85.0% 42.3% 34.1% 58.2% 45.5%

84.7% 40.5% 32.3% 57.2% 55.7%

84.7% 41.2% 32.8% 57.5% 54.3%

84.4% 40.7% 32.9% 57.2% 53.1%

84.7% 41.1% 33.0% 57.5% 52.1%

84.0% 39.8% 31.6% 55.9% 49.9%

58.1% 34.3% 23.9% 42.7% 45.6%

60.3% 33.5% 29.0% 43.6% 44.7%

60.0% 33.3% 27.4% 43.9% 43.1%

59.9% 28.5% 23.9% 40.6% 36.9%

60.8% 31.1% 25.3% 41.6% 37.5%

59.6% 29.8% 25.0% 40.9% 36.5%

60.1% 30.6% 25.3% 41.7% 38.4%

59.6% 29.7% 23.9% 40.8% 32.8%

60.3% 28.8% 23.0% 40.7% 40.8%

60.7% 29.5% 23.5% 41.2% 39.8%

60.4% 29.1% 23.5% 40.9% 40.6%

60.2% 29.3% 23.5% 40.9% 38.4%

60.6% 28.7% 22.8% 40.3% 37.9%

Source: Company reports, Lehman Brothers estimates

84

72.8% 56.4% 81.3% 79.4% 95.1% 68.5% 73.7% 76.1% 98.0% 88.1%

3/07A

7,953.8 1,969.4 1,239.0 11,162.3

Lehman Brothers

Internet Data Book

April 2008

Figure 105: Google Revenue Analysis, 2005–09E ($ in millions, except per share data) 2005A 6,138.6

2006A 10,604.9

3/07A 3,664.0

6/07A 3,872.0

9/07A 4,231.4

12/07A 4,826.7

2007A 16,594.0

3/08E 5,107.9

6/08E 5,273.2

9/08E 5,567.2

12/08E 6,130.1

2008E 22,078.3

2009E 27,708.6

3,377.1 112.5%

6,332.8 87.5%

534.1 194.6%

694.4 30.0%

10,604.9 72.8%

4,058.0 30.0% 10.7% 1,905.7 16.5% 8.3% 5,963.7 25.4% 9.9% 166.3 140.0% 16.8% 6,130.1 27.0% 10.1%

27,014.2 25.4%

6,138.6 92.5%

3,664.6 34.0% 6.4% 1,760.2 21.0% 4.2% 5,424.8 29.5% 5.7% 142.4 240.0% 2.0% 5,567.2 31.6% 5.6%

21,544.2 31.3%

112.3 52.7%

3,443.5 38.5% 4.1% 1,690.1 25.0% -1.5% 5,133.6 33.7% 2.2% 139.6 315.0% 62.7% 5,273.2 36.2% 3.2%

8,344.2 18.0%

73.6 60.3%

3,306.8 44.9% 5.9% 1,715.3 27.5% 4.9% 5,022.1 38.4% 5.6% 85.8 135.0% 23.8% 5,107.9 39.4% 5.8%

7,071.3 22.2%

10,492.6 73.0%

3,121.5 57.9% 14.1% 1,635.8 36.6% 12.5% 4,757.4 49.8% 13.6% 69.3 126.6% 65.5% 4,826.7 50.6% 14.1%

18,670.0 29.0%

6,065.0 92.9%

2,734.8 68.2% 10.0% 1,454.7 40.3% 7.6% 4,189.5 57.3% 9.1% 41.9 57.0% 24.5% 4,231.4 57.3% 9.3%

14,472.9 36.2%

4,159.8 54.8%

2,486.3 73.6% 8.9% 1,352.1 35.7% 0.5% 3,838.3 58.0% 5.8% 33.6 24.8% -7.9% 3,872.0 57.7% 5.7%

10,624.7 67.8%

2,687.9 72.9%

2,282.1 75.9% 15.4% 1,345.3 44.9% 12.3% 3,627.5 63.0% 14.3% 36.5 30.1% 19.4% 3,664.0 62.6% 14.3%

22,078.3 33.1%

27,708.6 25.5%

55.0% 43.8% 98.8% 1.2% 100.0%

59.7% 39.2% 98.9% 1.1% 100.0%

62.3% 36.7% 99.0% 1.0% 100.0%

64.2% 34.9% 99.1% 0.9% 100.0%

64.6% 34.4% 99.0% 1.0% 100.0%

64.7% 33.9% 98.6% 1.4% 100.0%

64.0% 34.9% 98.9% 1.1% 100.0%

64.7% 33.6% 98.3% 1.7% 100.0%

65.3% 32.1% 97.4% 2.6% 100.0%

65.8% 31.6% 97.4% 2.6% 100.0%

66.2% 31.1% 97.3% 2.7% 100.0%

65.6% 32.0% 97.6% 2.4% 100.0%

67.4% 30.1% 97.5% 2.5% 100.0%

Google Web Sites - TAC TAC as % of Google Sites Gross Adv. Revenues Y/Y growth Google Network Web Sites - TAC TAC as % of Google Network Gross Adv. Revenues Y/Y growth Total Traffic Acquisition Costs (TAC) TAC as a % of Total Gross Adv. Revenues Y/Y growth

89.9 2.7% NA 2,025.0 75.3% 64.8% 2,114.9 34.9% 72.1%

174.1 2.7% 93.7% 3,134.6 75.4% 54.8% 3,308.8 31.5% 56.4%

73.1 3.2% 125.6% 1,051.9 78.2% 52.4% 1,125.0 31.0% 55.7%

86.9 3.5% 136.6% 1,061.0 78.5% 41.8% 1,148.0 29.9% 46.2%

105.4 3.9% 134.2% 1,115.8 76.7% 43.0% 1,221.1 29.1% 48.0%

125.4 4.0% 109.0% 1,314.4 80.4% 43.6% 1,439.8 30.3% 47.6%

390.8 3.7% 124.4% 4,543.1 78.5% 44.9% 4,933.9 30.1% 49.1%

135.6 4.1% 85.4% 1,392.8 81.2% 32.4% 1,528.4 30.4% 35.9%

144.6 4.2% 66.4% 1,377.4 81.5% 29.8% 1,522.0 29.6% 32.6%

155.7 4.3% 47.8% 1,422.3 80.8% 27.5% 1,578.0 29.1% 29.2%

174.5 4.3% 39.2% 1,572.2 82.5% 19.6% 1,746.7 29.3% 21.3%

610.4 4.2% 56.2% 5,764.7 81.5% 26.9% 6,375.2 29.6% 29.2%

840.2 4.5% 37.6% 6,883.9 82.5% 19.4% 7,724.1 28.6% 21.2%

Total Net Revenues

4,023.7

7,296.2

2,538.9

2,724.0

3,010.2

3,386.9

11,660.1

3,579.5

3,751.2

3,989.2

4,383.3

15,703.2

19,984.5

3,287.2 106.9%

6,158.7 87.4%

534.1 194.6%

694.4 30.0%

7,296.2 81.3%

3,883.5 29.6% 10.7% 333.5 3.8% -1.3% 4,217.0 27.1% 9.6% 166.3 140.0% 16.8% 4,383.3 29.4% 9.9%

19,290.1 27.2%

4,023.7 105.2%

3,508.8 33.4% 6.4% 338.0 -0.3% 8.1% 3,846.8 29.6% 6.5% 142.4 240.0% 2.0% 3,989.2 32.5% 6.3%

15,169.0 32.1%

112.3 52.7%

3,298.9 37.5% 4.0% 312.7 7.4% -3.0% 3,611.5 34.2% 3.4% 139.6 315.0% 62.7% 3,751.2 37.7% 4.8%

1,460.2 11.8%

73.6 60.3%

3,171.2 43.6% 5.8% 322.5 9.9% 0.3% 3,493.7 39.6% 5.3% 85.8 135.0% 23.8% 3,579.5 41.0% 5.7%

1,306.6 5.0%

7,183.9 81.9%

2,996.2 56.3% 13.9% 321.4 13.9% -5.2% 3,317.6 50.8% 11.8% 69.3 126.6% 65.5% 3,386.9 51.9% 12.5%

17,829.9 28.6%

3,950.1 106.3%

2,629.4 66.3% 9.6% 339.0 32.0% 16.5% 2,968.4 61.5% 10.3% 41.9 57.0% 24.5% 3,010.2 61.5% 10.5%

13,862.4 35.5%

1,025.2 54.6%

2,399.4 71.9% 8.6% 291.0 17.3% -0.8% 2,690.4 63.7% 7.5% 33.6 24.8% -7.9% 2,724.0 63.0% 7.3%

10,233.9 66.2%

662.9 103.6%

2,209.0 74.6% 15.2% 293.4 23.3% 4.0% 2,502.4 66.5% 13.8% 36.5 30.1% 19.4% 2,538.9 65.8% 13.9%

15,703.2 34.7%

19,984.5 27.3%

81.7% 16.5% 98.2% 1.8% 100.0%

84.4% 14.1% 98.5% 1.5% 100.0%

87.0% 11.6% 98.6% 1.4% 100.0%

88.1% 10.7% 98.8% 1.2% 100.0%

87.3% 11.3% 98.6% 1.4% 100.0%

88.5% 9.5% 98.0% 2.0% 100.0%

87.8% 10.7% 98.4% 1.6% 100.0%

88.6% 9.0% 97.6% 2.4% 100.0%

87.9% 8.3% 96.3% 3.7% 100.0%

88.0% 8.5% 96.4% 3.6% 100.0%

88.6% 7.6% 96.2% 3.8% 100.0%

88.3% 8.3% 96.6% 3.4% 100.0%

89.2% 7.3% 96.5% 3.5% 100.0%

2005A 6,138.6 92.5%

2006A 10,604.9 72.8%

3/07A 3,664.0 62.6% 14.3%

6/07A 3,872.0 57.7% 5.7%

9/07A 4,231.4 57.3% 9.3%

12/07A 4,826.7 50.6% 14.1%

2007A 16,594.0 56.5%

3/08E 5,107.9 39.4% 5.8%

6/08E 5,273.2 36.2% 3.2%

9/08E 5,567.2 31.6% 5.6%

12/08E 6,130.1 27.0% 10.1%

2008E 22,078.3 33.1%

2009E 27,708.6 25.5%

3,756.9 77.3%

6,030.1 60.5%

2,559.1 30.7% 2.1% 50.1% 2,548.8 49.4% 9.8% 49.9%

2,578.6 27.2% 0.8% 48.9% 2,694.6 46.1% 5.7% 51.1%

2,666.7 20.9% 3.4% 47.9% 2,900.5 43.2% 7.6% 52.1%

2,911.8 16.2% 9.2% 47.5% 3,218.3 38.7% 11.0% 52.5%

48.5% 11,362.2 43.9%

46.5% 14,824.1 30.5%

43.1%

2,505.9 40.4% 13.6% 51.9% 2,320.8 63.4% 14.6% 48.1%

12,884.5 20.2%

38.8%

2,205.8 46.4% 8.8% 52.1% 2,025.5 71.2% 9.8% 47.9%

10,716.1 23.2%

56.9% 4,574.8 92.1%

2,027.9 42.7% 3.6% 52.4% 1,844.0 78.2% 8.1% 47.6%

8,698.0 44.2%

61.2% 2,381.7 122.5%

1,958.4 48.6% 9.7% 53.4% 1,705.6 82.2% 20.1% 46.6%

51.5%

53.5%

2005A 5,680 88.0%

2006A 10,674 87.9%

6/07A 13,786 73.6% 12.6% 1,548

9/07A 15,916 69.7% 15.5% 2,130

12/07A 16,805 57.4% 5.6% 889

2007A 16,805 57.4%

6/08E 19,005 37.9% 6.1% 1,100

9/08E 20,405 28.2% 7.4% 1,400

12/08E 21,405 27.4% 4.9% 1,000

2008E 21,405 27.4%

2009E 25,805 20.6%

6,131

3/08E 17,905 46.3% 6.5% 1,100

$ 1,190,281 $ 837,389 $ 483,601 $ 299,185

$ 1,139,681 $ 810,782 $ 474,448 $ 284,697

$ 1,180,081 $ 828,059 $ 483,107 $ 291,207

$ 1,207,758 $ 848,653 $ 503,708 $ 292,164

$ 1,177,277 $ 825,011 $ 480,318 $ 294,364

$ 1,142,931 $ 813,041 $ 464,859 $ 299,199

$ 1,130,100 $ 809,776 $ 465,439 $ 297,188

$ 1,172,940 $ 838,717 $ 479,413 $ 306,970

Total Gross Revenues GROSS REVENUE SEGMENT ANALYSIS Google Web Sites - Gross Revenues Y/Y growth Q/Q growth Google Network Web Sites - Gross Revenues Y/Y growth Q/Q growth Total Gross Advertising Revenues Y/Y growth Q/Q growth Licensing & Other Gross Revenues Y/Y growth Q/Q growth Total Gross Revenues Y/Y growth Q/Q growth

5,787.9 39.1% 16,412.6 56.4% 181.3 61.5% 16,594.0 56.5%

GROSS REVENUE SHARE BY SEGMENT Google Web Sites - Gross Revenues Google Network Web Sites - Gross Revenues Total Gross Advertising Revenues Licensing & Other Gross Revenues Total Gross Revenues TAC ANALYSIS

NET REVENUE SEGMENT ANALYSIS Google Web Sites (AdWords) - Net Revenues Y/Y growth Q/Q growth Google Network Web Sites (AdSense) - Net Revenues Y/Y growth Q/Q growth Total Net Advertising Revenues Y/Y growth Q/Q growth Licensing & Other Net Revenues Y/Y growth Q/Q growth Total Net Revenues Y/Y growth Q/Q growth

1,244.8 21.4% 11,478.7 59.8% 181.3 61.5% 11,660.1 59.8%

NET REVENUE SHARE BY SEGMENT Google Web Sites as % of Total Net Revs Google Network Web Sites as % of Total Net Revs Total Advertising Revenues as % of Total Net Revs Licensing & Other Revenue as % of Total Net Revs Total Net Revenues

Geographic Breakdown ($ millions) Total Gross Revenues Y/Y growth Q/Q growth United States Y/Y growth Q/Q growth U.S. revenues as % of Gross Revenues International Y/Y growth Q/Q growth International revenues as % of Gross Revenues

52.4% 7,896.0 72.6% 47.6%

Other Metrics ($ actual) Full-Time Headcount Y/Y growth Q/Q growth Absolute Sequential Change in Headcount Annualized Gross Revenue/Average Full Time Employee Annualized Net Revenue/Average Full Time Employee Annualized EBITDA/Average Full Time Employee Annualized Cash Opex/Average Full Time Employee

2,659

4,994

3/07A 12,238 80.2% 14.7% 1,564

$ 1,411,001 $ 924,873 $ 603,112 $ 289,407

$ 1,296,920 $ 892,278 $ 565,102 $ 292,213

$ 1,279,319 $ 886,502 $ 562,174 $ 276,836

$ $ $ $

4,600

4,400

1,155,632 821,941 472,501 299,708

$ 1,173,843 $ 846,621 $ 472,879 $ 321,716

Source: Company reports, Lehman Brothers estimates

April 07, 2008

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Figure 106: Google Cash Flow Statement, 2005–09E ($ in millions, except per share data) 2005A Cash flows from operating activities Net income Adjustments Depreciation & amortization of PP&E Amortization of warrants Amortization of intangibles In-process research & development Stock-based compensation Tax benefits from exercise of stock options and other One-time items Changes in working capital Cash flows from operations Cash flows from investing activities Purchases of PP&E Purchase of short-term investments Maturities and sales of short-term investments Acquisitions, net of cash acquired Change in other assets Net cash from investing activities Cash flows from financing activities Proceeds from issuance of common stock Proceeds from issuance of convertible preferred stock, net Proceeds from exercise of stock options, net Excess tax benefits from stock-based award activity Proceeds from exercise of warrants Payments of notes receivable from stockholders Payments of principal on capital leases and equip. loans Net cash from financing activities Other (effect of exchange rate changes on cash & equivalents) Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP

1,465.4

3,077.4

256.8 37.0 22.0 200.7 433.7 43.7 2,459.4 -31%

494.4 77.5 10.8 458.1 (581.7) 1.7 42.3 3,580.5 -26%

(838.2) (12,675.9) 10,257.2 (86.5) (14.8) (3,358.2)

(1,902.8) (26,681.9) 23,107.1 (1,421.6) (6,899.2)

4,287.2 85.0

2,063.5 321.1 581.7 2,966.4

(1.4) 4370.8 (21.8) 3,450.3 426.9 3,877.2

2005A Working Capital Analysis: Changes in: Accounts receivable, net Income taxes net Prepaid revenue share, expenses and other assets Accounts payable Accrued expenses and other liabilities Accrued revenue share Deferred revenue Changes in working capital

2006A

19.7 (332.5) 3,877.2 3,544.7

2006A

3/07A

1,002.2

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

925.1

1,070.0

1,206.4

4,203.7

1,221.5

1,212.3

1,309.4

1,442.9

5,186.1

6,323.8

34.7 183.9 (74.1) (6.4) (91.0) 1,219.6

188.1 35.2 3.66 241.5 (105.7) 2.7 (60.7) 1,229.9

207.4 42.0 (3.66) 198.0 (58.8) (3.5) 181.3 1,632.6

241.9 48.0 245.3 (140.6) (32.5) 124.7 1,693.3

807.7 159.9 868.6 (379.2) (39.7) 154.3 5,775.4

268.6 50.0 250.6 (80.0) (126.2) 1,584.5

296.9 51.0 277.6 (85.0) (143.4) 1,609.5

326.1 52.0 271.3 (87.0) 263.4 2,135.2

357.3 53.0 311.2 (89.0) 53.5 2,128.9

1,248.9 206.0 1,110.6 (341.0) 47.4 7,458.0

1,763.4 206.0 1,239.0 (341.0) 151.2 9,342.5

(596.9) (5,225.2) 5,079.4 (34.4) (777.1)

(575.1) (2,118.7) 1,937.8 (173.1) (10.3) (939.3)

(552.6) (4,412.3) 4,501.8 (615.6) (11.0) (1,089.7)

(678.2) (4,240.9) 4,140.5 (83.6) (13.2) (875.4)

(2,402.8) (15,997.1) 15,659.5 (906.7) (34.5) (3,681.6)

(715.9) (3,240.0) (230.00) (4,185.9)

(750.2) (750.2)

(797.8) (797.8)

(876.7) (876.7)

(3,140.6) (3,240.0) (230.0) (6,610.6)

(3,897.0) (3,897.0)

85.0 85.0

87.0 87.0

89.0 89.0

170.3

14.4 74.1 88.5

14.4 105.7 120.1

(9.8) 58.8 49.0

4.8 140.6 145.4

23.9 379.2 403.1

5.7

1.6

20.8

12.0

40.0

536.7 3,544.7 4,081.3

412.3 4,081.3 4,493.6

612.8 4,493.6 5,106.4

975.2 5,106.4 6,081.6

2,536.9 3,544.7 6,081.6

3/07A

6/07A

9/07E

12/07A

2007A

80.0 80.0 -

-

-

(2,521.4) 6,081.6 3,560.2

944.2 3,560.2 4,504.4

1,424.4 4,504.4 5,928.8

3/08E

6/08E

9/08E

1,341.2 5,928.8 7,270.0

12/08E

341.0 341.0 1,188.4 6,081.6 7,270.0

2008E

341.0 341.0 5,786.5 7,270.0 13,056.5

2009E

(372.3) 87.4 (51.7) 80.6 166.8 93.3 39.6 43.7

(624.0) 398.4 (289.2) 95.4 291.5 139.3 30.8 42.3

(153.6) 337.7 (185.5) (29.3) (139.9) 77.9 1.7 (91.0)

(171.5) (4.30) (22.0) (45.4) 160.8 4.3 17.5 (60.7)

(234.4) 97.63 (29.7) 94.8 185.6 54.3 13.0 181.3

(277.8) 149.6 (61.4) 50.0 212.4 13.9 38.2 124.7

(837.2) 580.6 (298.7) 70.1 418.9 150.3 70.3 154.3

(56.8) (100.0) (63.3) (6.5) 54.0 32.8 13.6 (126.2)

(181.4) 35.0 (102.3) 24.5 39.9 37.9 3.1 (143.4)

(132.4) 265.0 (19.5) 27.0 59.4 45.6 18.3 263.4

(237.2) 160.0 (84.9) 23.6 113.7 49.9 28.4 53.5

(607.8) 360.0 (270.0) 68.6 267.0 166.2 63.4 47.4

(427.2) 350.00 (232.9) 69.0 167.3 171.1 54.0 151.2

838.2 20.8% 34.1%

1,902.8 26.1% 53.1%

596.9 23.5% 48.9%

575.1 21.1% 46.8%

552.6 18.4% 33.8%

678.2 20.0% 40.1%

2,402.8 20.6% 41.6%

715.9 20.0% 45.2%

750.2 20.0% 46.6%

797.8 20.0% 37.4%

876.7 20.0% 41.2%

3,140.6 20.0% 42.1%

3,897.0 19.5% 41.7%

Free Cash Flow Reconciliation Cash flow from operations Capex Excess tax benefits from stock-based award activity Free Cash Flow % Y/Y change Free Cash Flow per share

2,459.4 (838.2) 1,621.2 146.4% $5.55

3,580.5 (1,902.8) 1,677.7 3.5% $5.42

1,219.6 (596.9) 622.7 29.8% $1.98

1,229.9 (575.1) 654.8 362.5% $2.08

1,632.6 (552.6) 1,080.0 110.9% $3.41

1,693.3 (678.2) 1,015.0 86.5% $3.19

5,775.4 (2,402.8) 3,372.6 101.0% $10.67

1,584.5 (715.9) 868.6 39.5% $2.71

1,609.5 (750.2) 859.2 31.2% $2.67

2,135.2 (797.8) 1,337.4 23.8% $4.14

2,128.9 (876.7) 1,252.2 23.4% $3.85

7,458.0 (3,140.6) 4,317.4 28.0% $13.40

9,342.5 (3,897.0) 5,445.5 26.1% $16.54

FCF conversion as % of Cash Flow from Ops Y/Y change in CFO FCF as % of EBITDA

65.9% 151.7% 61.8%

46.9% 45.6% 36.3%

51.1% 47.9% 38.7%

53.2% 46.3% 41.6%

66.2% 62.6% 61.3%

59.9% 85.9% 51.4%

58.4% 61.3% 48.7%

54.8% 29.9% 41.7%

53.4% 30.9% 40.1%

62.6% 30.8% 58.3%

58.8% 25.7% 50.0%

57.9% 29.1% 47.8%

58.3% 25.3% 48.8%

Capex Analysis: Capex Capex as % of net revenues Capex as % of operating cash flow

Source: Company reports, Lehman Brothers estimates

86

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April 2008

Figure 107: Google Discounted Cash Flow Analysis ($ in millions, except per share data) 1,000.0

0

1

2

3

Net Revenues % change

2003A 939.4 172.3%

2004A 1,960.6 108.7%

2005A 4,023.6 105.2%

2006A 7,296.1 81.3%

2007E 11,660.1 59.8%

2008E 15,703.2 34.7%

2009E 19,984.5 27.3%

2010E 24,349.9 21.8%

2011E 28,124.7 15.5%

2012E 31,674.8 12.6%

EBITDA % change

638.5 169.3%

1,279.8 100.4%

2,623.8 105.0%

4,620.8 76.1%

6,920.7 49.8%

9,027.1 30.4%

11,162.3 23.7%

13,277.6 19.0%

15,034.1 13.2%

16,619.2 10.5%

19.1%

(241.0) (176.8) (6.2) 214.5 79.3%

(251.1) (319.0) (253.2) 456.4 112.8%

(676.3) (838.2) 43.7 1,153.1 152.6%

(933.6) (1,902.8) 42.3 1,826.7 58.4%

(1,470.3) (2,402.8) 154.3 3,201.9 75.3%

(1,889.2) (3,140.6) 47.4 4,044.7 26.3%

(2,398.7) (3,897.0) 151.2 5,017.9 24.1%

(2,889.2) (4,504.7) (68.3) 5,815.4 15.9%

(3,337.9) (4,921.8) (66.2) 6,708.3 15.4%

(3,686.7) (5,384.7) (73.9) 7,473.9 11.4%

18.5%

214.5 $0.82

409.4 $1.56

927.5 $3.53

1,317.8 $5.02

2,071.6 $7.89

2,347.0 $8.94

2,611.4 $9.95

2,714.3 $10.34

2,808.1 $10.70

2,805.9 $10.69

1,034.2 $3.62

1,469.3 $5.14

2,309.9 $8.08

2,616.9 $9.15

2,911.7 $10.18

3,026.4 $10.58

3,131.0 $10.95

3,128.6 $10.94

1,153.1 $3.79

1,638.3 $5.39

2,575.5 $8.47

2,917.8 $9.60

3,246.5 $10.68

3,374.5 $11.10

3,491.1 $11.48

3,488.4 $11.48

1,826.7 $5.83

2,871.7 $9.16

3,253.4 $10.38

3,619.9 $11.55

3,762.5 $12.00

3,892.6 $12.42

3,889.5 $12.41

3,201.9 $10.13

3,627.5 $11.47

4,036.2 $12.76

4,195.2 $13.27

4,340.2 $13.73

4,336.8 $13.71

4,044.7 $12.55

4,500.4 $13.96

4,677.7 $14.51

4,839.3 $15.02

4,835.5 $15.00

5,017.9 $15.57

5,215.6 $16.18

5,395.9 $16.74

5,391.6 $16.73

Cash Taxes Capex Change in working capital Unlevered free cash flow % change 2003 PV of Cash Flow Per Share 2004 PV of Cash Flow Per Share

456.4 $1.60

2005 PV of Cash Flow Per Share 2006 PV of Cash Flow Per Share

4

2007 PV of Cash Flow Per Share

5

2008 PV of Cash Flow Per Share

6

2009 PV of Cash Flow Per Share

Terminal EBITDA multiple Discount Rate Terminal value Implied Terminal FCF Multiple

14.0x 11.5% 232,668.4 31.1

14.0x 11.5% 232,668.4 31.1

14.0x 11.5% 232,668.4 31.1

14.0x 11.5% 232,668.4 31.1

14.0x 11.5% 232,668.4 31.1

14.0x 11.5% 232,668.4 31.1

7

18,227.4 87,350.2 $105,577.6

20,084.4 97,395.4 $117,479.9

21,885.2 108,595.9 $130,481.1

23,116.3 121,084.4 $144,200.8

23,737.9 135,009.1 $158,747.1

22,897.6 150,535.2 $173,432.8

21,021.0 167,846.7 $188,867.7

Plus: Cash Less: Debt Implied Equity Value

334.7 $105,912.3

2,132.3 $119,612.2

8,034.2 $138,515.4

11,243.9 $155,444.7

14,218.6 $172,965.7

15,407.0 $188,839.8

21,193.5 $210,061.3

262.6

285.9

304.0

313.5

316.2

322.3

329.3

$403.38

$418.31

$455.68

$495.90

$547.00

$585.91

$637.90

Equity Value Per Share

9

2007A-2012E CAGR 22.1%

14.0x 11.5% 232,668.4 31.1

Present value of FCF Present value of terminal value Implied Firm Value

Fully diluted shares outstanding

8

Source: Company reports, Lehman Brothers estimates

April 07, 2008

87

Lehman Brothers

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April 2008

Figure 108: eBay Snapshot Strengths

Biggest Concerns

- Symbiotic, network effect business model within core eBay, PayPal, and Skype

- Natural evolution of e-commerce toward multi-channel buying and selling

- Community of ~ 250 million registered users, 83 million active users; strong barriers to entry around core auction business

- Feb '08 fee changes in US, UK, & Germany may not be significant enough to reaccelerate core marketplace growth; addt'l changes may be necessary

- Annualized GMV of $60B; would be ~11th largest retailer in the world

- Core growth: 4Q07 GMV +8% in U.S. and +8% international (ex FX)

- Vertically integrated through PayPal; exploiting off eBay opportunity

- Low/no growth in the U.S. and Germany which make up ~70% of eBay’s business

- Rebalancing initiatives improving ASPs and conversion rates

- PayPal a key driver, but lower-margin business and could require increased investment in '08. Competition intensifying in payments space - Google Checkout and potentially Amazon; 2/3 of PayPal biz on eBay platform

- Strong balance sheet: $5.0 billion in cash---bought back $3.2B of stock and another $2.8B to go---could also lever up

- Is there a novelty effect to online auctions? Do e-commerce shoppers want more convenience, speed, ease of use? It looks like Amazon is taking share - Fixed price format growing faster than auctions--away from E15 strengths

What to Watch For - Impact of Feb '08 Fee Change on listings growth, ASPs, conversion rates in key markets - US, UK, Germany - Whether new Finding technology (w/ Best Match as default) on eBay.com meaningfully improves buyer experience, offsets potential increase in listings post-fee reductions - Whether eBay can stimulate buyer demand by improving user experience and trust/safety - Core growth: current numbers helped by FX, acquisitions, buybacks, China deconsolidation, lower tax rate, advertising - Health of the Big 3: U.S., Germany, UK - Continued share buybacks: repo’d $3.2B worth from 3Q06-4Q07; addt’l $2.85B in authorizations - Potential to lever up and do bigger buyback; increased credit line from $1B to $2B - Increased presence of YHOO sponsored search results on null search & within complementary listings, also graphical;GOOG sponsored search overseas - Comps: Listings comps easier into 1H08, but also lapping RPL improvements - Whether investors give eBay credit for non-GMV businesses, i.e., Shopping.com, Classifieds, Rent.com Source: Company reports, Lehman Brothers estimates

88

April 07, 2008

Guidance

Net Revenues Y/Y revenue growth

1Q08

2008

$2.000B - $2.050B +13% - 16%

$8.500B - $8.750B +11% - 14%

Operating Margin Pro Forma Operating Margin GAAP Diluted EPS Pro Forma Diluted EPS Non-cash charges and tax impact GAAP Effective Tax Rate PF Effective Tax Rate Capex Free Cash Flow

0.24 0.32 $0.28 - $0.30 $0.37 - $0.39

$1.27 - $1.31 $1.63 - $1.67

21% - 22% 22% - 23% 6.5% - 7% of Revenue $2.300B - $2.400B

Lehman Brothers

Internet Data Book

April 2008

Figure 109: eBay Income Statement, 2005–09E ($ in thousands, except per share data) Net revenues Cost of net revenues Gross profit

2005A 4,552,401 818,104 3,734,297

2006A 5,969,741 1,205,960 4,763,781

3/07A 1,768,074 380,375 1,387,699

6/07A 1,834,429 401,859 1,432,570

9/07A 1,889,220 437,389 1,451,831

12/07A 2,180,606 496,507 1,684,099

2007A 7,672,329 1,716,130 5,956,199

3/08E 2,027,657 470,416 1,557,240

6/08E 2,073,260 485,143 1,588,117

9/08E 2,125,491 518,620 1,606,871

12/08E 2,448,059 555,709 1,892,349

2008E 8,674,467 2,029,888 6,644,578

2009E 9,962,705 2,420,937 7,541,768

1,230,728 328,191 591,715 13,015 128,941

424,029 121,641 250,362 51,890 71,950 919,872

454,682 128,514 256,001 56,846 79,621 975,664

463,048 143,505 259,556 1,390,938 51,888 80,589 2,389,524

502,335 150,065 282,593 53,313 69,653 1,057,959

1,844,094 543,725 1,048,512 1,390,938 213,937 301,813 5,343,019

486,638 148,019 285,900 58,000 100,000 1,078,556

503,802 149,275 288,183 55,000 100,000 1,096,260

514,369 163,663 297,569 60,000 100,000 1,135,601

563,053 178,708 330,488 60,000 100,000 1,232,250

2,067,862 639,665 1,202,139 233,000 400,000 4,542,666

2,351,198 712,333 1,364,891 200,000 414,000 5,042,422

467,827 593,445

456,906 594,664

626,140 754,979

613,180 2,536,532

478,684 636,684

491,857 646,857

471,271 631,271

660,100 820,100

2,101,912 2,734,912

2,499,345 3,113,345

Operating expenses Sales and marketing Product development General and administrative Payroll expense on employeee stock options Patent litigation expense Amortization of acquired intangible assets Incremental non-cash stock-based comp (FAS123) Total operating expenses

2,292,590

1,548,841 413,206 842,039 4,400 214,929 317,410 3,340,825

Operating income PF Operating income

1,441,707 1,615,435

1,422,956 1,960,614

Interest and other income, net Interest expense Impairment of certain equity investments Total non-operating expenses, net

(937,693) 593,444

111,148 (3,478) 107,670

130,017 (5,916) 124,101

30,020 (4,542) 25,478

33,967 (2,734) 31,233

38,363 (2,728) 35,635

51,921 (6,596) 45,325

154,271 (16,600) 137,671

43,658 (3,000) 40,658

43,501

46,934

51,491

Income (loss) before income taxes and minority interests Provision for income taxes Tax Rate Minority interests in consolidated companies Cumulative effect of accounting change

1,549,377 (467,285) 30.2% (49) -

1,547,057 (421,418) 27.2% (4) -

493,305 (116,129) 23.5% -

488,139 (112,315) 23.0% -

(902,058) (33,577) -3.7% -

671,465 (140,579) 20.9% -

750,851 (402,600) 53.6% -

519,343 (114,255) 22.0%

535,358 (117,779) 22.0%

518,205 (114,005) 22.0%

711,590 (156,550) 22.0%

GAAP Net income (loss) Basic income (loss) per share Diluted income (loss) per share Basic shares outstanding Diluted shares outstanding

1,082,043 $0.79 $0.78 1,361,656 1,393,688

1,125,635 $0.80 $0.79 1,399,251 1,425,472

Non-recurring items: Payroll expense on employeee stock options Amortization of acquired intangible assets Impairment of certain equity investments Opex adj. for non-cash stock based comp. Cost of net revenues adjustment Interest and other income adjustment Tax adjustment Other one-time items Minority interests PF Net income (loss) PF basic income (loss) per share PF diluted income (loss) per share Basic shares outstanding Diluted shares outstanding

13,015 128,941 30,170 1,602 (2,260) (50,517) 1,202,994 $0.88 $0.86 1,361,656 1,393,688

5,319 214,929 317,410 (171,690) 1,491,603 $1.07 $1.05 1,399,251 1,425,472

EBITDA Reconciliation PF Operating income Depreciation EBITDA

1,615,435 249,224 1,864,659

1,960,614 329,623 2,290,237

2005A Y/Y Growth Net sales Cost of net revenues Sales and marketing Product development General and administrative Total operating expenses Operating income PF Operating income GAAP Net income PF Net income EBITDA Sequential Growth Net sales % of Revenues Sales and marketing Product development General and administrative Total operating expenses Margins Gross margin Operating margin PF Operating margin EBITDA margin Operating Leverage (∆ in PF op inc / ∆ in revenues)

2006A

377,176 $0.28 $0.27 1,366,915 1,384,287

375,824 $0.28 $0.27 1,361,046 1,378,697

(935,635) ($0.69) ($0.69) 1,354,786 1,354,786

1,778 51,890 71,950

1,291 56,846 79,621

(42,315)

(42,532)

2,281 51,888 1,390,938 80,589 5,441 (31,721)

530,886 $0.39 $0.39 1,352,077 1,368,067

1,522 53,313 69,653 4,351 (48,853)

460,479 $0.34 $0.33 1,366,915 1,384,287

471,050 $0.35 $0.34 1,361,046 1,378,697

563,781 $0.41 $0.41 1,373,284 1,373,284

610,872 $0.45 $0.45 1,352,077 1,368,067

593,445 91,559 685,004

594,664 89,876 684,540

593,444 99,832 693,276

754,979 106,503 861,482

3/07A

6/07A

39.2% 33.2% 43.5% 36.4% 42.3% 43.5% 36.1% 40.7% 39.0% 45.0% 39.5%

31.1% 47.4% 25.8% 25.9% 42.3% 45.7% -1.3% 21.4% 4.0% 24.0% 22.8%

27.2% 41.4% 12.8% 23.7% 34.3% 15.2% 45.0% 28.8% 51.9% 34.3% 28.7%

30.0% 41.1% 22.6% 27.3% 32.2% 19.8% 46.7% 29.2% 50.3% 34.3% 26.6%

2.8% 27.0% 7.2% 13.0% 50.4%

25.9% 6.9% 14.1% 56.0%

24.0% 6.9% 14.2% 52.0%

82.0% 31.7% 35.5% 41.0% 36.4%

79.8% 23.8% 32.8% 38.4% 24.4%

78.5% 26.5% 33.6% 38.7% 35.2%

78.1% 24.9% 32.4% 37.3% 31.7%

9/07A

12/07A

30.4% 42.1% 27.8% 41.5% 22.0% 198.0% -376.6% 27.8% -433.1% 53.4% 26.5%

26.8% 44.2% 14.2% 33.4% 13.3% 14.3% 39.2% 31.3% 53.2% 41.9% 28.8%

3.8%

3.0%

15.4%

24.8% 7.0% 14.0% 53.2%

24.5% 7.6% 13.7% 126.5% 76.8% -49.6% 31.4% 36.7% 29.3%

348,251 $0.26 $0.25 1,358,706 1,371,459

6,872 213,937 1,390,938 301,813 9,792 (165,421) 2,106,182 $1.54 $1.53 1,363,331 1,376,084

2,536,532 387,770 2,924,302 2007A

405,087 $0.30 $0.30 1,352,077 1,368,067

58,000 100,000 (38,147)

46,501 (3,000)

417,579 $0.31 $0.31 1,352,077 1,368,067

55,000 100,000 (37,552)

49,934 (3,000)

404,200 $0.30 $0.30 1,352,077 1,368,067

60,000 100,000 (38,591)

54,491 (3,000)

555,040 $0.41 $0.41 1,352,077 1,368,067

60,000 100,000 (39,558)

524,941 $0.39 $0.38 1,352,077 1,368,067

535,027 $0.40 $0.39 1,353,077 1,369,067

525,609 $0.39 $0.38 1,354,077 1,370,067

675,482 $0.50 $0.49 1,354,077 1,370,067

636,684 100,000 736,684

646,857 100,000 746,857

631,271 100,000 731,271

820,100 100,000 920,100

3/08E

6/08E

28.5% 42.3% 19.1% 31.6% 24.5% 59.9% -56.9% 29.4% -69.1% 41.2% 27.7%

14.7% 23.7% 14.8% 21.7% 14.2% 17.3% 2.3% 7.3% 7.4% 14.0% 7.5%

13.0% 20.7% 10.8% 16.2% 12.6% 12.4% 7.6% 8.8% 11.1% 13.6% 9.1%

-7.0%

23.0% 6.9% 13.0% 48.5%

24.0% 7.1% 13.7% 69.6%

24.0% 7.3% 14.1% 53.2%

77.2% 28.7% 34.6% 39.5% 39.1%

77.6% 8.0% 33.1% 38.1% 33.8%

76.8% 23.6% 31.4% 36.3% 16.7%

76.6% 23.7% 31.2% 36.0% 21.9%

9/08E

12/08E

12.5% 18.6% 11.1% 14.0% 14.6% -52.5% -150.3% 6.4% -143.2% -6.8% 5.5%

12.3% 11.9% 12.1% 19.1% 16.9% 16.5% 5.4% 8.6% 4.5% 10.6% 6.8%

2.2%

2.5%

15.2%

24.3% 7.2% 13.9% 52.9%

24.2% 7.7% 14.0% 53.4% 75.6% 22.2% 29.7% 34.4% 16.0%

194,583 (12,000) 182,583

274,060 (12,000) 262,060

2,284,495 (502,589) 22.0% -

2,761,405 (607,509) 22.0% -

1,781,906 $1.32 $1.30 1,352,077 1,368,067

2,153,896 $1.58 $1.57 1,359,077 1,375,067

233,000 400,000 (153,847) 2,261,059 $1.67 $1.65 1,353,327 1,369,317

(185,711) 2,582,185 $1.90 $1.88 1,359,077 1,375,067

2,734,912 400,000 3,134,912

3,113,345 430,000 3,543,345

2008E

200,000 414,000

2009E

13.1% 18.3% 12.1% 17.6% 14.7% -15.0% 242.8% 7.8% 411.7% 7.4% 7.2%

14.9% 19.3% 13.7% 11.4% 13.5% 11.0% 18.9% 13.8% 20.9% 14.2% 13.0%

23.0% 7.3% 13.5% 50.3%

23.8% 7.4% 13.9% 52.4%

23.6% 7.2% 13.7% 50.6%

77.3% 27.0% 33.5% 37.6% 24.3%

76.6% 24.2% 31.5% 36.1% 19.8%

75.7% 25.1% 31.3% 35.6% 29.4%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

89

Lehman Brothers

Internet Data Book

April 2008

Figure 110: eBay Segment Breakdown, 2005–09E ($ in thousands, except per share data) Transaction Revenue Detail TOTAL LISTINGS Y/Y growth Q/Q growth Conversion Rate Y/Y growth Average Selling Price (ASP) Y/Y growth TOTAL GMV Y/Y growth eBay Merchandise Take Rate Total Marketplaces Transaction Revenue Y/Y growth Total Transaction Revenue Per Listing Y/Y growth Q/Q growth US LISTINGS Y/Y growth Q/Q growth % of total listings Conversion Rate Y/Y growth Average Selling Price (ASP) Y/Y growth US GMV Y/Y growth % of total GMV Take Rate US TRANSACTION REVENUE Y/Y growth US Transaction Revenue Per Listing Y/Y growth Q/Q growth INTERNATIONAL LISTINGS Y/Y growth Q/Q growth % of total listings Conversion Rate Y/Y growth Average Selling Price (ASP) Y/Y growth INTERNATIONAL GMV Y/Y growth % of total GMV Take Rate INTERNATIONAL TRANSACTION REVENUE Y/Y growth INTERNATIONAL Transaction Revenue Per Listing Y/Y growth Q/Q growth

2005A 1,876,800 33%

2006A 2,365,300 26%

48.5% -3% $48.69 0% 44,299,000 30% 7.68% 3,402,301 36% $1.81 3%

46.0% -5% $48.25 -1% 52,473,000 18% 8.01% 4,203,340 24% $1.78 -2%

5.1% 916,587 18%

1,061,900 16%

48.8% 49.3% 0% $48.64 1% 21,958,809 19% 50% 7.9% 1,737,039 30% $1.90 10%

44.9% 48.6% -1% $48.94 1% 25,233,000 15% 48% 8.3% 2,105,312 21% $1.98 5%

960,213 50%

1,303,400 36%

51.2% 47.7% -5% $48.74 0% 22,340,191 42% 50% 7.454% 1,665,262 44% $1.73 -4%

55.1% 43.9% -8% $47.63 -2% 27,240,000 22% 52% 7.7% 2,098,028 26% $1.61 -7%

3/07A 588,400 2% -4% 48.0% 4% $50.52 7% 14,281,000 14% 8.48% 1,211,545 22% $2.06 20% 5%

6/07A 559,100 -6% -5% 49.7% 9% $52.05 9% 14,464,000 12% 8.55% 1,236,835 24% $2.21 32% 7%

9/07A 555,600 -5% -1% 50.8% 10% $51.05 9% 14,395,000 14% 8.80% 1,267,463 25% $2.28 31% 3%

12/07A 637,200 4% 15% 49.9% 8% $51.00 0% 16,213,000 12% 8.76% 1,419,520 18% $2.23 13% -2%

258,400 -2% -5% 43.9% 52.1% 5% $50.00 5% 6,736,000 8% 47% 8.71% 586,751 16% $2.27 18% 5%

243,100 -8% -6% 43.5% 54.0% 11% $51.00 8% 6,700,000 10% 46% 8.82% 590,712 20% $2.43 31% 7%

254,400 -2% 5% 45.8% 52.9% 8% $50.00 4% 6,729,000 10% 47% 9.15% 615,734 18% $2.42 21% 0%

280,600 3.3% 10% 44.0% 51.2% 9% $51.00 -4% 7,330,000 8% 45% 8.91% 652,979 11% $2.33 8% -4%

330,000 6% -3% 56.1% 44.8% 4% $51.00 9% 7,545,000 20% 53% 8.28% 624,794 29% $1.89 22% 5%

316,000 -5% -4% 56.5% 46.4% 9% $53.00 10% 7,764,000 14% 54% 8.32% 646,123 28% $2.04 34% 8%

301,200 -7% -5% 54.2% 48.9% 11% $52.00 13% 7,666,000 17% 53% 8.50% 651,729 31% $2.16 41% 6%

356,600 5.3% 18% 56.0% 48.8% 7% $51.00 3% 8,883,000 16% 55% 8.63% 766,541 25% $2.15 19% -1%

2007A 2,340,300 -1% 49.6% 8% $51.16 6% 59,353,000 13% 8.65% 5,135,363 22% $2.19 23%

1,036,500 -2% 44.3% 52.5% 8% $50.50 3% 27,495,000 9% 46% 8.90% 2,446,176 16% $2.36 19%

1,303,800 0.0% 55.7% 47.2% 8% $51.75 9% 31,858,000 17% 54% 8.44% 2,689,187 28% $2.06 28%

3/08E 629,270 7% -1% 48.0% 0% $50.50 0% 15,264,767 7% 8.54% 1,303,613 8% $2.07 1% -7%

6/08E 614,159 10% -2% 49.0% -1% $51.57 -1% 15,524,860 7% 8.53% 1,324,694 7% $2.16 -2% 4%

9/08E 606,774 9% -1% 50.0% -2% $51.34 1% 15,566,222 8% 8.68% 1,350,665 7% $2.23 -2% 3%

12/08E 669,060 5% 10% 50.0% 0% $51.45 1% 17,227,881 6% 8.71% 1,501,132 6% $2.24 1% 1%

272,870 5.6% -3% 43.4% 52.0% 0% $50.50 1% 7,165,577 6% 47% 8.80% 630,571 7% $2.31 2% -1%

264,979 9.0% -3% 43.1% 53.0% -2% $50.50 -1% 7,092,163 6% 46% 8.75% 620,564 5% $2.34 -4% 1%

270,936 6.5% 2% 44.7% 52.4% -1% $50.60 1% 7,183,705 7% 46% 9.00% 646,533 5% $2.39 -1% 2%

294,630 5.0% 9% 44.0% 51.0% 0% $52.00 2% 7,813,588 7% 45% 8.85% 691,503 6% $2.35 1% -2%

356,400 8.0% 0% 56.6% 45.0% 0% $50.50 -1% 8,099,190 7% 53% 8.31% 673,043 8% $1.89 0% -12%

349,180 10.5% -2% 56.9% 46.0% -1% $52.50 -1% 8,432,697 9% 54% 8.35% 704,130 9% $2.02 -1% 7%

335,838 11.5% -4% 55.3% 48.0% -2% $52.00 0% 8,382,516 9% 54% 8.40% 704,131 8% $2.10 -3% 4%

374,430 5.0% 11% 56.0% 49.3% 1% $51.00 0% 9,414,293 6% 55% 8.60% 809,629 6% $2.16 1% 3%

2008E 2,519,263 8%

2009E 2,664,902 6%

49.3% -1% $51.22 0% 63,583,730 7% 8.62% 5,480,105 7% $2.18 -1%

49.7% 1% $51.77 1% 68,544,174 8% 8.82% 6,048,464 10% $2.27 4%

1,103,415 6.5%

1,164,103 5.5%

43.8% 52.1% -1% $50.90 1% 29,255,033 6% 46% 8.85% 2,589,171 6% $2.35 -1%

43.7% 52.5% 1% $51.50 1% 31,474,442 8% 46% 9.10% 2,864,174 11% $2.46 5%

1,415,848 8.6%

1,500,799 6.0%

56.2% 47.1% 0% $51.50 0% 34,328,697 8% 54% 8.42% 2,890,934 8% $2.04 -1%

56.3% 47.5% 1% $52.00 1% 37,069,732 8% 54% 8.59% 3,184,290 10% $2.12 4%

Segment Breakdown NET REVENUE BY TYPE Transaction Net Revenues U.S. Marketplaces Y/Y growth Q/Q growth % of Total Mkplaces Trans Rev International Marketplaces Y/Y growth Q/Q growth % of Total Mkplaces Trans Rev Total Marketplaces Transaction Rev. Y/Y growth Q/Q growth U.S. Payments Transaction Rev. Y/Y growth Q/Q growth % of Total Payments Trans Rev International Payments Transaction Rev. Y/Y growth Q/Q growth % of Total Payments Trans Rev Total Payments Transaction Rev. Y/Y growth Q/Q growth Communications Transaction Rev. Y/Y growth Q/Q growth % of Comm. Trans revenue that is International Total Transaction Revenue Y/Y growth Q/Q growth % of transaction revenue Advertising & other non-transaction rev Y/Y growth Q/Q growth Non Transaction Revenue Breakdown U.S. Marketplaces Y/Y growth % of adv & non-trans revenue International Marketplaces Y/Y growth % of adv & non-trans revenue Payments Y/Y growth % of adv & non-trans revenue Communications Y/Y growth % of adv & non-trans revenue Total Advertising & Non-Transaction Rev. Y/Y growth Total Net Revenue Y/Y growth Q/Q growth TYPE AS % OF TOTAL NET REVENUE Transaction Advertising and other non-transaction rev Total Net Revenue

2005A

2006A

1,737,039 30%

2,105,312 21%

51% 1,665,262 44%

50% 2,098,028 26%

38% 3,402,301 36%

36% 4,203,340 24%

635,850 34%

868,623 37%

63% 366,065 76%

62% 533,201 46%

37% 1,001,915 47%

38% 1,401,824 40%

April 07, 2008

6/07A

9/07A

12/07A

2007A

586,751 16% 0% 48% 624,794 29% 2% 52% 1,211,545 22% 1%

590,712 20% 1% 48% 646,123 28% 3% 52% 1,236,835 24% 2%

615,734 18% 4% 49% 651,729 31% 1% 51% 1,267,463 25% 2%

652,979 11% 6% 46% 766,541 25% 18% 54% 1,419,520 18% 12%

2,446,176 16%

247,687 18% 3% 59% 171,305 44% 6% 41% 418,992 28% 4%

251,193 22% 1% 58% 181,101 45% 6% 42% 432,294 31% 3%

256,847 21% 2% 57% 191,105 50% 6% 43% 447,952 32% 4%

302,009 25% 18% 56% 237,292 47% 24% 44% 539,301 34% 20%

1,057,735 22%

77,078 119% 22% 85% 1,707,615 26% 3% 141%

89,133 102% 16% 85% 1,758,262 28% 3% 142%

96,772 93% 9% 83% 1,812,187 29% 3% 143%

113,732 79% 18% 83% 2,072,553 24% 14% 100%

3/08E

6/08E

9/08E

12/08E

630,571 7% -74% 48% 673,043 8% -75% 52% 1,303,613 8% -75%

620,564 5% -2% 47% 704,130 9% 5% 53% 1,324,694 7% 2%

646,533 5% 4% 48% 704,131 8% 0% 52% 1,350,665 7% 2%

691,503 6% 7% 46% 809,629 6% 15% 54% 1,501,132 6% 11%

287,041 16% -5% 55% 234,852 37% -1% 45% 521,893 25% -72%

283,450 13% -1% 54% 241,457 33% 3% 46% 524,907 21% 1%

298,308 16% 5% 55% 244,070 28% 1% 45% 542,378 21% 3%

341,670 13% 15% 52% 315,387 33% 29% 48% 657,057 22% 21%

376,715 95%

104,055 35% -72%

115,873 30% 11%

122,900 27% 6%

7,350,617 27%

1,929,561 13% -74% 100%

1,965,474 12% 2% 100%

48% 2,689,187 28% 52% 5,135,363 22%

58% 780,804 46% 42% 1,838,539 31%

2008E

2009E

2,589,171 6%

2,864,174 11%

47% 2,890,934 8%

47% 3,184,290 10%

53% 5,480,105 7%

53% 6,048,464 10%

1,210,468 14%

1,350,508 12%

54% 1,035,766 33%

50% 1,350,508 30%

46% 2,246,235 22%

50% 2,701,016 20%

136,478 20% 11%

479,307 27%

579,962 21%

2,015,944 11% 3% 100%

2,294,667 11% 14% 100%

8,205,646 12%

9,329,442 14%

100%

100%

24,809

192,756 677%

4,429,025 39%

5,797,920 31%

89%

86%

123,376 31%

171,821 39%

60,459 65% 10%

76,167 96% 26%

77,033 86% 1%

108,053 96% 40%

321,712 87%

98,095 62% -70%

107,786 42% 10%

109,548 42% 2%

153,392 42% 40%

468,821 46%

633,263 35%

67,053 10% 54% 29,783 83% 24% 26,540 57% 22% NA 123,376 31%

80,194 20% 47% 50,756 70% 30% 38,706 46% 23% 2,165 NA 1% 171,821 39%

25,847 30% 43% 12,808 31% 21% 20,349 194% 34% 1,455 NA 2% 60,459 65%

26,817 42% 35% 26,900 132% 35% 21,873 160% 29% 577 NA 1% 76,167 96%

27,282 86% 35% 25,887 51% 34% 22,444 135% 29% 1,420 NA 2% 77,033 86%

43,433 62% 40% 39,554 221% 37% 23,411 69% 22% 1,655 -24% 2% 108,053 96%

123,378 54% 38% 105,150 107% 33% 88,077 128% 27% 5,107 136% 2% 321,712 87%

36,185 40% 37% 34,582 170% 35% 25,436 25% 26% 1,892 30% 2% 98,095 62%

41,566 55% 39% 36,315 35% 34% 28,029 28% 26% 1,875 225% 2% 107,786 42%

40,923 50% 37% 37,536 45% 34% 28,887 29% 26% 2,201 55% 2% 109,548 42%

65,149 50% 42% 53,398 35% 35% 32,775 40% 21% 2,069 25% 1% 153,392 42%

183,824 49% 39% 161,832 54% 35% 115,128 31% 25% 8,037 57% 2% 468,821 46%

253,677 38% 40% 223,328 38% 35% 146,213 27% 23% 10,046 25% 2% 633,263 35%

4,552,401 39%

5,969,741 31%

1,768,074 27% 3%

1,834,429 30% 4%

1,889,220 30% 3%

2,180,606 27% 15%

7,672,329 29%

2,027,657 15% -7%

2,073,260 13% 2%

2,125,491 13% 3%

2,448,059 12% 15%

8,674,467 13%

9,962,705 15%

97% 3% 100%

97% 3% 100%

97% 3% 100%

96% 4% 100%

96% 4% 100%

95% 5% 100%

96% 4% 100%

95% 5% 100%

95% 5% 100%

95% 5% 100%

94% 6% 100%

95% 5% 100%

94% 6% 100%

Source: Company reports, Lehman Brothers estimates

90

3/07A

100%

Lehman Brothers

Internet Data Book

April 2008

Figure 111: eBay Cash Flow Statement, 2005–09E ($ in thousands, except per share data) 2005A Cash Flows from Operating Activities Net income (loss) Provision for doubtful accounts and authorized credits Provision for transaction losses Depreciation and amortization Stock based compensation expense related to stock options Tax benefit on the exercise of employee stock options Excess tax benefits from stock-based compensation Impairment of certain equity investments Minority interests and other Cumulative effect of accounting change Gain on sale of assets Changes in working capital: Accounts receivable Funds receivable Other current assets Other non-current assets Deferred tax assets Accounts payable Due to customers and funds payable Accrued expenses and other liabilities Deferred revenue and customer advances Income taxes payable Net cash provided by (used in) operating activities Cash Flows from Investing Activities Purchases of property and equipment Proceeds from sale of corporate aircraft Purchases of investments Maturities and sales of investments Proceeds from sale of property and equipment Acquisitions, net of cash acquired Payments on notes receivable Purchases of other non-current assets Net cash provided by (used in) investing activities Cash Flows from Financing Activities Proceeds from issuance of common stock, net Repurchases of common stock Payment of headquarter facility lease obligation Proceeds from (principal payments on) long-term debt Proceeds from issuance of common stock by subsidiaries Proceeds from notes payable Partnership contributions Partnership distributions Excess tax benefits from stock-based compensation Net cash provided by (used in) financing activities Effect of exchange-rate on cash and equivalents Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP Free Cash Flow Calculation Net cash provided by operating activities Payment of headquarters facility lease obligations Purchases of fixed assets (net) Free Cash Flow Y/Y Growth Q/Q Growth Cumulative Free Cash Flow last four quarters

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

1,082,043 89,499 73,773 378,165 31,772 267,142 49 -

1,125,635 100,729 126,439 544,552 317,410 148,565 (92,371) 4 -

377,176 24,795 35,937 143,449 71,950 22,995 (13,773) -

375,824 20,452 33,832 146,722 79,621 30,014 (16,001) -

(935,635) 21,601 31,079 151,720 80,589 59,874 (39,252) 1,390,938 -

530,886 29,613 38,407 159,816 69,653 30,320 (15,804) -

348,251 96,461 139,255 601,707 301,813 143,203 (84,830) 1,390,938 -

405,087 30,000 42,242 158,000 100,000 40,000 (22,000)

417,579 30,000 42,265 155,000 100,000 40,000 (22,000)

404,200 30,000 48,401 160,000 100,000 40,000 (24,000)

555,040 35,000 67,435 160,000 100,000 40,000 (24,000)

1,781,906 125,000 200,343 633,000 400,000 160,000 (92,000) -

2,153,896 143,750 248,778 630,000 414,000 155,000 (92,000) -

(151,993) (132,606) (49,372) (4,611) 91,690 564 251,870 17,012 3,646 61,248 2,009,891

(169,750) (146,900) (443,530) 10,126 (181,094) 32,986 575,137 (31,026) 47,859 283,016 2,247,787

(12,676) (23,278) (18,521) (22,364) (42,032) 8,407 24,974 (40,503) 14,176 13,780 564,492

(20,241) (77,159) (4,352) (35,469) (9,145) 153 93,572 13,078 2,358 21,326 654,585

(53,399) (63,295) (414,139) (21,236) (17,757) 4,147 302,271 33,067 10,943 87,970 629,486

(99,300) 137,952 20,735 (9,648) (72,469) 24,247 (83,942) (24,467) 10,330 46,217 792,546

(185,616) (25,780) (416,277) (88,717) (141,403) 36,954 336,875 (18,825) 37,807 169,293 2,641,109

(74,566) (37,893) (17,462) 155,775 (137,311) (24,559) 617,314

53,416 (143,000) (2,322) (10,545) 43,534 3,192 707,120

(88,899) (48,726) 6,160 83,552 69,148 3,656 783,492

(95,103) 111,988 6,460 120,187 (269,690) 22,580 829,898

(205,151) (117,631) (7,164) 348,969 (294,318) 4,869 2,937,824

(203,726) (166,840) 28,438 130,513 (79,730) 27,890 3,389,969

(338,281) 28,290 (1,324,353) 1,928,540 (622) (2,732,229) (14,076) (2,452,731)

(515,448) (583,263) 1,380,227 (45,505) (7,158) 228,853

(85,413) (112,527) 392,696 (258,559) 1,153 (62,650)

(121,328) (47,616) 232,571 (61,636) 959 2,950

(119,293) (45,155) 158,549 3,410 (2,489)

(127,933) (65,378) 104,941 (543,370) 783 (630,957)

(453,967) (270,676) 888,757 (863,565) 6,305 (693,146)

(150,000)

(150,000)

(150,000)

(150,000)

(150,000)

(150,000)

(150,000)

(150,000)

(600,000) (600,000)

(681,000) (681,000)

599,844 (126,390) (1,849) 471,605

313,482 (1,666,540) 92,371 (1,260,687)

92,155 (331,085) 13,773 (225,157)

92,286 (343,776) 16,000 (235,490)

180,758 (495,838) 39,252 (275,828)

141,756 (314,698) 200,220 15,804 43,082

506,955 (1,485,397) 200,220 84,829 (693,393)

(200,000)

(300,000)

(250,000)

(200,000)

22,000 (178,000)

22,000 (278,000)

24,000 (226,000)

24,000 (176,000)

(950,000) 92,000 (858,000)

(500,000) 92,000 (408,000)

(45,230) (16,465) 1,330,045 1,313,580

133,255 1,349,208 1,313,580 2,662,788

27,532 304,217 2,662,788 2,967,005

29,294 451,339 2,967,005 3,418,344

143,073 494,242 3,418,344 3,912,586

103,929 308,600 3,912,586 4,221,186

303,828 1,558,398 2,662,788 4,221,186

2,009,891 (126,390) (309,991) 1,573,510 59%

2,247,787 (515,448) 1,732,339 10%

564,492 (85,413) 479,079 6% -10% 1,760,791

654,585 (121,328) 533,257 45% 11% 1,926,968

629,486 (119,293) 510,193 32% -4% 2,051,916

792,546 (127,933) 664,613 26% 30% 2,187,142

56%

12%

-3% -10%

27% 16%

21% -4%

338,281 7.4%

515,448 8.6%

85,413 4.8%

121,328 6.6%

119,293 6.3%

Operating Cash Flow Growth Y/Y Growth Q/Q Growth Capex Capex as % of net revenue

2006A

1,479,824 4,221,186 5,701,010

2,300,969 5,701,010 8,001,979

829,898 (150,000) 679,898 2% 7% 2,337,824

2,937,824 (600,000) 2,337,824 7%

3,389,969 (681,000) 2,708,969 16%

24% 11%

5% 6%

11%

15%

150,000 7.1%

150,000 6.1%

600,000 6.9%

681,000 6.8%

289,314 4,221,186 4,510,500

279,120 4,510,500 4,789,620

407,492 4,789,620 5,197,112

503,898 5,197,112 5,701,010

2,641,109 (453,967) 2,187,142 26%

617,314 (150,000) 467,314 -2% -79% 2,175,377

707,120 (150,000) 557,120 4% 19% 2,199,240

783,492 (150,000) 633,492 24% 14% 2,322,539

27% 26%

17%

9% -22%

8% 15%

127,933 5.9%

453,967 5.9%

150,000 7.4%

150,000 7.2%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

91

Lehman Brothers

Internet Data Book

April 2008

Figure 112: eBay Discounted Cash Flow Analysis ($ in thousands, except per share data) Periods from Today Revenue % change

1 2006A 5,969,741 31.1%

2 2007E 7,672,329 28.5%

3 2008E 8,674,467 13.1%

4 2009E 9,962,705 14.9%

5 2010E 11,346,908 13.9%

6 2011E 12,748,240 12.3%

7 2012E 14,038,456 10.1%

EBITDA % change

2,290,237 22.8%

2,924,302 27.7%

3,134,912 7.2%

3,543,345 13.0%

4,027,929 13.7%

4,494,947 11.6%

4,928,114 9.6%

11.0%

(421,418) (515,448) (23,176) $1,330,195 16.0%

(402,600) (453,967) (295,689) $1,772,046 33.2%

(502,589) (600,000) (270,426) $1,761,897 -0.6%

(607,509) (681,000) (263,455) $1,991,381 13.0%

(721,565) (762,720) (208,486) $2,335,158 17.3%

(829,321) (854,246) (206,713) $2,604,667 11.5%

(951,398) (939,671) (277,356) $2,759,688 6.0%

9.3%

$1,772,046 $1.29

$1,573,123 $1.15

$1,587,517 $1.16

$1,662,119 $1.21

$1,655,313 $1.21

$1,565,921 $1.14

$1,761,897 $1.29

$1,778,019 $1.30

$1,861,573 $1.36

$1,853,950 $1.35

$1,753,832 $1.28

Cash Taxes Capex Change in working capital Unlevered free cash flow % change

2007 PV of Cash Flow Per Share 2008 PV of Cash Flow Per Share

Discount Rate Terminal EBITDA Multiple Terminal Value Implied Terminal FCF Multiple Present value of FCF Present value of terminal value Implied Firm Value

12.0% 11.0x 54,209,252 19.6x $10,094,515 27,464,094 $37,558,609

Plus: Cash Plus: Investments Less: Debt Less: Minority Interest Implied Equity Value

12.0% 11.0x 54,209,252 19.6x $9,816,039 30,759,785 $40,575,824

12.0% 11.0x 54,209,252 19.6x $9,009,272 34,450,959 $43,460,231

3,495,486 405,312 $41,459,407

5,035,692 620,312 $46,231,828

6,515,511 620,312 $50,596,054

1,402,749

1,371,459

1,370,067

$29.56

$33.71

$36.93

Fully diluted shares outstanding Equity Value Per Share

Source: Company reports, Lehman Brothers estimates

Figure 113: eBay Sum-of-the-Parts Analysis ($ in thousands, except per share data) 2008E Revenue

EBITDA

Consolidated Operations: U.S. Marketplace Transaction International Marketplace Transaction Global eBay Marketplaces Transaction

2,589,171 2,890,934 5,480,105

2,301,644

PayPal Transaction

2,246,235

494,172

Skype Transaction

479,307

Advertising/Non-Transaction

468,821

Corporate/Other Total Consolidated Operations

EBITDA Margin %

Multiple

42.0%

EBITDA EBITDA EBITDA

10.0x

23,016,439

22.0%

EBITDA

16.0x

7,906,746

28,758

6.0%

EBITDA

14.0x

402,618

234,410

50.0%

EBITDA

12.0x

2,812,923

0.0

75,928

NA

11.2x

847,365

8,674,467

3,134,912

36.1%

11.2x

$34,986,091

Equity Investments Mercado Libre - Latin America JV (18.5% interest post-IPO) TomOnline - China JV (49% interest) PChome Online - Taiwan JV (estimated 33% interest) Craigslist.org (~25% interest) GittiGidiyor - Turkey

298,839 125,000 60,000 25,000 5,000

Total Unconsolidated Operations

$513,839 Total Asset Value of eBay

$35,499,930

Less: Debt Plus: Cash Value to Common Shareholders

$5,701,010 $41,200,939

Total shares outstanding Value per eBay share

Source: Company reports, Lehman Brothers estimates

92

April 07, 2008

2008E

1,370,067 $30.07

2007E-2012E CAGR 12.8%

Lehman Brothers

Internet Data Book

April 2008

Figure 114: eBay Fee Changes—Auction-Style and Fixed Price, U.S. Only

Insertion Fees for Auction-style listings Starting or Reserve Price $0.01 - $0.99 $1.00 - $9.99 $10.00 - $24.99 $25.00 - $49.99 $50.00 - $199.99 $200.00 - $499.99 $500 or more

Current Insertion Fee $0.20 $0.40 $0.60 $1.20 $2.40 $3.60 $4.80

Insertion Fee (effective 2/20/08) $0.15 $0.35 $0.55 $1.00 $2.00 $3.00 $4.00

% Change -25% -13% -8% -17% -17% -17% -17%

Insertion Fee (effective 2/20/08) NA $0.35 $0.55 $1.00 $2.00 $3.00 $4.00

% Change

Insertion Fees for Fixed Price listings Starting or Reserve Price $0.01 - $0.99 $1.00 - $9.99 $10.00 - $24.99 $25.00 - $49.99 $50.00 - $199.99 $200.00 - $499.99 $500 or more

Current Insertion Fee $0.20 $0.40 $0.60 $1.20 $2.40 $3.60 $4.80

-13% -8% -17% -17% -17% -17%

Final Value Fees on Fixed Price and Auction-style Final Value Fees Item not sold

Current Final Value Fee No Fee

Final Fee (effective 2/20/08) No change

$0.01 $25.00

5.25% of the closing value

8.75% of the closing value

$25.01 - $1,000.00

5.25% of the initial $25.00 ($1.31), plus 3.25% of the remaining closing value balance ($25.01 to $1,000.00)

8.75% of the initial $25.00 ($2.19), plus 3.5% of the remaining closing value balance ($25.01 to $1,000.00)

Equal to or Over $1,000.01

5.25% of the initial $25.00 ($1.31), plus 3.25% of the initial $25.01 - $1,000.00 ($31.69), plus 1.50% of the remaining closing value balance ($1000.01 - closing value)

8.75% of the initial $25.00, plus 3.50% of the initial $25.00 $1,000.00 plus 1.50% of the remaining closing value balance ($1,000.01 - closing value)

Source: eBay sites

April 07, 2008

93

Lehman Brothers

Internet Data Book

April 2008

Figure 115: Amazon Snapshot Strengths

Biggest Concerns

- Has evolved from books to a virtual shopping mall; captures ~6% of U.S. online retail ex-travel

- Valuation: 43x ‘08 EPS, 22x ’08 EV/EBITDA, 4.3% ’08 FCF yield, but trading more on lack of liquidity and short interest

- Consumer-centric company with 76M active users

- Tougher comps should result in profit growth slowdown in '08

- Virtual model results in lower overhead and invested capital, enables technology spending

- Tech and content spending slowing, but profitability levels could remain low due to free shipping, Prime, low prices, product-mix

- Turns inventory ~11-12 times per year, results in negative working capital cash cycle

- Is another round of investment needed in N-T?

- Investing in long-term loyalty via free shipping, Amazon Prime, low prices; has been paying off in last several quarters

- Media growth accelerating, but still 64% of biz and at risk of category shifting to digital; still very early with Unbox, MP3

- Amazon Prime gaining traction; driving incremental sales across categories; accelerating revenue growth, increasing loyalty

- Competition continues to increase from search, comparison shopping, traditional retailers shifting online

- Business benefitting from Prime, supplier efficiencies, int’l 3rd party, media mix, lower tech & content spend - Solid balance sheet: $3.0 billion in cash, $1.28B in debt---bought back $500M in stock Aug ’06-2Q07 & addt’l $1B auth.

What to Watch For

Guidance

- Whether margins can move toward 10%; current stock price may already factor this in Net Sales

1Q08 $3.95B - $4.15B

2008 $18.75B-$19.75B

Implied Cons. Operating Inc. Stock-based Comp. Operating Income

up 31% - 38% $210M - $255M $55M $155M - $200M

up 26%-33% $1.025B - $1.225B $240M $785M-$985M

- Whether AMZN can keep top line growth around 30% and continue to take share of e-commerce - Whether Prime is driving incremental volume and loyalty - AMZN Prime effect overseas---launched in UK in early November; rolled out in Japan - Traction of 3rd party stores in Europe; helping margins - Whether AMZN extends Endless/Shopbop off-platform model to other categories, such as jewelry - Shareholder structure: top 5 own 46%---9% of shares out are short - Traction in Services and Seller Platforms, i.e. EC2, S3, Fulfillment by Amazon (FBA), etc. Launching web services overseas. - Buying back stock at current levels? - The trend around TTM average revenue/active shopper; up 18% Y/Y in 2007

Source: Company reports, Lehman Brothers estimates

94

April 07, 2008

Effective Tax Rate Cash taxes Capex

PF op. margin: low-mid-high Free cash flow growth

30% $75M ~$300M

5.3% - 5.7% - 6.1%

5.5% - 5.8% - 6.2% Trend similar to CSOI Y/Y

Lehman Brothers

Internet Data Book

April 2008

Figure 116: Amazon Income Statement, 2005–09E ($ in thousands, except per share data) Net sales Cost of sales Gross profit

2005A 8,490,000 6,452,000 2,038,000

2006A 10,711,000 8,256,000 2,455,000

3/07A 3,015,000 2,296,000 719,000

6/07A 2,886,000 2,185,000 701,000

9/07A 3,262,000 2,500,000 762,000

12/07A 5,673,000 4,503,000 1,170,000

2007A 14,836,000 11,484,000 3,352,000

3/08E 4,075,190 3,127,841 947,349

6/08E 3,784,410 2,893,499 890,911

9/08E 4,134,600 3,175,129 959,471

12/08E 7,308,870 5,822,573 1,486,297

2008E 19,303,070 15,019,042 4,284,028

2009E 23,874,976 18,640,240 5,234,736

Operating expenses Fulfillment Marketing Technology and content General and administrative Stock-based compensation Amortization of other intangibles Restructuring related and other Total operating expenses

727,901 192,001 405,901 145,701 87,696 3,250 44,000 1,606,450

912,000 259,000 607,000 176,000 101,000 10,000 2,065,000

253,000 71,000 167,000 49,000 34,000 574,000

248,000 63,000 176,000 49,000 46,000 3,000 585,000

285,000 72,000 181,000 47,000 51,000 3,000 639,000

467,000 131,000 190,000 54,000 54,000 3,000 899,000

1,253,000 337,000 714,000 199,000 185,000 9,000 2,697,000

342,316 95,767 211,910 58,702 55,000 2,000

321,675 87,041 210,035 57,460 60,000 2,000

355,576 90,961 219,134 56,718 60,000 2,000

606,636 160,795 226,575 51,036 65,000 2,000

765,694

738,211

784,388

1,112,042

1,626,203 434,565 867,653 223,915 240,000 8,000 3,400,336

1,981,623 513,312 1,026,624 272,515 247,200 8,000 4,049,274

431,550 566,496

390,000 501,000

145,000 179,000

116,000 165,000

123,000 177,000

271,000 328,000

655,000 849,000

181,655 238,655

152,700 214,700

175,083 237,083

374,255 441,255

883,692 1,131,692

1,185,463 1,440,663

44,000 (92,000) 2,000 42,000 (4,000)

60,000 (80,000) (4,000) 11,000 (13,000)

20,000 (19,000) (2,000) (1,000)

20,000 (19,000) (1,000) (5,000) (5,000)

23,000 (19,000) (1,000) (2,000) 1,000

28,000 (21,000) 1,000 2,000 10,000

91,000 (78,000) (1,000) (7,000) 5,000

28,960 (19,230)

28,805 (19,230)

32,221 (19,230)

40,687 (19,230)

9,730

9,575

12,991

21,457

Income (loss) before equity-method investees Equity in losses of equity-method investees, net Income (loss) before income taxes Provision (benefit) for income taxes Effective Tax Rate Income before change in acctg/ Fully Taxed Income Cumulative effect of change in acctng principle GAAP Net income (loss) Basic income (loss) per share Diluted income (loss) per share Basic shares outstanding Diluted shares outstanding

427,550 427,550 95,000 22.2% 332,550 26,000 358,550 $0.87 $0.84 412,250 425,500

377,000 377,000 187,000 49.6% 190,000 190,000 $0.46 $0.45 416,250 424,500

144,000 144,000 33,000 22.9% 111,000 111,000 $0.27 $0.26 412,000 420,000

111,000 111,000 33,000 29.7% 78,000 78,000 $0.19 $0.19 412,000 423,000

124,000 124,000 44,000 35.5% 80,000 80,000 $0.19 $0.19 414,000 425,000

281,000 281,000 74,000 26.3% 207,000 207,000 $0.50 $0.48 416,000 427,000

660,000 660,000 184,000 27.9% 476,000 476,000 $1.15 $1.12 413,500 423,750

191,385

162,274

188,074

395,712

191,385 57,415 30.0% 133,969 133,969 $0.32 $0.31 416,750 427,750

162,274 48,682 30.0% 113,592 113,592 $0.27 $0.27 417,500 428,500

188,074 56,422 30.0% 131,652 131,652 $0.31 $0.31 418,250 429,250

Non-recurring items: Stock-based compensation Amortization of other intangibles Restructuring related and other Remeasurement of 6.875% PEACS, other Equity in losses of equity-method investees, net Cum. Effect of change in acctg/Other one-time items PF Net income (loss) PF basic income (loss) per share PF diluted income (loss) per share PF diluted fully-taxed EPS (normalized) Basic shares outstanding Diluted shares outstanding

87,696 3,250 44,000 (42,000) (64,000) 387,496 $0.94 $0.91 $0.80 412,250 425,500

101,000 10,000 (11,000) 290,000 $0.70 $0.68 $0.73 416,250 424,500

34,000 2,000 147,000 $0.36 $0.35 $0.28 412,000 420,000

46,000 3,000 5,000 132,000 $0.32 $0.31 $0.25 412,000 423,000

51,000 3,000 2,000 136,000 $0.33 $0.32 $0.28 414,000 425,000

54,000 3,000 (2,000) 262,000 $0.63 $0.61 $0.51 416,000 427,000

185,000 9,000 7,000 677,000 $1.64 $1.60 $1.32 413,500 423,750

55,000 2,000 190,969 $0.46 $0.45 $0.38 416,750 427,750

60,000 2,000 175,592 $0.42 $0.41 $0.34 417,500 428,500

EBITDA Reconciliation PF Operating income Depreciation and other amortization EBITDA

566,496 120,000 686,496

501,000 205,000 706,000

179,000 62,000 241,000

165,000 60,000 225,000

177,000 61,000 238,000

328,000 63,000 391,000

849,000 246,000 1,095,000

238,655 65,000 303,655

214,700 64,000 278,700

Operating income PF Operating income Interest income Interest expense Other income, net Remeasurement of 6.875% PEACS, other Total non-operating expenses, net

2005A Y/Y Growth Net sales Gross profit Fulfillment Marketing Technology and content General and administrative Total cash operating expenses Operating income PF Operating income GAAP Net income PF Net income GAAP EPS PF EPS PF diluted FT EPS (normalized) EBITDA Sequential Growth Net sales % of Revenues Cost of sales Fulfillment Marketing Technology and content General and administrative Total cash operating expenses Margins Gross margin Operating margin PF Operating margin EBITDA margin PF Operating Profit/Gross Profit Operating Leverage (∆ PF op inc / ∆ Revenues)

2006A

22.7% 27.2% 23.3% 21.5% 61.6% 29.8% 32.3% -2.0% 15.6% -39.1% -1.9% -39.2% -2.1% 27.8% 21.3%

26.2% 20.5% 25.3% 34.9% 49.5% 20.8% 32.8% -9.6% -11.6% -47.0% -25.2% -46.9% -25.0% -8.1% 2.8%

76.0% 8.6% 2.3% 4.8% 1.7% 17.3%

77.1% 8.5% 2.4% 5.7% 1.6% 18.2%

24.0% 5.1% 6.7% 8.1% 27.8% 4.9%

22.9% 3.6% 4.7% 6.6% 20.4% -2.9%

3/07A 32.3% 31.4% 33.2% 31.5% 21.0% 8.9% 26.5% 36.8% 49.2% 117.6% 116.2% 120.8% 119.3% 61.6% 50.6%

6/07A

9/07A

12/07A

2007A 38.5% 36.5% 37.4% 30.1% 17.6% 13.1% 28.1% 67.9% 69.5% 150.5% 133.4% 151.0% 133.9% 80.8% 55.1%

3/08E 35.2% 31.8% 35.3% 34.9% 26.9% 19.8% 31.2% 25.3% 33.3% 20.7% 29.9% 18.5% 27.6% 35.5% 26.0%

6/08E

34.9% 37.7% 36.3% 21.2% 16.6% 11.4% 24.9% 146.8% 106.3% 254.5% 207.0% 260.9% 209.2% 121.6% 82.9%

41.4% 38.8% 36.4% 14.3% 16.0% -4.1% 22.6% 207.5% 145.8% 321.1% 172.0% 320.1% 171.4% 160.3% 76.3%

42.3% 37.6% 41.1% 45.6% 17.3% 42.1% 35.6% 37.6% 43.2% 111.2% 103.1% 108.8% 100.7% 50.9% 35.8%

31.1% 27.1% 29.7% 38.2% 19.3% 17.3% 26.2% 31.6% 30.1% 45.6% 33.0% 42.2% 31.3% 34.2% 23.9%

-24.4%

-4.3%

13.0%

73.9%

-28.2%

76.2% 8.4% 2.4% 5.5% 1.6% 17.9%

75.7% 8.6% 2.2% 6.1% 1.7% 18.6%

76.6% 8.7% 2.2% 5.5% 1.4% 17.9%

79.4% 8.2% 2.3% 3.3% 1.0% 14.8%

77.4% 8.4% 2.3% 4.8% 1.3% 16.9%

76.8% 8.4% 2.4% 5.2% 1.4% 17.4%

23.8% 4.8% 5.9% 8.0% 24.9% 8.0%

24.3% 4.0% 5.7% 7.8% 23.5% 11.4%

23.4% 3.8% 5.4% 7.3% 23.2% 11.0%

20.6% 4.8% 5.8% 6.9% 28.0% 5.9%

22.6% 4.4% 5.7% 7.4% 25.3% 8.4%

23.2% 4.5% 5.9% 7.5% 25.2% 5.6%

23.5% 4.0% 5.7% 7.4% 24.1% 5.5%

130,673 (76,920) 53,753

148,195 (26,263) 121,932

395,712 118,714 30.0% 276,998 276,998 $0.66 $0.64 419,000 430,000

937,445 937,445 281,233 30.0% 656,211 656,211 $1.57 $1.53 417,875 428,875

1,307,395 1,307,395 392,218 30.0% 915,176 915,176 $2.17 $2.12 420,875 431,875

60,000 2,000 193,652 $0.46 $0.45 $0.38 418,250 429,250

65,000 2,000 343,998 $0.82 $0.80 $0.70 419,000 430,000

240,000 8,000 904,211 $2.16 $2.11 $1.80 417,875 428,875

247,200 8,000 1,170,376 $2.78 $2.71 $2.35 420,875 431,875

237,083 62,000 299,083

441,255 60,000 501,255

1,131,692 251,000 1,382,692

1,440,663 263,550 1,704,213

9/08E

12/08E

26.8% 25.9% 24.8% 26.3% 21.1% 20.7% 23.5% 42.3% 33.9% 64.6% 42.4% 62.9% 41.0% 37.6% 25.7%

28.8% 27.0% 29.9% 22.7% 19.2% -5.5% 24.1% 38.1% 34.5% 33.8% 31.3% 32.9% 30.4% 36.8% 28.2%

-7.1%

9.3%

76.8%

76.5% 8.5% 2.3% 5.6% 1.5% 17.9%

76.8% 8.6% 2.2% 5.3% 1.4% 17.5% 23.2% 4.2% 5.7% 7.2% 24.7% 6.9%

2008E

2009E

30.1% 27.8% 29.8% 29.0% 21.5% 12.5% 25.9% 34.9% 33.3% 37.9% 33.6% 36.2% 32.0% 36.0% 26.3%

23.7% 22.2% 21.9% 18.1% 18.3% 21.7% 20.4% 34.1% 27.3% 39.5% 29.4% 38.5% 28.5% 30.9% 23.3%

79.7% 8.3% 2.2% 3.1% 0.7% 14.3%

77.8% 8.4% 2.3% 4.5% 1.2% 16.3%

78.1% 8.3% 2.2% 4.3% 1.1% 15.9%

20.3% 5.1% 6.0% 6.9% 29.7% 6.9%

22.2% 4.6% 5.9% 7.2% 26.4% 6.3%

21.9% 5.0% 6.0% 7.1% 27.5% 6.8%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

95

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April 2008

Figure 117: Amazon Segment Analysis, 2005–09E ($ in thousands, except per share data) 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

2008E

2009E

2,046,250 25.0% 1,843,680 38.0% 130,980 18.0% 4,020,910 30.4%

5,714,420 23.4% 4,392,780 40.0% 401,940 22.9% 10,509,140 29.8%

6,743,016 18.0% 5,842,397 33.0% 474,289 18.0% 13,059,702 24.3%

1,252,400 24.0% 618,240 38.0% 26,400 65.0% 1,897,040 28.7%

2,064,240 22.0% 1,192,720 36.0% 31,000 55.0% 3,287,960 27.0%

5,773,240 25.2% 2,917,090 40.8% 103,600 81.8% 8,793,930 30.5%

6,812,423 18.0% 3,850,559 32.0% 152,292 47.0% 10,815,274 23.0%

2,281,890 24.5% 1,388,320 43.1% 114,200 37.6% 3,784,410 31.1%

2,527,980 20.9% 1,489,020 38.0% 117,600 27.8% 4,134,600 26.8%

4,110,490 23.5% 3,036,400 37.2% 161,980 23.6% 7,308,870 28.8%

11,487,660 24.3% 7,309,870 40.3% 505,540 31.7% 19,303,070 30.1%

13,555,439 18.0% 9,692,956 32.6% 626,581 23.9% 23,874,976 23.7%

567,193 29% 26.2% 380,156 36% 19.9% 947,349 32% 23.2%

544,396 25% 26.1% 346,514 30% 20.4% 890,911 27% 23.5%

570,578 24% 25.5% 388,893 29% 20.5% 959,471 26% 23.2%

884,600 27% 22.0% 601,697 27% 18.3% 1,486,297 27% 20.3%

2,566,768 26% 24.4% 1,717,260 30% 19.5% 4,284,028 28% 22.2%

3,147,388 23% 24.1% 2,087,348 22% 19.3% 5,234,736 22% 21.9%

1,631,000 26% 20.1% 872,000 32% 12.9% 2,503,000 28% 16.9%

454,621 29% 21.0% 254,074 36% 13.3% 708,694 31% 17.4%

440,106 25% 21.1% 236,105 28% 13.9% 676,211 26% 17.9%

458,700 20% 20.5% 263,689 29% 13.9% 722,388 23% 17.5%

673,502 24% 16.8% 371,539 25% 11.3% 1,045,042 24% 14.3%

2,026,929 24% 19.3% 1,125,407 29% 12.8% 3,152,336 26% 16.3%

2,442,164 20% 18.7% 1,351,909 20% 12.5% 3,794,074 20% 15.9%

153,000 24% 5.0% 175,000 65% 6.8% 328,000 43% 5.8%

400,000 72% 4.9% 449,000 67% 6.7% 849,000 69% 5.7%

112,573 31% 5.2% 126,082 36% 6.6% 238,655 33% 5.9%

104,291 27% 5.0% 110,409 33% 6.5% 214,700 30% 5.7%

111,878 42% 5.0% 125,205 28% 6.6% 237,083 34% 5.7%

211,098 38% 5.3% 230,157 32% 7.0% 441,255 35% 6.0%

539,839 35% 5.1% 591,853 32% 6.7% 1,131,692 33% 5.9%

705,224 31% 5.4% 735,439 24% 6.8% 1,440,663 27% 6.0%

100% 60% 35% 4% 100% 69% 30% 1% 100% 64% 33% 3%

100% 53% 43% 4% 100% 65% 34% 1% 100% 59% 39% 2%

100% 57% 39% 4% 100% 68% 31% 1% 100% 62% 35% 3%

100% 58% 38% 4% 100% 69% 30% 1% 100% 63% 34% 3%

100% 54% 41% 4% 100% 68% 31% 1% 100% 60% 37% 3%

100% 57% 39% 4% 100% 66% 33% 1% 100% 61% 36% 3%

100% 51% 46% 3% 100% 63% 36% 1% 100% 56% 42% 2%

100% 54% 42% 4% 100% 66% 33% 1% 100% 60% 38% 3%

100% 52% 45% 4% 100% 63% 36% 1% 100% 57% 41% 3%

55% 45% 100%

55% 45% 100%

54% 46% 100%

55% 45% 100%

53% 47% 100%

55% 45% 100%

54% 46% 100%

55% 45% 100%

54% 46% 100%

55% 45% 100%

48% 52% 100%

50% 50% 100%

45% 55% 100%

47% 53% 100%

47% 53% 100%

47% 53% 100%

49% 51% 100%

47% 53% 100%

48% 52% 100%

48% 52% 100%

49% 51% 100%

20% 21%

19% 19%

22% 21%

38% 39%

100% 100%

21% 21%

20% 19%

21% 21%

38% 39%

100% 100%

100% 100%

NET SALES North America Media % change Electronics and other general merchandise % change Other % change Total North America Sales % change

3,045,000 17.6% 1,444,000 28.0% 222,000 70.6% 4,711,000 22.4%

3,581,000 17.6% 2,024,000 40.2% 264,000 18.9% 5,869,000 24.6%

990,000 21.5% 564,000 50.8% 68,000 17.2% 1,622,000 30.1%

923,000 26.4% 606,000 66.0% 72,000 16.1% 1,601,000 38.4%

1,081,000 37.7% 631,000 54.3% 76,000 20.6% 1,788,000 42.2%

1,637,000 30.9% 1,336,000 52.5% 111,000 37.0% 3,084,000 39.7%

4,631,000 29.3% 3,137,000 55.0% 327,000 23.9% 8,095,000 37.9%

1,257,300 27.0% 817,800 45.0% 89,760 32.0% 2,164,860 33.5%

1,135,290 23.0% 860,520 42.0% 90,000 25.0% 2,085,810 30.3%

1,275,580 18.0% 870,780 38.0% 91,200 20.0% 2,237,560 25.1%

International Media % change Electronics and other general merchandise % change Other % change Total International Sales % change

2,886,000 14.8% 885,000 58.5% 8,000 236.3% 3,779,000 22.9%

3,485,000 20.8% 1,337,000 51.1% 20,000 150.0% 4,842,000 28.1%

1,000,000 31.1% 383,000 44.5% 10,000 150.0% 1,393,000 35.0%

910,000 26.7% 364,000 40.5% 11,000 120.0% 1,285,000 30.9%

1,010,000 33.4% 448,000 54.5% 16,000 433.3% 1,474,000 40.4%

1,692,000 35.7% 877,000 67.7% 20,000 150.0% 2,589,000 45.6%

4,612,000 32.3% 2,072,000 55.0% 57,000 185.0% 6,741,000 39.2%

1,310,000 31.0% 578,330 51.0% 22,000 120.0% 1,910,330 37.1%

1,146,600 26.0% 527,800 45.0% 24,200 120.0% 1,698,600 32.2%

Total Consolidated Sales Media % change Electronics and other general merchandise % change Other % change Total Consolidated Sales % change

5,931,000 16.2% 2,329,000 38.1% 230,000 73.5% 8,490,000 22.7%

7,066,000 19.1% 3,361,000 44.3% 284,000 23.5% 10,711,000 26.2%

1,990,000 26.1% 947,000 48.2% 78,000 25.8% 3,015,000 32.3%

1,833,000 26.6% 970,000 55.4% 83,000 23.9% 2,886,000 34.9%

2,091,000 35.6% 1,079,000 54.4% 92,000 39.4% 3,262,000 41.4%

3,329,000 33.3% 2,213,000 58.2% 131,000 47.2% 5,673,000 42.3%

9,243,000 30.8% 5,209,000 55.0% 384,000 35.2% 14,836,000 38.5%

2,567,300 29.0% 1,396,130 47.4% 111,760 43.3% 4,075,190 35.2%

GROSS PROFIT North America % change % margin International % change % margin Total Consolidated % change % margin

1,267,000 24% 26.9% 771,000 33% 20.4% 2,038,000 27% 24.0%

1,525,000 20% 26.0% 930,000 21% 19.2% 2,455,000 20% 22.9%

439,000 29% 27.1% 280,000 36% 20.1% 719,000 31% 23.8%

434,000 40% 27.1% 267,000 34% 20.8% 701,000 38% 24.3%

460,000 34% 25.7% 302,000 47% 20.5% 762,000 39% 23.4%

698,000 31% 22.6% 472,000 48% 18.2% 1,170,000 38% 20.6%

2,031,000 33% 25.1% 1,321,000 42% 19.6% 3,352,000 37% 22.6%

CASH OPERATING EXPENSES North America % change % of sales International % change % of sales Total Consolidated % change % of sales

971,000 38% 20.6% 501,000 22% 13.3% 1,472,000 32% 17.3%

1,293,000 33% 22.0% 661,000 32% 13.7% 1,954,000 33% 18.2%

353,000 27% 21.8% 187,000 26% 13.4% 540,000 26% 17.9%

352,000 24% 22.0% 184,000 27% 14.3% 536,000 25% 18.6%

381,000 19% 21.3% 204,000 31% 13.8% 585,000 23% 17.9%

545,000 33% 17.7% 297,000 40% 11.5% 842,000 36% 14.8%

296,000 -8% 6.3% 270,496 60% 7.2% 566,496 16% 6.7%

232,000 -22% 4.0% 269,000 -1% 5.6% 501,000 -12% 4.7%

86,000 39% 5.3% 93,000 60% 6.7% 179,000 49% 5.9%

82,000 228% 5.1% 83,000 51% 6.5% 165,000 106% 5.7%

79,000 259% 4.4% 98,000 96% 6.6% 177,000 146% 5.4%

100% 65% 31% 5% 100% 76% 23% 0% 100% 70% 27% 3%

100% 61% 34% 4% 100% 72% 28% 0% 100% 66% 31% 3%

100% 61% 35% 4% 100% 72% 27% 1% 100% 66% 31% 3%

100% 58% 38% 4% 100% 71% 28% 1% 100% 64% 34% 3%

55% 45% 100%

55% 45% 100%

54% 46% 100%

52% 48% 100%

46% 54% 100%

100% 100%

100% 100%

PF OPERATING INCOME North America % change % margin International % change % margin Total Consolidated % change % margin SHARE OF REVENUE BY CATEGORY North America Sales Media Electronics and other general merchandise Other International Sales Media Electronics and other general merchandise Other Total Consolidated Sales Media Electronics and other general merchandise Other SHARE OF REVENUE BY GEOGRAPHY North America Sales International Sales Total Consolidated Sales SHARE OF OPERATING INCOME BY GEOGRAPHY North America Sales International Sales Total Consolidated Sales SEASONALITY Net Sales PF Operating Income

Source: Company reports, Lehman Brothers estimates

96

April 07, 2008

12/08E

Lehman Brothers

Internet Data Book

April 2008

Figure 118: Amazon Cash Flow Statement, 2005–09E ($ in thousands, except per share data) 2005A Cash Flows from Operating Activities Net income (loss) Depreciation and amortization Stock-based compensation Equity in losses of equity-method investees Amortization of goodwill, other intangibles Non-cash restructuring-related and other (Gain) Losses on sale of marketable securities, net Remeasurement of PEACS and other Non-cash interest expense, deferred taxes and other Deferred income taxes Excess tax benefit on stock awards Cumulative effect of accounting change Changes in working capital: Inventories Accounts receivable, net and other current assets Accounts payable Accrued expenses and other current liabilities Increases to unearned revenue Amortization of previously unearned revenue Interest payable Net cash provided by (used in) operating activities Total Change in Working Capital

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

111,000 62,000 34,000 3,000 2,000 (24,000) -

78,000 60,000 46,000 3,000 5,000 (2,000) (35,000) -

80,000 61,000 51,000 3,000 3,000 (2,000) (34,000) -

207,000 63,000 54,000 3,000 (1,000) (97,000) (163,000) -

476,000 246,000 185,000 9,000 10,000 (99,000) (256,000) -

133,969 65,000 55,000

113,592 64,000 60,000

131,652 62,000 60,000

276,998 60,000 65,000

2,000

2,000

2,000

2,000

41,599 (30,000)

34,454 (35,000)

40,710 (35,000)

89,470 (125,000)

(26,000) (105,000) (84,000) 275,000 102,000 156,000 (149,000) (41,000) 733,000 154,000

190,000 205,000 101,000 10,000 (2,000) (10,000) 3,000 23,000 (64,000) (282,000) (103,000) 402,000 203,000 206,000 (181,000) 701,000 245,000

126,000 66,000 (602,000) (58,000) 45,000 (44,000) (279,000) (467,000)

25,000 (10,000) 82,000 31,000 64,000 (48,000) 299,000 144,000

(223,000) (73,000) 304,000 58,000 56,000 (47,000) 237,000 75,000

(231,000) (237,000) 1,144,000 399,000 79,000 (71,000.00) 1,149,000 1,083,000

(303,000) (254,000) 928,000 430,000 244,000 (210,000) 1,406,000 835,000

181,203 93,722 (879,661) (63,210) -

110,539 5,773 52,554 14,624 -

(166,738) (97,376) 202,772 121,890 -

(459,867) (393,449) 1,483,770 396,381 -

(400,378) (667,947)

422,536 183,490

321,909 60,548

1,395,305 1,026,836

836,000 (1,386,000) (203,000) (24,000) (777,000)

1,844,000 (1,929,000) (216,000) (32,000) (333,000)

784,000 (514,000) (34,000) (1,000) 235,000

161,000 (180,000) (47,000) (22,000) (88,000)

210,000 (83,000) (69,000) (24,000) 34,000

115,000 (153,000) (73,000) (29,000) (140,000)

1,270,000 (930,000) (223,000) (75,000) (1,000) 41,000

(61,128)

(56,766)

(74,423)

(109,633)

(61,128)

(56,766)

(74,423)

(109,633)

Cash Flows from Financing Activities Proceeds from exercise of stock options, other Excess tax benefit on stock awards Common stock repurchased Proceeds from issuance of common stock, net Proceeds from long-term debt, other Repayment of long-term debt Repayment of capital lease obligation, other Financing costs Net cash provided by (used in) financing activities

61,000 4,000 13,000 (271,000) (193,000)

35,000 102,000 (252,000) 99,000 (383,000) (399,000)

9,000 24,000 (248,000) (17,000) (232,000)

35,000

35,000 34,000

12,000 164,000

30,000

35,000

35,000

125,000

35,000 (29,000) 41,000

33,000 (29,000) 73,000

3,000 (11,000) 168,000

56,000 257,000 (248,000) 35,000 36,000 (57,000) (29,000) 50,000

30,000

35,000

35,000

Effect of exchange-rate on cash and equivalents Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP

(53,000) (290,000) 1,302,600 1,012,600

400,770 2,107,094 2,507,864

282,486 2,507,864 2,790,350

Cash Flows from Investing Activities Sales and maturities of marketable securities Purchases of marketable securities Purchases of fixed assets, incl. software, site devel. Proceeds from sale of subsidiary and other Investments in equity-method investees, other Net cash provided by (used in) investing activities

Other cash flow information: Fixed assets acquired under capital leases, other financing Equity securities received for commercial agreements Stock issued in connection with business acquisitions Cash paid for interest Cash paid for income tax Free Cash Flow Calculation Operating cash flow Purchases of fixed assets One time Items Free Cash Flow % change Cumulative Free Cash Flow last four quarters % change Free Cash Flow Conversion of Operating Cash Flow Revenue Capex Y/Y Growth Capex as % of Revenue

359,000 120,000 87,000 3,000 4,000 (1,000) (42,000) 4,000 71,000

2006E

40,000 9,000 1,012,600 1,021,600

2,000 (274,000) 1,021,600 747,600

4,000 256,000 747,600 1,003,600

18,000 362,000 1,003,600 1,365,600

3,000

22,000 4,000

(4,000) 1,173,000 1,365,600 2,538,600

1,000 10,000

20,000 1,517,000 1,021,600 2,538,600

105,000 12,000

86,000 14,000

43,000 3,000

733,000 (203,000) 40,000 570,000 19.4%

701,000 (216,000) 485,000 -14.9%

(279,000) (34,000) (313,000) NA

299,000 (47,000) 252,000 250.0%

237,000 (69,000) 168,000 147.1%

1,149,000 (73,000) 1,076,000 55.0%

1,406,000 (223,000) 1,183,000 143.9%

78%

69%

521,000 -3.7% NA

701,000 68.9% 84%

801,000 118.9% 71%

1,183,000 143.9% 94%

84%

8,490,000 203,000 128% 2.4%

10,711,000 216,000 6% 2.0%

3,015,000 34,000 -26% 1.1%

2,886,000 47,000 -19% 1.6%

3,262,000 69,000 11% 2.1%

5,673,000 73,000 46% 1.3%

14,836,000 223,000 3% 1.5%

(431,506) 2,538,600 2,107,094

2008E

2009E

656,211 251,000 240,000 8,000 206,233 (225,000) (334,863) (391,331) 859,435 469,685 1,739,372 602,927

915,176 263,550 247,200 8,000 98,055 (250,000) (327,385) (288,418) 977,310 425,813 2,069,301 787,320

(301,950) (301,950)

(382,000) (382,000)

125,000

225,000 225,000

250,000 (900,000) (650,000)

1,410,672 2,790,350 4,201,022

1,662,422 2,538,600 4,201,022

1,037,301 4,201,022 5,238,323

1,739,372 (301,950) 1,437,422 21.5%

2,069,301 (382,000) 1,687,301 17.4%

66,000 20,000

(400,378) (61,128) (461,506) 47.4%

422,536 (56,766) 365,770 45.1%

321,909 (74,423) 247,486 47.3%

1,395,305 (109,633) 1,285,672 19.5%

1,034,494 98.6%

1,148,264 63.8%

1,227,750 53.3%

1,437,422 21.5%

4,075,190 61,128 80% 1.5%

3,784,410 56,766 21% 1.5%

4,134,600 74,423 8% 1.8%

7,308,870 109,633 50% 1.5%

83%

82%

19,303,070 301,950 35% 1.6%

23,874,976 382,000 27% 1.6%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

97

Lehman Brothers

Internet Data Book

April 2008

Figure 119: Amazon Discounted Cash Flow Analysis ($ in thousands, except per share data) Net Sales % change

2006A 10,711,000 26.2%

2007E 14,836,000 38.5%

2008E 19,303,070 30.1%

2009E 23,874,976 23.7%

2010E 28,446,451 19.1%

2011E 32,708,503 15.0%

2012E 36,635,086 12.0%

EBITDA % change

706,000 2.8%

1,095,000 55.1%

1,382,692 26.3%

1,704,213 23.3%

2,074,215 21.7%

2,428,869 17.1%

2,769,435 14.0%

(15,000) (216,000) 245,000 720,000 15.1%

(25,000) (223,000) 835,000 1,682,000 133.6%

(75,000) (301,950) 602,927 1,608,669 -4.4%

(294,164) (382,000) 787,320 1,815,369 12.8%

(501,121) (455,143) 783,256 1,901,207 4.7%

(615,775) (523,336) 825,647 2,115,405 11.3%

(704,277) (604,479) 797,018 2,257,698 6.7%

720,000 $1.70

1,501,786 $3.54

1,282,421 $3.02

1,292,144 $3.04

1,208,251 $2.85

1,200,338 $2.83

1,143,820 $2.69

1,682,000 $3.97

1,436,311 $3.39

1,447,201 $3.42

1,353,242 $3.19

1,344,378 $3.17

1,281,078 $3.02

1,608,669 $3.74

1,620,865 $3.77

1,515,631 $3.52

1,505,703 $3.50

1,434,808 $3.34

1,815,369 $4.28

1,901,207 $4.49

2,115,405 $4.99

2,257,698 $5.33

Cash Taxes Capex Change in working capital Unlevered Free Cash Flow % change

2006 PV of Cash Flow Per Share

2007E-2012E CAGR 19.8%

20.4%

6.1%

3,046,070.7 2007 PV of Cash Flow Per Share 2008 PV of Cash Flow Per Share 2009 PV of Cash Flow Per Share

Terminal EBITDA multiple Discount Rate Terminal value Implied Terminal FCF Multiple

12.0x 12.0% 33,233,222 14.7x

12.0x 12.0% 33,233,222 14.7x

12.0x 12.0% 33,233,222 14.7x

12.0x 12.0% 33,233,222 14.7x

Present value of FCF Present value of terminal value Implied Firm Value

8,348,759 16,836,984 25,185,744

8,544,210 18,857,423 27,401,633

7,685,676 21,120,313 28,805,989

6,077,007 23,654,751 29,731,758

Plus: Cash Less: Debt Implied Equity Value

2,019,000 1,247,000 25,957,744

3,112,000 1,282,000 29,231,633

4,774,022 1,282,000 32,298,011

5,811,323 382,000 35,161,081

424,500

423,750

430,000

431,875

$61.15

$68.98

$75.11

$81.41

Fully diluted shares outstanding Equity Value Per Share

Source: Company reports, Lehman Brothers estimates

98

April 07, 2008

3,046,070.7

Lehman Brothers

Internet Data Book

April 2008

Figure 120: IAC/InterActiveCorp Snapshot Strengths

Biggest Concerns

- We believe that IAC's decision to split into five publicly traded companies (IAC, HSN, Ticketmaster, Interval International, and Lending Tree) should ultimately help to unlock value in the shares.

- Weakness in smaller biz: Lehnding Tree, EPI, Cornerstone masking solid trends in HSN and Ticketmaster

- The two largest businesses, Retailing and Ticketing, generate solid FCF and fund investment in emerging properties

- Will be challenging for HSN to close gap w/ QVC; operational issues, brand recognition, scale, channel placement

- Ask.com's renewed search partnership with Google should provide incremental upside to 2008 numbers and beyond.

- Tough N-T macro trends around Lending; loan origination increases overall risk profile

- Multi-brand strategy with leading positions across a number of verticals such as tickets and personals

- IAC remains a complicated story in a challenging market

- Net L-T buyer of its own stock. Repurchased 15.6M shares in 2007, 6M YTD 2008; 44.8M shares remain under authorization

- Whether HSN can continue to outperform given overall retail trends

- Strong balance sheet: $2.4 billion in cash & investments, and ~$1 billion in debt

- No growth in 1Q08

- Valuation: currently trading at 5.4x 2008E EBITDA

What to Watch For - Continued signs of improved performance at HSN - Trends in the overall ticket & event mkt along with Ticketmaster pricing power & rev splits - Ticketmaster-LiveNation deal runs through end of 2008; Accounts for ~15% of Ticketmaster revs - Signs that Lending can survive macro environment - Continued share buybacks; 7.6M 1Q07; 8M in 3Q; (none in 2Q or 4Q07). Repurchased 6M shares post-4Q07, approx 45M left in authorization - Potential for sponsored spins - Easier comps starting 2Q08 - Shift of Ask from network to proprietary after Google quality clean-up

Source: Company reports, Lehman Brothers estimates

April 07, 2008

99

Lehman Brothers

Internet Data Book

April 2008

Figure 121: IAC/InterActiveCorp Income Statement, 2005–09E ($ in millions, except per share data) Revenue Cost of revenue Gross profit Selling and marketing expense General and administrative expense Other operating expense Other (one-time expenses, restructuring, etc.) EBITDA Amortization of cable distribution fees Depreciation Other adjustments EBITA Amortization of non-cash distrib. & mktg Amortization of non-cash compensation Amortization of intangibles Goodwill impairment Merger costs Operating income Interest income (expense), net Equity in income of VUE Equity in the income (loss) of affiliates and other Income (loss) before taxes and minority interest Income tax expense (benefit) Effective tax rate Minority interest Net Income (loss) from Continuing Operations Diluted income (loss) per share from continuing ops One-time items Income from discontinued operations Earnings before preferred dividends Preferred dividends Net earnings available to common shareholders Diluted earnings (loss) per share Diluted shares outstanding Adjusted Net Income Calculation Net income Amortization of non-cash distrib. & mktg Amortization of non-cash compensation Amortization of intangibles Discontinued ops & other Equity in the income of VUE Equity in the income (loss) of affiliates and other Impact of income taxes and minority interest Adjusted Net Income Adjusted EPS Adjusted shares outstanding Y/Y GROWTH Revenue Cost of revenue Gross profit Selling and marketing General and administrative EBITDA EBITA SEQUENTIAL GROWTH Revenue EBITA EBITDA % OF REVENUES Cost of sales Selling and marketing expense General and administrative expense Other operating expenses Total cash operating expenses MARGINS Gross margin Operating margin EBITA margin EBITDA margin Operating leverage (∆EBITA / ∆Revenue)

2005A 5,416.5 2,855.2 2,561.3 946.2 656.8 85.2 873.1 70.4 133.7 9.6 659.4 137.5 186.5 335.3 63.4 523.5 60.5 982.8 389.8 39.7% (2.3) 590.8 $1.68 70.2 209.7 870.6 (8.0) 862.6 $2.45 352.4

2006A 5,908.9 2,980.4 2,928.5 1,265.8 748.2 114.2 959.9 67.5 150.5 (0.1) 742.1 37.1 92.3 182.7 189.1 240.8 10.3 31.9 283.0 119.2 42.1% 0.5 164.3 $0.51 9.6 13.2 187.1 187.1 $0.59 319.5

3/07A 1,490.1 838.5 651.6 343.4 212.0 37.0 179.4 1.2 37.8 140.4 0.5 24.2 30.2 85.5 4.1 8.6 98.2 37.5 38.2% (0.1) 60.6 $0.20 0.1 60.7 60.7 $0.20 304.7

6/07A 1,509.8 784.8 725.0 345.1 205.9 28.0 173.1 1.2 38.7 (0.2) 133.4 24.0 26.9 30.4 52.2 3.0 13.5 68.7 23.0 33.5% 0.4 46.1 $0.15 35.1 13.5 94.7 94.7 $0.31 302.6

9/07A 1,513.3 801.6 711.7 301.9 208.7 14.8 211.8 1.2 39.3 (0.1) 171.4 13.1 25.2 31.1 102.0 0.2 15.9 118.1 47.4 40.1% 2.9 73.6 $0.25 (1.6) (1.6) 70.4 70.4 $0.24 298.4

12/07A 1,860.1 1,017.6 842.6 361.5 225.3 33.1 251.8 1.2 40.6 (0.1) 210.1 16.6 29.3 55.7 507.8 (399.3) (1.0) 16.7 26.5 (357.2) 30.1 -8.4% 1.4 (385.9) ($1.36) 16.0 (369.9) (369.9) ($1.31) 283.3

2007A 6,373.3 3,442.5 2,930.9 1,352.0 852.0 112.9 816.2 4.9 156.4 (0.4) 655.3 54.1 105.6 147.4 507.8 (159.6) 6.3 16.7 64.5 (72.1) 138.0 -191.4% 4.6 (205.6) ($0.72) 33.5 28.0 (144.1) (144.1) ($0.50) 285.7

3/08E 1,487.2 795.7 691.6 297.4 208.2 24.5 161.4 0.5 40.6 120.3 11.0 25.0 31.0 53.3 (1.1) 12.5 64.7 25.2 39.0% (2.0) 37.5 $0.13 37.5 37.5 $0.13 278.2

6/08E 1,556.8 797.1 759.7 350.3 199.3 29.4 180.8 0.5 40.6 139.7 11.0 25.0 32.0 71.7 1.0 12.5 85.3 33.2 39.0% (2.0) 50.0 $0.18 50.0 50.0 $0.18 278.2

9/08E 1,588.2 827.4 760.7 317.6 203.3 11.4 228.4 0.5 41.1 186.8 10.5 25.0 32.0 119.3 2.8 12.5 134.7 52.5 39.0% (2.0) 80.1 $0.29 80.1 80.1 $0.29 278.2

12/08E 1,926.0 1,003.5 922.6 375.6 227.3 20.2 299.5 0.5 41.1 257.9 10.5 25.0 45.0 177.4 7.4 12.5 197.3 77.0 39.0% (2.0) 118.4 $0.43 118.4 118.4 $0.43 277.2

2008E 6,558.3 3,423.7 3,134.6 1,340.9 838.0 85.5 870.1 2.0 163.3 704.8 43.0 100.0 140.0 421.8 10.2 50.0 482.0 188.0 39.0% (8.0) 286.0 $1.03 286.0 286.0 $1.03 278.0

2009E 6,649.8 3,457.9 3,191.9 1,316.7 837.9 87.3 950.1 168.0 782.1 95.0 140.0 547.1 29.7 50.0 626.8 244.5 39.0% (6.0) 376.3 $1.36 376.3 376.3 $1.36 276.0

862.7 137.5 186.5 (283.2) (545.4) 106.7 464.8 $1.31 356.0

187.1 37.1 92.4 182.7 191.6 (168.6) 522.3 $1.60 327.3

60.7 0.5 24.2 30.2 6.3 (21.2) 100.7 $0.32 310.8

94.7 24.0 26.9 30.4 (50.5) (30.0) 95.3 $0.31 309.3

70.4 13.1 25.2 31.1 (3.2) (25.8) 110.8 $0.36 305.2

(369.9) 16.6 29.3 55.7 507.8 (16.4) (83.8) 139.4 $0.46 299.8

(144.1) 54.1 105.6 147.4 460.4 (16.4) (160.8) 446.2 $1.46 306.3

37.5 11.0 25.0 31.0 (24.8) 79.7 $0.27 292.3

50.0 11.0 25.0 32.0 (25.2) 92.8 $0.32 292.3

80.1 10.5 25.0 32.0 (25.0) 122.7 $0.42 292.3

118.4 10.5 25.0 45.0 (29.8) 169.1 $0.58 291.3

286.0 43.0 100.0 140.0 (104.7) 464.3 $1.59 292.1

376.3 95.0 140.0 (87.0) 524.4 $1.81 290.1

29.5% 19.2% 43.5% NA NA 38.4% 57.7%

9.1% 4.4% 14.3% 33.8% 13.9% 9.9% 12.5%

10.3% 24.1% -3.5% 9.6% 21.6% -14.3% -6.8%

5.7% 9.2% 2.1% 6.6% 9.4% -21.9% -18.1%

7.4% 13.4% 1.4% 2.7% 9.4% -6.3% 2.0%

8.1% 15.7% 0.2% 8.0% 15.6% -16.9% -19.3%

7.9% 15.5% 0.1% 6.8% 13.9% -15.0% -11.7%

-0.2% -5.1% 6.1% -13.4% -1.8% -10.1% -14.3%

3.1% 1.6% 4.8% 1.5% -3.2% 4.5% 4.8%

4.9% 3.2% 6.9% 5.2% -2.6% 7.8% 9.0%

3.5% -1.4% 9.5% 3.9% 0.9% 18.9% 22.8%

2.9% -0.5% 7.0% -0.8% -1.6% 6.6% 7.6%

1.4% 1.0% 1.8% -1.8% 0.0% 9.2% 11.0%

-13.4% -46.1% -40.8%

1.3% -5.0% -3.5%

0.2% 28.5% 22.4%

22.9% 22.6% 18.9%

-20.0% -42.8% -35.9%

4.7% 16.2% 12.1%

2.0% 33.7% 26.3%

21.3% 38.0% 31.1%

52.7% 17.5% 12.1% 1.6% 82.3%

50.4% 21.4% 12.7% 1.9% 84.5%

56.3% 23.0% 14.2% 2.5% 96.0%

52.0% 22.9% 13.6% 1.9% 90.3%

53.0% 20.0% 13.8% 1.0% 87.7%

54.7% 19.4% 12.1% 1.8% 88.0%

54.0% 21.2% 13.4% 1.8% 88.6%

53.5% 20.0% 14.0% 1.7% 89.2%

51.2% 22.5% 12.8% 1.9% 88.4%

52.1% 20.0% 12.8% 0.7% 85.6%

52.1% 19.5% 11.8% 1.1% 84.5%

52.2% 20.4% 12.8% 1.3% 85.4%

52.0% 19.8% 12.6% 1.3% 85.7%

47.3% 6.2% 12.2% 16.1% 19.5%

49.6% 4.1% 12.6% 16.2% 16.8%

43.7% 5.7% 9.4% 12.0% -7.4%

48.0% 3.5% 8.8% 11.5% -36.3%

47.0% 6.7% 11.3% 14.0% 3.2%

45.3% -21.5% 11.3% 13.5% -36.0%

46.0% -2.5% 10.3% 12.8% -18.7%

46.5% 3.6% 8.1% 10.8% 703.7%

48.8% 4.6% 9.0% 11.6% 13.5%

47.9% 7.5% 11.8% 14.4% 20.6%

47.9% 9.2% 13.4% 15.5% 72.6%

47.8% 6.4% 10.7% 13.3% 26.8%

48.0% 8.2% 11.8% 14.3% 84.5%

Source: Company reports, Lehman Brothers estimates

100

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 122: IAC/InterActiveCorp Segment Breakdown – Revenue and EBITA, 2005–09E ($ in millions, except per share data) 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

REVENUE Retailing U.S. Total Retailing Transactions Ticketmaster Lending & Real Estate Service Magic (Home Services) Total Services Media & Advertising IAC Search and Media Citysearch, Evite, Other Total Media & Advertising Membership & Subscriptions Interval (Vacations) Match.com Entertainment (Discounts) Intra-Sector Elimination Total Membership & Subscriptions Emerging Businesses Intersegment Eliminations TOTAL REVENUE

2,671.0

2,933.4

685

701

700

905

2,992

694

710

718

923

3,046

3,138

2,671.0

2,933.4

685

701

700

905

2,992

694

710

718

923

3,046

3,138

950.1 425.5 41.0

1,085.4 485.5 63.8

310 113 22

303 114 25

301 77 25

355 52 22

1,269 356 93

310 68 25

339 74 29

345 61 27

406 48 24

1,399 251 105

1,260 239 115

1,416.6

1,634.7

445

442

403

429

1,718

402

442

433

478

1,755

1,614

371.6 48.5

470.4 73.8

147 21

152 22

170 20

203 23

672 86

152 22

168 23

182 22

202 25

704 92

793 96

213.5

544.2

168

174

190

227

759

174

190

203

228

795

889

272.8 249.5 219.0 (1.5)

288.7 311.2 196.7 0.0

86 82 21 0

86 87 19 0

96 89 33 0

92 91 110 0

360 349 183 0

104 90 19 -

99 95 18 -

103 98 32 -

96 96 104 -

401 379 173 -

431 393 169 -

739.8

796.6

190

191

218

293

892

212

211

233

296

953

994

1.1 (5.1) 5,036.7

7.5 (7.6) 5,908.8

4 (1) 1,490

5 (4) 1,510

8 (6) 1,513

16 (9) 1,860

33 (21) 6,373

6 (2) 1,487

7 (3) 1,557

6 (5) 1,588

6 (5) 1,926

25 (15) 6,558

34 (20) 6,650

EBITA Retailing U.S. Total Retailing Transactions Ticketmaster Lending & Real Estate Service Magic (Home Services) Total Services

277

269

40

38

47

85

211

39

43

50

90

222

238

277

269

40

38

47

85

211

39

43

50

90

222

238

219 64 11

264 42 16

72 (4) 6

59 (4) 7

62 (7) 5

71 (28) 2

264 (43) 21

63 (12) 5

68 (10) 6

69 (4) 6

77 (3) 4

277 (28) 21

252 (2) 22

294

323

74

62

60

45

241

57

63

71

78

270

272

Media & Advertising Total Media & Advertising

31

58

17

12

28

31

88

22

23

32

37

113

147

Membership & Subscriptions Interval (Vacations) Match.com Entertainment (Discounts)

111 48 18

116 64 14

39 8 (13)

34 20 (14)

34 30 (1)

32 21 37

139 78 9

40 9 (14)

38 21 (14)

39 28 (2)

35 23 25

152 82 (6)

164 87 3

176

193

34

40

62

89

226

35

45

65

84

229

254

(12) (106)

(16) (86)

(3) (23)

3 (22)

(5) (21)

(7) (33)

(12) (99)

(4) (28)

(7) (27)

(7) (24)

(7) (25)

(25) (104)

(25) (104)

Total Membership & Subscriptions Emerging Businesses Corporate Subtotal

659

742

140

133

171

210

655

120

140

187

258

705

782

Intersegment Eliminations TOTAL EBITA

659

742

140

133

171

210

655

120

140

187

258

705

782

Source: Company reports, Lehman Brothers estimates

April 07, 2008

101

Lehman Brothers

Internet Data Book

April 2008

Figure 123: IAC/InterActiveCorp Segment Breakdown – Growth Rates and Margins, 2005–09E ($ in millions, except per share data) 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

REVENUE GROWTH Retailing U.S. Total Retailing Transactions Ticketmaster Lending & Real Estate Service Magic (Home Services) Total Services

40%

10%

2%

1%

2%

3%

2%

1%

1%

3%

2%

2%

3%

19%

10%

2%

1%

2%

3%

2%

1%

1%

3%

2%

2%

3%

24% 124% NA

14% 14% 56%

26% -10% 54%

3% -7% 58%

13% -37% 33%

27% -55% 43%

17% -27% 46%

0% -40% 15%

12% -35% 14%

14% -20% 10%

14% -8% 9%

10% -29% 12%

-10% -5% 10%

13%

15%

15%

2%

-1%

5%

5%

-10%

0%

8%

11%

2%

-8%

Media & Advertising IAC Search and Media Citysearch, Evite, Other Total Media & Advertising

66% 16% NA

27% 52% 155%

42% 48% 43%

33% 27% 33%

46% 5% 40%

49% 0% 42%

43% 17% 39%

3% 4% 4%

10% 3% 9%

7% 10% 7%

0% 9% 1%

5% 6% 5%

13% 5% 12%

Membership & Subscriptions Interval (Vacations) Match.com Entertainment (Discounts) Intra-Sector Elimination

6% 26% 0% NA

6% 25% -10% NA

10% 12% -13% NA

20% 11% -3% NA

36% 11% 4% NA

35% 14% -9% NA

25% 12% -7% NA

20% 9% -8% NA

15% 10% -7% NA

7% 10% -4% NA

4% 6% -5% NA

11% 9% -5% NA

8% 4% -2% NA

Total Membership & Subscriptions TOTAL REVENUE

10%

8%

8%

13%

20%

9%

12%

12%

10%

7%

1%

7%

4%

20%

17%

10%

6%

7%

8%

8%

0%

3%

5%

4%

3%

1%

EBITA GROWTH Retailing U.S. Total Retailing Transactions Ticketmaster Lending & Real Estate Service Magic (Home Services) Total Services

42%

-3%

-33%

-37%

-18%

-7%

-22%

-2%

11%

6%

6%

5%

7%

39%

-3%

-33%

-37%

-18%

-7%

-22%

-2%

11%

6%

6%

5%

7%

33% 198% NA

21% -34% 44%

9% -145% 94%

-22% -138% 61%

9% -157% -10%

8% -340% -20%

0% -201% 29%

-11% 230% -16%

15% 166% -15%

11% -48% 3%

9% -90% 109%

5% NA 1%

-9% -92% 7%

45%

10%

-3%

-31%

-20%

-44%

-25%

-23%

2%

18%

75%

12%

1%

Media & Advertising Total Media & Advertising

NA

91%

48%

9%

74%

55%

50%

26%

95%

14%

19%

29%

30%

Membership & Subscriptions Interval (Vacations) Match.com Entertainment (Discounts)

23% 74% -20%

5% 33% -21%

14% 40% NA

28% 13% NA

27% 53% NA

12% 0% -23%

20% 23% -36%

4% 1% NA

10% 9% NA

14% -4% NA

13% 12% -32%

10% 4% -162%

7% 6% -161%

26%

10%

29%

47%

47%

-8%

17%

1%

12%

5%

-6%

1%

11%

58%

13%

-7%

-18%

2%

-19%

-12%

-14%

5%

9%

23%

8%

11%

10.4%

9.2%

5.8%

5.5%

6.7%

9.4%

7.0%

5.6%

6.0%

7.0%

9.8%

7.3%

7.6%

10.4%

9.2%

5.8%

5.5%

6.7%

9.4%

7.0%

5.6%

6.0%

7.0%

9.8%

7.3%

7.6%

23.0% 15.0% 27.4%

24.4% 8.7% 25.2%

23.1% -3.1% 28.7%

19.5% -3.4% 28.1%

20.5% -9.2% 22.0%

20.0% -54.3% 9.1%

20.8% -12.0% 22.2%

20.5% -17.0% 21.0%

20.0% -14.0% 21.0%

20.0% -6.0% 20.5%

19.0% -6.0% 17.5%

19.8% -11.3% 20.1%

20.0% -1.0% 19.5%

Total Membership & Subscriptions TOTAL EBITA EBITA MARGIN Retailing U.S. Total Retailing Transactions Ticketmaster Lending & Real Estate Service Magic (Home Services)

20.7%

19.7%

16.7%

14.1%

14.9%

10.4%

14.1%

14.2%

14.4%

16.3%

16.4%

15.4%

16.9%

Media & Advertising Total Media & Advertising

Total Services

14.3%

10.7%

10.2%

6.7%

14.5%

13.8%

11.6%

12.4%

12.0%

15.5%

16.3%

14.2%

16.5%

Membership & Subscriptions Interval (Vacations) Match.com Entertainment (Discounts)

40.6% 19.2% 8.0%

40.2% 20.4% 7.1%

45.0% 10.2% -62.8%

39.7% 22.6% -71.4%

35.6% 33.1% -4.2%

34.2% 23.1% 33.5%

38.5% 22.5% 4.9%

39.0% 9.5% -75.0%

38.0% 22.6% -80.0%

38.0% 29.0% -7.0%

37.0% 24.3% 24.0%

38.0% 21.6% -3.2%

38.0% 22.0% 2.0%

23.8%

24.3%

18.1%

21.0%

28.5%

30.5%

25.3%

16.3%

21.3%

28.0%

28.3%

24.0%

25.5%

NA NA 13.1%

NA NA 12.6%

NA NA 9.4%

NA NA 8.8%

NA NA 11.3%

NA NA 11.3%

NA NA 10.3%

NA NA 8.1%

NA NA 9.0%

NA NA 11.8%

NA NA 13.4%

NA NA 10.7%

NA NA 11.8%

Total Membership & Subscriptions Emerging Businesses Corporate TOTAL EBITA MARGIN

Source: Company reports, Lehman Brothers estimates

102

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 124: IAC/InterActiveCorp Segment Breakdown – Share of Revenue and EBITA, 2005–09E ($ in millions, except per share data) REVENUE Retailing U.S. Total Retailing Transactions Ticketmaster Lending & Real Estate Service Magic (Home Services) Total Services Media & Advertising Ask.com Other Media & Services

53%

50%

46%

46%

46%

49%

47%

47%

46%

45%

48%

46%

47%

53%

50%

46%

46%

46%

49%

47%

47%

46%

45%

48%

46%

47%

19% 8% 1%

18% 8% 1%

21% 8% 1%

20% 8% 2%

20% 5% 2%

19% 3% 1%

20% 6% 1%

21% 5% 2%

22% 5% 2%

22% 4% 2%

21% 2% 1%

21% 4% 2%

19% 4% 2%

28%

28%

30%

29%

27%

23%

27%

27%

28%

27%

25%

27%

24%

7% 1%

8% 1%

10% 1%

10% 1%

11% 1%

11% 1%

11% 1%

10% 1%

11% 1%

11% 1%

11% 1%

11% 1%

12% 1%

Total Media & Advertising

4%

9%

11%

12%

13%

12%

12%

12%

12%

13%

12%

12%

13%

Membership & Subscriptions Interval (Vacations) Match.com Entertainment (Discounts) Intra-Sector Elimination

5% 5% 4% 0%

5% 5% 3% 0%

6% 6% 1% 0%

6% 6% 1% 0%

6% 6% 2% 0%

5% 5% 6% 0%

6% 5% 3% 0%

7% 6% 1% 0%

6% 6% 1% 0%

6% 6% 2% 0%

5% 5% 5% 0%

6% 6% 3% 0%

6% 6% 3% 0%

15%

13%

13%

13%

14%

16%

14%

14%

14%

15%

15%

15%

15%

0% 0% 100%

0% 0% 100%

0% 0% 100%

0% 0% 100%

1% 0% 100%

1% 0% 100%

1% 0% 100%

0% 0% 100%

0% 0% 100%

0% 0% 100%

0% 0% 100%

0% 0% 100%

1% 0% 100%

42%

36%

28%

29%

28%

41%

32%

32%

30%

27%

35%

32%

30%

42%

36%

28%

29%

28%

41%

32%

32%

30%

27%

35%

32%

30%

33% 10% 2%

36% 6% 2%

51% -2% 4%

44% -3% 5%

36% -4% 3%

34% -13% 1%

40% -7% 3%

53% -10% 4%

48% -7% 4%

37% -2% 3%

30% -1% 2%

39% -4% 3%

32% 0% 3%

Total Membership & Subscriptions Emerging Businesses Intersegment Eliminations TOTAL REVENUE EBITA Retailing U.S. Total Retailing Transactions Ticketmaster Lending & Real Estate Service Magic (Home Services)

45%

44%

53%

47%

35%

21%

37%

48%

45%

38%

30%

38%

35%

Media & Advertising Total Media & Advertising

Total Services

5%

8%

12%

9%

16%

15%

13%

18%

16%

17%

14%

16%

19%

Membership & Subscriptions Interval (Vacations) Match.com Entertainment (Discounts)

17% 7% 3%

16% 9% 2%

28% 6% -9%

26% 15% -10%

20% 17% -1%

15% 10% 18%

21% 12% 1%

34% 7% -12%

27% 15% -10%

21% 15% -1%

14% 9% 10%

22% 12% -1%

21% 11% 0% 32%

27%

26%

24%

30%

36%

42%

34%

29%

32%

35%

33%

32%

Emerging Businesses Corporate

Total Membership & Subscriptions

-2% -16%

-2% -12%

-2% -16%

2% -17%

-3% -12%

-4% -16%

-2% -15%

-3% -23%

-5% -19%

-4% -13%

-3% -10%

-4% -15%

-3% -13%

Sub Total

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

Intersegment Eliminations TOTAL EBITA

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

0% 100%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

103

Lehman Brothers

Internet Data Book

April 2008

Figure 125: IAC/InterActiveCorp Breakdown – Retailing, 2005–09E ($ in millions, except per share data) Retailing U.S. $ in millions 2005A FTEs - end of period FTEs - average Y/Y growth Revenue per average home Y/Y growth HSN U.S. Revenue % change

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

91.5 91.7 4.1% $21.73 0.4% 1,992 4.5%

89.1 89.0 -3.0% $22.33 2.8% 1,987 -0.3%

89.8 89.5 -1.5% $5.37 0.5% 480 -1.0%

89.5 89.7 -0.2% $4.90 -0.8% 439 -1.0%

89.8 89.7 1.6% $5.35 -0.1% 480 1.5%

90.8 90.3 2.5% $6.76 1.7% 610 4.3%

90.8 90.0 1.2% $22.33 0.0% 2,009 1.1%

90.8 90.8 1.5% $5.50 2.5% 499 4.0%

90.8 90.8 1.3% $5.04 3.0% 458 4.3%

90.8 90.8 1.3% $5.50 2.8% 500 4.1%

90.8 90.8 0.6% $6.92 2.4% 628 3.0%

90.8 90.8 0.9% $22.97 2.9% 2,085 3.8%

90.8 90.8 0.0% $23.77 3.5% 2,158 3.5%

679 NA 336

947 NA 421 25.3%

205 9.0% 103 -7.2%

262 3.8% 109 -1.8%

220 3.4% 85 -8.9%

295 0.9% 104 -2.0%

983 3.9% 401 -4.8%

195 -5.0%

252 -4.0%

218 -1.0%

295 0.0%

960 -2.3%

980 2.0%

Total U.S. Retailing Revenue Y/Y growth

2,671 40.1%

2,933 9.8%

685 1.8%

701 0.7%

700 2.1%

905 3.1%

2,992 2.0%

694 1.3%

710 1.2%

718 2.5%

923 2.0%

3,046 1.8%

3,138 3.0%

Cost of goods sold Gross profit % gross margin

1,647 1,024 38.3%

1,804 1,129 38.5%

432 254 37.0%

436 266 37.9%

438 262 37.4%

574 331 36.6%

1,880 1,113 37.2%

439 256 36.8%

442 268 37.7%

450 268 37.3%

585 339 36.7%

1,916 1,130 37.1%

1,961 1,177 37.5%

Total U.S. EBITA Y/Y growth % EBITA margin

277 42.1% 10.4%

269 -2.7% 9.2%

40 -32.5% 5.8%

38 -36.5% 5.5%

47 -17.7% 6.7%

85 -7.4% 9.4%

211 -21.7% 7.0%

39 -2.3% 5.6%

43 10.9% 6.0%

50 6.5% 7.0%

90 6.1% 9.8%

222 5.5% 7.3%

238 7.3% 7.6%

Depreciation HSN cable distribution fees EBITDA Y/Y growth % EBITDA margin

41 62 380 26.7% 14.2%

37 67 374 -1.5% 12.7%

9 1 50 -44.5% 7.2%

9 1 48 -47.2% 6.9%

9 1 57 -33.7% 8.2%

9 1 95 -10.9% 10.5%

35 5 250 -33.1% 8.4%

9 1 48 -2.3% 7.0%

9 1 52 7.8% 7.3%

9 1 60 4.5% 8.3%

9 1 100 5.1% 10.8%

36 2 260 4.0% 8.5%

36 274 5.5% 8.7%

Operating Metrics Units shipped Y/Y growth Average price point Y/Y growth

50.7 25.2% $57.72 12.7%

55.3

12.9 1.6% $59.39 1.1%

12.9 -0.8% $60.74 1.4%

13.0 -1.5% $61.01 5.1%

17.1 3.6% $59.16 1.5%

% of sales on the Internet Return rate

26% 16.6%

31% 18.4%

32% 18.9%

32% 18.9%

35% 17.9%

Cornerstone Brands & Shoebuy Y/Y growth # Catalogs Mailed Y/Y growth

$58.72

28% 17.7%

TOTAL RETAILING $ in millions 2005A Total Retailing Revenue Y/Y growth Total Retailing EBITA Y/Y growth % margin Depreciation Cable distribution fees Total Retailing EBITDA

2,671 18.8% 277 39.0% 10.4% 48 70 395

Source: Company reports, Lehman Brothers estimates

104

April 07, 2008

2006A 2,933 9.8% 269 -2.7% 9.2% 37 67 374

3/07A 685 1.8% 40 -32.5% 5.8% 9 1 50

6/07A 701 0.7% 38 -36.5% 5.5% 9 1 48

9/07A 700 2.1% 47 -17.7% 6.7% 9 1 57

12/07A 905 3.1% 85 -7.4% 9.4% 9 1 95

2007A 2,992 2.0% 211 -21.7% 7.0% 35 5 250

3/08E 694 1.3% 39 -2.3% 5.6% 9 1 48

6/08E 710 1.2% 43 10.9% 6.0% 9 1 52

9/08E 718 2.5% 50 6.5% 7.0% 9 1 60

12/08E

2008E

2009E

923 2.0% 90 6.1% 9.8%

3,046 1.8% 222 5.5% 7.3%

3,138 3.0% 238 7.3% 7.6%

9 1 100

36 2 260

36 274

Lehman Brothers

Internet Data Book

April 2008

Figure 126: IAC/InterActiveCorp Breakdown – Transactions, 2005–09E Ticketmaster Model $ and tickets in millions 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

Tickets Sold Y/Y growth

119.4 21.5%

128.2 7.4%

35.9 14.7%

33.2 1.2%

34.4 11.3%

38.8 16.9%

142.3 11.0%

34.8 -3.0%

35.7 7.6%

37.5 9.0%

42.7 10.0%

150.7 5.9%

137.2 -9.0%

Revenue per ticket sold Y/Y growth

$7.96 1.8%

$8.47 6.4%

$8.63 10.0%

$9.12 1.3%

$8.76 1.9%

$9.14 8.7%

$8.91 5.3%

$8.89 3.0%

$9.48 4.0%

$9.20 5.0%

$9.51 4.0%

$9.28 4.1%

$9.19 -1.0%

Total Revenue Y/Y growth EBITA Y/Y growth % EBITA margin Depreciation EBITDA Y/Y growth % EBITDA margin

950 23.7% 219 33.1% 23.0% 37 255 29.2% 26.9%

1,085 14.2% 264 20.9% 24.4% 38 303 18.5% 27.9%

310 26.1% 72 8.8% 23.1% 10 81 8.0% 26.3%

303 2.6% 59 -22.3% 19.5% 10 69 -19.0% 22.9%

301 13.5% 62 8.5% 20.5% 10 72 8.7% 24.0%

355 27.1% 71 8.1% 20.0% 11 82 9.3% 23.2%

1,269 16.9% 264 -0.4% 20.8% 42 305 0.8% 24.1%

310 -0.1% 63 -11.4% 20.5% 11 74 -8.5% 24.1%

339 11.9% 68 14.8% 20.0% 11 79 13.8% 23.2%

345 14.5% 69 11.4% 20.0% 11 80 10.6% 23.2%

406 14.4% 77 8.6% 19.0% 11 88 7.0% 21.7%

1,399 10.3% 277 5.2% 19.8% 44 321 5.3% 23.0%

1,260 -9.9% 252 -9.1% 20.0% 45 297 -7.7% 23.5%

Operating Metrics Total Average Ticket Price (incl. charges) Y/Y growth Total Gross Transaction Value Y/Y growth

$52.22 2.9% 6,236 25.0%

$54.99 5.3% 7,050 13.1%

$57.83 14.8% 2,076 31.7%

$58.52 -3.6% 1,943 -2.4%

$55.20 6.0% 1,899 18.0%

$62.71 11.1% 2,433 29.8%

$58.69 6.7% 8,351 18.5%

$60.14 4.0% 2,094 0.9%

$61.45 5.0% 2,195 13.0%

$59.07 7.0% 2,215 16.6%

$66.47 6.0% 2,837 16.6%

$61.98 5.6% 9,341 11.9%

$63.22 2.0% 8,670 -7.2%

Offline tickets sold Y/Y growth % tickets sold offline

54.5 15.7% 45.6%

52.9 -3.0% 41.2%

14.0 4.0% 39.0%

12.3 -10.8% 37.0%

12.0 -5.0% 35.0%

12.8 -1.1% 33.0%

51.1 -3.3% 35.9%

11.1 -20.4% 32.0%

11.4 -6.9% 32.0%

12.4 2.8% 33.0%

13.7 6.7% 32.0%

48.6 -4.9% 32.2%

41.1 -15.3% 30.0%

Online tickets sold Y/Y growth % tickets sold online

65.0 26.9% 54.4%

75.3 16.0% 58.8%

21.9 22.7% 61.0%

20.9 9.9% 63.0%

22.4 22.6% 65.0%

26.0 28.4% 67.0%

91.2 21.0% 64.1%

23.7 8.1% 68.0%

24.3 16.1% 68.0%

25.1 12.4% 67.0%

29.0 11.6% 68.0%

102.1 12.0% 67.8%

96.0 -6.0% 70.0%

Lending and Real Estate $ in millions, loans in thousands 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

Total Revenue Y/Y growth EBITA Y/Y growth % EBITA margin

426 124.2% 64 198.2% 15.0%

486 14.1% 42 -33.8% 8.7%

113 -9.7% (4) -144.9% -3.1%

114 -7.2% (4) -138.2% -3.4%

77 -37.0% (7) -156.8% -9.2%

52 -54.9% (28) -339.8% -54.3%

356 -26.7% (43) -201.2% -12.0%

68 -40.0% (12) 229.9% -17.0%

74 -35.0% (10) 166.0% -14.0%

61 -20.0% (4) -48.1% -6.0%

48 -8.0% (3) -89.8% -6.0%

251 -29.4% (28) -33.5% -11.3%

239 -5.0% (2) -91.6% -1.0%

Depreciation EBITDA Y/Y growth % EBITDA margin

7 71 182.5% 16.6%

12 54 -23.3% 11.1%

3 (1) -106.2% -0.6%

3 (1) -110.0% -1.1%

2 (5) -130.3% -6.1%

2 (26) -282.5% -50.1%

10 (33) -160.6% -9.2%

3 (9) 1120.9% -12.6%

3 (7) 467.2% -10.0%

3 (1) -85.4% -1.1%

3 0 -100.5% 0.3%

12 (16) -49.7% -6.6%

14 12 -170.4% 4.9%

Note: Lending Tree not consolidated within IACI financials until August, 2003. Historicals prior to this date do not impact IACI overall.

Service Magic (Home Services) $ in millions 2005A Revenue Y/Y growth EBITA Y/Y growth % EBITA margin Depreciation EBITDA Y/Y growth % EBITDA margin

41 NA 11 NA 27.4% 1 12 NA 29.7%

2006A 64 55.7% 16 NA 25.2% 2 18 NA 27.9%

3/07A 22 53.8% 6 93.8% 28.7% 1 7 91.4% 31.0%

6/07A 25 58.1% 7 61.4% 28.1% 1 8 60.4% 30.4%

9/07A 25 33.5% 5 -10.0% 22.0% 1 6 -6.2% 24.8%

12/07A 22 43.1% 2 -20.0% 9.1% 1 3 -6.7% 12.8%

2007A 93 46.5% 21 28.6% 22.2% 3 23 30.9% 24.9%

3/08E 25 15.0% 5 -15.9% 21.0% 1 6 -14.7% 23.0%

6/08E 29 14.0% 6 -14.7% 21.0% 1 7 -14.8% 22.7%

9/08E

12/08E

27 10.0% 6 2.7% 20.5% 1 6 -0.9% 22.3%

24 9.0% 4 108.9% 17.5% 1 5 67.1% 19.6%

2008E 105 12.0% 21 1.4% 20.1% 2 23 -1.3% 22.0%

2009E 115 10.0% 22 6.9% 19.5% 2 24 6.3% 21.2%

TOTAL TRANSACTIONS $ in millions 2005A Total Transactions Revenue Y/Y growth Total Transactions EBITA Y/Y growth % EBITA margin Depreciation Total Transactions EBITDA Y/Y growth % EBITDA margin

1,417 12.5% 294 44.7% 20.7% 44 338 31.1% 23.9%

2006A 1,635 15.4% 323 9.9% 19.7% 52 375 10.8% 22.9%

3/07A 445 15.5% 74 -3.3% 16.7% 13 87 -3.1% 19.7%

6/07A 442 1.8% 62 -31.3% 14.1% 13 76 -26.7% 17.1%

9/07A 403 -0.8% 60 -20.3% 14.9% 14 74 -16.8% 18.3%

12/07A 429 4.6% 45 -44.1% 10.4% 14 59 -36.3% 13.8%

2007A 1,718 5.1% 241 -25.2% 14.1% 54 296 -21.0% 17.2%

3/08E 402 -9.5% 57 -23.1% 14.2% 15 72 -18.0% 17.8%

6/08E 442 -0.1% 63 2.0% 14.4% 15 78 3.1% 17.6%

9/08E

12/08E

433 7.6% 71 17.7% 16.3% 15 85 15.8% 19.7%

478 11.4% 78 75.4% 16.4% 15 93 57.5% 19.5%

2008E 1,755 2.1% 270 11.8% 15.4% 58 328 10.9% 18.7%

2009E 1,614 -8.0% 272 0.9% 16.9% 61 333 1.5% 20.6%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

105

Lehman Brothers

Internet Data Book

April 2008

Figure 127: IAC/InterActiveCorp Breakdown – Media and Advertising, 2005–09E ($ in millions, except per share data) IAC Search and Media $ in millions 2006A

2005A Total Proprietary Queries (Bil) (Lehman est.) Y/Y growth Q/Q growth Revenue Per Thoursand Queries (RPQ) Y/Y growth Q/Q growth Total Proprietary Search Revenue Y/Y growth Q/Q growth Proprietary Rev. as % of IAC Search/Media

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

7,008 43.6%

8,461 20.7%

2,048 9.0% -10.3%

2,506 18.0% 22.4%

2,501 15.0% -0.2%

2,626 15.0% 5.0%

9,681 14.4%

2,314 13.0% -76.1%

2,807 12.0% 21.3%

2,801 12.0% -0.2%

2,914 11.0% 4.1%

10,837 11.9%

11,920 10.0%

$35 -14.7%

$33 -4.4%

$39 11.9% 19.0%

$33 -3.1% -16.9%

$34 7.1% 3.9%

$37 12.7% 9.8%

$36 7.0%

$36 -8.8% 0.6%

$36 9.8% 0.0%

$37 8.7% 2.8%

$37 -1.0% 0.0%

$37 2.1%

$40 10.0%

245 22.5%

283 15.4%

81 22.0% 6.7% 55.0%

82 14.3% 1.6% 54.0%

85 23.2% 3.7% 50.1%

98 29.7% 15.3% 48.3%

346 22.4%

83 3.1% -15.1% 54.8%

101 23.0% 21.3% 60.3%

104 21.7% 2.6% 57.0%

108 22.0% 4.1% 53.3%

396 14.3%

479 21.0%

56.3%

60.4%

66 78.2% 8.9% 45.0%

70 65.8% 5.8% 46.0%

85 78.8% 21.2% 49.9%

105 73.1% 23.9% 51.7%

326 73.9%

69 4.0% -78.9% 45.2%

66 -5.0% -3.3% 39.7%

78 -8.0% 17.4% 43.0%

95 -10.0% 21.2% 46.7%

308 -5.6%

314 2.0%

43.7%

39.6%

147 42.2% 7.7% 87.4%

152 33.4% 3.5% 87.4%

170 45.8% 11.7% 89.6%

203 49.0% 19.6% 89.7%

672 42.9%

152 3.5% -77.4% 87.4%

168 10.1% 10.1% 88.1%

182 6.9% 8.4% 89.3%

202 -0.4% 11.4% 88.8%

704 4.7%

793 12.7%

88.5%

89.2%

66.0%

60.2%

Network Syndication Search Revenue Y/Y growth Q/Q growth Network Rev. as % of IAC Search/Media

126 444.1%

187 48.3%

34.0%

39.8%

IAC Search & Media Y/Y growth Q/Q growth IAC Search & Media as % of Total M&A

372 66.3%

470 26.6%

--

86.4%

CitySearch, Evite, Other Revenue Y/Y growth Q/Q growth

48 24.2%

74 52.1%

21 48.5% -9.5%

22 26.9% 3.5%

20 4.8% -9.4%

23 -0.1% 17.7%

86 16.8%

22 4.0% -74.5%

23 3.0% 2.5%

22 10.0% -3.2%

25 9.0% 16.6%

92 6.5%

96 5.0%

NA

NA

NA NA

NA NA

NA NA

NA NA

NA

NA NA

NA NA

NA NA

NA NA

NA

NA

Licensing Revenue Y/Y growth Q/Q growth

51.5%

48.5%

88.6%

TOTAL MEDIA & ADVERTISING $ in millions 2005A Total Media & Advertising Revenue Y/Y growth Q/Q growth Total Media & Advertising EBITA Y/Y growth Q/Q growth % EBITA margin Depreciation Total Media & Advertising EBITDA Y/Y growth % EBITDA margin Incremental EBITDA margin

213 NA

544 154.9%

31 NA

58 90.7%

14.3% 13 44 NA 20.5%

10.7% 28 86 96.4% 15.8%

Source: Company reports, Lehman Brothers estimates

106

April 07, 2008

2006A

3/07A

6/07A

9/07A

12/07A

168 42.9% 5.2% 17 48.3% -14.4%

174 32.5% 3.5% 12 9.3% -32.0%

190 40.1% 9.1% 28 73.6% 135.9%

227 41.8% 19.4% 31 55.2% 13.0%

10.2% 8 25 34.8% 14.8% 12.7%

6.7% 8 19 11.5% 11.1% 4.7%

14.5% 8 35 54.4% 18.5% 22.8%

13.8% 8 39 42.2% 17.3% 17.4%

2007A 759 39.4% 88 50.4%

11.6% 31 119 37.6% 15.6% 15.1%

3/08E

6/08E

9/08E

12/08E

174 3.6% -77.0% 22 25.5% -75.4%

190 9.2% 9.2% 23 94.9% 5.7%

203 7.2% 7.1% 32 14.3% 38.3%

228 0.6% 12.0% 37 19.0% 17.8%

12.4% 8 30 19.3% 17.0% 79.9%

12.0% 8 31 58.8% 16.2% 71.0%

15.5% 8 40 12.3% 19.4% 31.7%

16.3% 8 45 15.4% 19.8% 483.4%

2008E

2009E

795 4.9%

889 11.8%

113 28.9%

147 29.8%

14.2% 32 145 22.4% 18.2% 71.9%

16.5% 34 181 24.6% 20.3%

Lehman Brothers

Internet Data Book

April 2008

Figure 128: IAC/InterActiveCorp Breakdown – Membership and Subscriptions, 2005–09E ($ in millions) Interval (Vacations) $ in millions 2005A Revenue Y/Y growth EBITA Y/Y growth % EBITA margin Depreciation EBITDA Y/Y growth % EBITDA margin

273 6.2% 111 22.8% 40.6% 7 118 19.7% 43.3%

2006A 289 5.8% 116 4.7% 40.2% 8 124 4.7% 42.8%

3/07A 86 9.8% 39 13.7% 45.0% 2 41 12.7% 47.2%

6/07A 86 20.3% 34 28.2% 39.7% 2 36 26.7% 42.0%

9/07A 96 36.4% 34 26.7% 35.6% 2 36 26.0% 37.9%

12/07A 92 35.0% 32 11.7% 34.2% 2 34 12.3% 36.7%

2007A 360 24.8% 139 19.6% 38.5% 8 147 18.9% 40.8%

3/08E 104 20.0% 40 3.9% 39.0% 2 42 4.1% 41.0%

6/08E 99 15.0% 38 10.1% 38.0% 2 40 9.6% 40.0%

9/08E 103 7.0% 39 14.1% 38.0% 2 41 12.8% 40.0%

12/08E 96 4.0% 35 12.5% 37.0% 2 37 10.8% 39.1%

2008E 401 11.3% 152 9.9% 38.0% 8 161 9.1% 40.0%

2009E 431 7.5% 164 7.4% 38.0% 8 172 7.1% 39.9%

Match (Personals) $ in millions, subs in thousands 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

Paid Subscribers (end of period) Y/Y growth Average Subscribers

1,189.4 21.0% 1,086.1

1,275.9 7.3% 1,232.7

1,338.9 1.1% 1,307.4

1,312.8 1.3% 1,325.9

1,308.8 -0.8% 1,310.8

1,286.5 0.8% 1,297.7

1,286.5 0.8% 1,281.2

1,370.4 2.3% 1,328.4

1,396.0 6.3% 1,383.2

1,375.9 5.1% 1,386.0

1,277.8 -0.7% 1,326.8

1,277.8 -0.7% 1,282.1

1,334.0 4.4% 1,305.9

Monthly Subscription Fee Y/Y growth

$19.15 11.5%

$21.04 9.9%

$21.01 8.1%

$21.77 9.3%

$22.66 10.8%

$23.27 14.1%

$22.68 7.8%

$22.48 7.0%

$22.86 5.0%

$23.56 4.0%

$24.20 4.0%

$24.62 8.5%

$25.11 2.0%

250 26.0% 48 73.5% 19.2% 8 56 32.5%

311 24.7% 64 32.7% 20.4% 7 71 26.3%

82 12.4% 8 40.0% 10.2% 2 10 32.5%

87 10.6% 20 13.3% 22.6% 2 21 12.6%

89 11.0% 30 52.8% 33.1% 2 32 45.8%

91 14.1% 21 0.0% 23.1% 2 23 1.8%

349 12.0% 78 23.5% 22.5% 8 86 21.4%

90 8.7% 9 1.3% 9.5% 2 11 3.5%

95 9.5% 21 9.4% 22.6% 2 23 9.8%

98 10.0% 28 -3.7% 29.0% 2 30 -3.3%

96 6.3% 23 12.0% 24.3% 2 25 10.7%

379 8.6% 82 4.3% 21.6% 8 90 4.5%

393 3.9% 87 5.9% 22.0% 8 95 5.6%

20,555 11.3% 1,983 11.5% 9.6%

22,141 7.7% 2,113 6.5% 9.5%

5,527 5.6% 480 -4.5% 8.7%

6,348 5.1% 552 -2.7% 8.7%

5,805 5.0% 522 -0.5% 9.0%

5,445 2.0% 490 -5.4% 9.0%

23,125 4.4% 2,045 -3.3% 8.8%

5,776 4.5% 502 4.7% 8.7%

6,633 4.5% 590 6.9% 8.9%

5,979 3.0% 520 -0.4% 8.7%

5,663 4.0% 481 -1.8% 8.5%

24,051 4.0% 2,094 2.4% 8.7%

24,532 2.0% 1,914 -8.6% 7.8%

1,776.8

2,026.7

416.7 7.9%

578.4 10.2%

526.5 9.6%

512.4 9.5%

2,033.9

418.6 7.8%

564.7 9.6%

540.4 9.4%

579.5 10.4%

2,103.1

1,857.3 9.7%

2005A

2006A

2008E

2009E

173 -5.4% (6) -162.3% -3.2% 6 0 -96.8% 0.3%

169 -2.0% 3 -161.1% 2.0% 6 9 1977.0% 5.5%

2008E

2009E

Revenue Y/Y growth EBITA Y/Y growth % EBITA margin Depreciation EBITDA Y/Y growth Operating Metrics New registrations Y/Y growth New subscriptions Y/Y growth Conversion rate of registered to new subs Churned Subscribers Monthly Churn rate

Entertainment (Discounts) $ in millions

Revenue Y/Y growth EBITA Y/Y growth % EBITA margin Depreciation EBITDA Y/Y growth % EBITDA margin

219 0.5% 18 NA 8.0% 5 22 -13.3% 10.2%

197 -10.2% 14 -20.6% 7.1% 6 20 -12.1% 10.0%

3/07A 21 2.0% (13) -5.1% -62.8% 1 (12) -6.5% -56.0%

6/07A 19 -3.1% (14) -18.7% -71.4% 1 (12) -19.2% -64.6%

9/07A 33 3.9% (1) -64.1% -4.2% 1 (0) -95.8% -0.3%

12/07A 110 -9.5% 37 -23.5% 33.5% 1 38 -23.2% 34.6%

2007A 183 -7.1% 9 -36.0% 4.9% 5 14 -28.1% 7.7%

3/08E 19 -8.0% (14) 9.9% -75.0% 2 (13) 10.2% -67.1%

6/08E 18 -7.0% (14) 4.2% -80.0% 2 (13) 3.0% -71.5%

9/08E 32 -4.0% (2) 59.8% -7.0% 2 (1) 637.8% -2.3%

12/08E 104 -5.0% 25 -32.0% 24.0% 2 27 -30.2% 25.4%

TOTAL MEMBERSHIP & SUBSCRIPTIONS $ in millions 2005A Intra-Sector Elimination Total Membership & Subscriptions Revenue Y/Y growth Total Membership & Subscriptions EBITA Y/Y growth % EBITA margin Depreciation Total Membership & Subscriptions EBITDA Y/Y growth % EBITDA margin

(2) 740 10.2% 176 26.0% 23.8% 20 197 17.8% 26.6%

2006A

3/07A

6/07A

9/07A

12/07A

797 7.7% 193 9.8% 24.3% 21 214 9.0% 26.9%

190 7.8% 34 29.4% 18.1% 5 39 24.8% 20.7%

191 13.1% 40 47.3% 21.0% 5 45 39.8% 23.7%

218 19.6% 62 46.9% 28.5% 6 68 40.7% 31.0%

293 8.8% 89 -8.2% 30.5% 6 95 -7.2% 32.4%

2007A

3/08E

6/08E

9/08E

-

-

-

-

12/08E -

-

-

892 11.9% 226 16.9% 25.3% 21 247 15.4% 27.7%

212 12.0% 35 1.1% 16.3% 6 40 2.4% 19.0%

211 10.4% 45 11.7% 21.3% 6 50 11.5% 23.9%

233 6.5% 65 4.7% 28.0% 6 71 4.4% 30.4%

296 1.3% 84 -6.0% 28.3% 6 89 -5.6% 30.2%

953 6.8% 229 1.2% 24.0% 22 251 1.5% 26.3%

994 4.3% 254 11.0% 25.5% 23 276 10.1% 27.8%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

107

Lehman Brothers

Internet Data Book

April 2008

Figure 129: IAC/InterActiveCorp Cash Flow Statement, 2005–09E ($ in millions, except per share data) 2005A Cash Flows from Operating Activities Earnings before preferred dividends Less: discontinued operations Earnings from continuing operations Depreciation and amortization Amortization of non-cash distribution and marketing Amortization of non-cash compensation expense Amortization of cable distribution fees Amortization of deferred financing costs Deferred income taxes Non-cash interest income Minority interest Goodwill impariment Increase in cable distribution fees Gain on loans held for sale & other Changes in working capital: Accounts receivable Loans available for sale Inventories Prepaids and other assets Accounts payable and accrued liabilities Deferred revenue Funds collected by Ticketmaster on behalf of clients, net Other, net Net cash provided by (used in) operating activities

6/07A

9/07A

7.0 (0.5) 189.1 (16.9) (254.7)

96.0 (52.5) 43.5 67.7 24.0 26.9 1.2 (6.0) (1.6) (47.1)

71.8 3.2 75.0 70.4 13.1 25.2 1.2 5.1 (6.0) (30.5)

(60.6) (166.3) 1.8 (34.1) 606.6 33.6 70.9 9.8 (72.3)

(61.1) 247.5 (25.5) (15.0) 23.2 31.0 2.6 45.1 828.384

17.6 (16.3) (31.3) (13.4) (92.7) 19.5 43.3 12.4 45.6

2.7 236.6 5.7 2.9 7.1 5.7 (11.0) 2.6 360.9

Cash Flows from Investing Activities Acquisitions and deal costs, net of cash acquired Capital expenditures Decrease (increase) in long-term investments and notes receivable Purchases of marketable securities Proceeds from sale of marketable securities Proceeds from sale of VUE and other Other, net Net cash provide by (used in) investing activities

(693.4) (241.5) (32.4) (2,158.7) 3,124.1 2,065.3 21.9 2,085.5

(117.6) (243.6) (20.7) (934.5) 1,551.0 267.6 (6.8) 495.5

(54.6) (52.8) (0.3) (166.2) 283.3 0.0 9.5

Cash Flows from Financing Activities Borrowings Increase in warehouse loans payable Principal payments on long-term obligations Purchase of treasury stock by IAC and subsidiaries Issuance of common stock, net of withholding taxes for options Redemption of preferred stock Preferred dividends Other, net Net cash provided by (used in) financing activities

80.0 162.8 (400.2) (1,848.3) (19.9) (655.7) (9.6) (14.5) (2,705.3)

(23.8) (12.3) (983.2) 111.8 15.9 (891.7)

Net change in cash Total cash provided by discontinued operations Effect of exchange-rate on cash and equivalents Net (decrease) increase in cash and cash equivalents Cash & equivalents - BOP Cash & equivalents - EOP

(692.2) 706.7 (27.1) (12.6) 999.7 987.1

Free Cash Flow Calculation Net cash provided by operating activities Capital expenditures % of Revenue

Source: Company reports, Lehman Brothers estimates

108

April 07, 2008

187.1 (22.8) 164.3 333.2 37.1 92.3 29.6

3/07A

62.1 3.8 65.9 69.4 0.5 24.2 1.2 1.7 (7.7) (48.6)

Increase in warehouse loans payable Tax payments related to the sale of VUE interests Preferred dividends paid Free Cash Flow % change

876.2 (277.8) 598.4 335.7 137.5 70.4 (1,068.8) (17.6) 2.2 (24.0) (567.8)

2006A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

(144.1) (61.5) (205.6) 303.8 54.1 105.6 4.9 (65.1) (4.6) 507.8 (185.5)

37.5 37.5 71.6 11.0 25.0 0.5 -

50.0 50.0 72.6 11.0 25.0 0.5 -

80.1 80.1 73.1 10.5 25.0 0.5 -

118.4 118.4 86.1 10.5 25.0 0.5 -

286.0 286.0 303.3 43.0 100.0 2.0 -

376.3 376.3 308.0 95.0 -

(29.4) 95.4 (60.9) (21.3) 25.3 (9.6) 24.8 15.8 193.5

(373.9) (16.0) (389.9) 96.3 16.6 29.3 1.2 (65.9) 10.8 507.8 (59.3) (59.4) 85.1 71.8 (63.5) 63.9 12.7 14.9 6.7 279.1

(68.5) 400.8 (14.8) (95.4) 3.5 28.4 72.1 37.5 879.1

(58.2) 75.0 13.4 (56.2) (16.2) (30.8) 72.6

60.2 75.0 (8.8) 24.0 1.1 14.4 325.0

(70.5) 75.0 (10.3) 33.7 1.8 20.2 239.1

27.2 75.0 (10.0) 13.6 1.6 8.2 356.0

(41.3) 300.0 (15.6) 15.1 (11.6) 11.9 992.7

(73.8) 330.0 (38.1) (16.7) (0.4) 24.5 1,004.8

(130.9) (51.6) (221.4) (359.4) 363.2 14.6 (385.4)

(0.0) (55.1) 101.6 (195.4) 574.5 2.7 428.2

(6.4) (72.4) (110.6) (62.8) 256.1 19.8 (3.3) 20.5

(191.9) (231.9) (230.6) (783.8) 1,477.1 19.8 14.1 72.8

(450.0) (55.0) (505.0)

(57.6) (57.6)

(58.8) (58.8)

(71.3) (71.3)

(450.0) (242.7) (692.7)

(246.0) (246.0)

62.4 (11.5) (322.6) 19.6 (7.9) (259.9)

(188.3) (8.6) 12.4 6.2 (178.2)

(68.6) (0.5) (220.4) 2.5 3.8 (283.2)

(64.6) (1.0) (15.8) 2.2 (79.2)

(259.0) (21.6) (542.9) 18.7 4.4 (800.6)

(50.0) (145.5) (195.5)

(50.0) (115.0) (165.0)

(50.0) (50.0)

(50.0) (50.0)

(200.0) (115.0) (145.5) (460.5)

(100.0) (100.0)

432.3 (22.7) 31.8 441.4 987.1 1,428.4

(204.8) (5.8) 3.6 (207.0) 1,428.4 1,221.5

(202.7) 2.7 4.5 (195.5) 1,221.5 1,026.0

338.5 (6.9) 21.3 352.9 1,026.0 1,378.9

220.4 (7.5) (6.2) 206.7 1,378.9 1,585.6

151.4 (17.5) 23.3 157.2 1,428.4 1,585.6

(627.9) (627.9) 1,585.6 957.7

(72.3) (241.5) 4.5%

828.4 (243.6) 4.1%

45.6 (52.8) 3.5%

360.9 (51.6) 3.4%

193.5 (55.1) 3.6%

279.1 (72.4) 3.9%

879.1 (231.9) 3.6%

72.6 (55.0) 3.7%

325.0 (57.6) 3.7%

239.1 (58.8) 3.7%

162.8 862.6 (9.6) 702.1 101.7%

(23.8) 3.1 564.1 -19.7%

62.4 17.5 72.7 -3.0%

(188.3) 121.1 -44.3%

(68.6) 29.2 99.0 64.3%

(64.6) (6.8) 135.3 -36.1%

(259.0) 39.9 428.0 -24.1%

(50.0)

(50.0)

(32.4) -144.6%

217.4 79.5%

102.4 102.4 957.7 1,060.0

130.3 130.3 1,060.0 1,190.4

234.8 234.8 1,190.4 1,425.1

(160.5) (160.5) 1,585.6 1,425.1

658.8 658.8 1,425.1 2,083.9

356.0 (71.3) 3.7%

992.7 (242.7) 3.7%

1,004.8 (246.0) 3.7%

(50.0)

(50.0)

130.3 31.7%

234.8 73.5%

(200.0) 550.0 28.5%

(100.0) 658.8 19.8%

Lehman Brothers

Internet Data Book

April 2008

Figure 130: IAC/InterActiveCorp Sum-of-the-Parts Analysis ($ in millions, except per share data) 2008E Consolidated Operations: Retailing (HSN, Cornerstone, Shoebuy) Ticketmaster Interval (Vacations) IAC Search & Media, Other (Ask, Citysearch, Evite, other) Match.com (Personals) LendingTree & Real Estate Service Magic Entertainment (Discounts) Corporate/Other Total Consolidated Operations

260 321 161 145 90 251 23 173 (114)

Metric

Multiple

EBITDA EBITDA EBITDA EBITDA EBITDA Revenue EBITDA Revenue EBITDA

5.5x 8.0x 7.0x 9.0x 7.0x 0.0x 7.5x 0.4x 7.4x 7.4x

Equity Investments Jupiter Shop Channel (home shopping in Japan)---30% stake TM Mexico---33.3% stake Front Line Management Group, Inc. ("Front Line") (United States) -- 45.99% stake TVSN Holdings (home shopping in China)---21% stake Evolution Artists, Inc. ("iLike.com") (U.S.) -- 40% stake DJ/IAC Online Ventures, LLC (United States) -- 50% stake Beijing Gehua Ticketmaster Ticketing Co., Ltd. (China) -- 40% stake Medem, Inc. (United States) -- 36.46% stake Points (Canada)---3.17% stake MerchantCircle Inc. (United States) -- 16.48% stake Total Unconsolidated Operations

2008E Value 1,431 2,570 1,124 1,306 630 172 69 (846) $6,457

483 110 90 25 10 $718

Total Asset Value of InterActiveCorp

$7,174

Less: Debt & Preferred Plus: Cash Value to Common Shareholders

831 1,752 $8,095

Total shares outstanding Value per InterActiveCorp share

291 $27.79

Current IACI Share price: Upside to SOP Value: DCF 2008 Value: Upside to DCF Value:

$21.70 28.0% $36.49 68.1%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

109

Lehman Brothers

Internet Data Book

April 2008

Figure 131: Expedia Snapshot

Strengths

Biggest Concerns

- Largest player in online travel, ultimately the Internet's most lucrative ecommerce category.

- Sustainability of domestic bookings growth: reaccelerated to 8% Y/Y growth in 2Q07, followed by 13% growth in 3Q07, and 18% in 4Q07.

-Large scale brings more leverage in negotiating with suppliers.

- International hotel business will likely become more competitive.

- Strong FCF with merchant model: $625M in 2007 -- 7.9% FCF yield; 4.2% ex-WC.

- Need to spend aggressively on marketing long-term.

- International Opportunity: 22% penetration in Europe and 12% in AsiaPacific vs 47% of travel booked online in the U.S during 2006.

- Increased competition from suppliers, travel search engines, tour operators in Europe, and other third-party distributors.

- High margin media and advertising business.

- Macro travel trends.

What to Watch For

Guidance

- Continued stabilization of supplier economics. Revenues per air ticket should be flattish in 2008 and hotel economics may be stabilizing.

- LDD EBITA growth in 2008.

- Heavy sales & marketing investments -- we project 37%+ of revenues.

- Selling and Marketing expense expected to be up Y/Y in 2008.

- Macro travel trends; is Expedia countercyclical?

- G&A expense expected to be similar percent of revenue in 2008 as 2007.

- Travel trends: airlines pricing, load factors, hotel ADRs, occupancy

- Technology and Content expenses expected to increase Y/Y in 2008.

- Can EXPE close the hotel gap in Europe with PCLN?

- Modest Gross Margin expansion in 2008.

- Media & Advertising strength, high margins---7% of revs, 15% of EBITDA Source: Company reports, Lehman Brothers estimates

110

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 132: Expedia Income Statement, 2005–09E ($ in millions, except per share data) Revenue Cost of revenue Gross profit Selling and marketing expense General & administrative expense Technology & content expense Amortization of non-cash distrib. & mktg Amortization of non-cash compensation Amortization of intangibles Impairment of intangible asset Depreciation Merger costs Operating income Interest income (expense), net Equity income (loss) in affiliates and other Other income, net Income (loss) before taxes and minority interest Income tax expense (benefit) Effective tax rate Minority interest Net Income Diluted income (loss) per share Diluted shares outstanding Adjusted Net Income Calculation Net income Amortization One-time items Minority interest Income taxes Adjusted Net Income Adjusted EPS Adjusted shares outstanding EBITA and EBITDA Reconciliation Operating income Amortization and other EBITA Depreciation EBITDA

Y/Y GROWTH Revenue Cost of revenue Gross profit Selling and marketing General & administrative expense Technology & content expense EBITDA EBITA SEQUENTIAL GROWTH Revenue EBITA Selling and marketing % OF REVENUES Cost of sales Selling and marketing expense General & administrative expense Technology & content expense Total cash operating expenses MARGINS Gross margin Operating margin EBITA margin EBITDA margin Operating leverage (∆EBITA / ∆Revenue)

2005A 2,119.5 470.7 1,648.7 697.5 211.5 112.3 12.6 91.7 126.1 397.1 41.0 11.1 (36.4) 412.8 186.0 45.0% 0.8 227.7 $0.65 349.5

2006A 2,237.6 494.2 1,743.3 770.3 252.8 121.3 9.6 80.3 110.8 47.0 351.3 14.8 18.8 384.9 139.5 36.2% (0.5) 244.9 $0.70 352.2

3/07A 550.5 120.4 430.1 219.0 68.5 38.2 15.9 21.2 67.3 (3.9) (5.5) 57.9 23.6 40.8% 0.5 34.8 $0.11 323.7

6/07A 689.9 143.0 546.9 253.1 68.7 38.0 14.0 19.5 153.6 0.7 5.94 160.2 64.1 40.0% 0.0 96.1 $0.30 320.2

9/07A 759.6 150.5 609.1 276.6 75.7 44.0 14.4 18.6 179.8 (1.1) (13.89) 164.8 65.5 39.8% 0.3 99.6 $0.32 312.8

12/07A 665.3 145.6 519.7 231.3 76.5 46.7 18.6 18.3 128.3 (9.2) (5.15) 114.0 49.9 43.8% 1.2 65.4 $0.22 300.5

2007A 2,665.3 559.5 2,105.8 980.1 289.4 166.9 62.8 77.6 529.1 (13.5) (18.6) 497.0 203.1 40.9% 2.0 295.9 $0.48 614.2

3/08E 649.6 139.7 510.0 261.1 81.2 46.8 18.0 15.0 87.8 0.7 88.6 33.7 38.0% 0.5 55.4 $0.18 303.5

6/08E 780.1 162.3 617.8 289.4 79.6 45.2 15.0 14.0 174.6 5.7 180.3 68.5 38.0% 0.2 112.0 $0.37 305.5

9/08E 847.9 166.2 681.7 311.2 85.6 50.9 14.0 13.0 207.0 7.8 214.8 81.6 38.0% 0.3 133.5 $0.43 307.5

12/08E 744.7 160.1 584.6 264.4 87.1 52.9 20.0 13.5 146.7 7.9 154.6 58.8 38.0% 0.8 96.7 $0.31 308.5

2008E 3,022.3 628.2 2,394.1 1,126.1 333.5 195.8 67.0 55.5 616.2 22.1 638.3 242.6 38.0% 1.8 397.5 $1.30 306.3

2009E 3,388.6 704.8 2,683.7 1,263.9 376.1 216.9 73.7 27.8 725.4 52.7 778.0 295.6 38.0% 1.8 484.2 $1.57 308.3

227.7 230.4 29.5 (1.8) (71.0) 414.7 $1.18 351.9

244.9 200.7 38.9 (0.9) (93.1) 390.5 $1.09 358.4

34.8 37.1 1.4 (0.2) (13.7) 59.3 $0.18 329.7

96.1 33.5 (8.4) (0.2) (7.0) 114.0 $0.35 327.3

99.6 33.0 2.3 (0.1) (11.7) 123.1 $0.39 318.9

65.4 36.9 0.6 (0.2) (8.1) 94.6 $0.31 306.3

295.9 140.4 (4.0) (0.7) (40.5) 391.1 $1.22 320.5

55.4 33.0 (12.5) 75.9 $0.25 309.3

112.0 29.0 (11.0) 130.0 $0.42 311.3

133.5 27.0 (10.3) 150.2 $0.48 313.3

96.7 33.5 (12.7) 117.4 $0.37 314.3

397.5 122.5 0.0 (46.6) 473.5 $1.52 312.0

484.2 101.5 (38.6) 547.1 $1.74 314.0

397.1 230.4 627.4 50.4 677.9

351.3 247.7 599.0 48.8 647.8

67.3 37.1 104.4 14.4 118.8

153.6 33.5 187.1 13.7 200.8

179.8 33.0 212.8 15.3 228.1

128.3 36.9 165.2 16.1 181.3

529.1 140.4 669.5 59.5 729.0

87.8 33.0 120.8 15.0 135.8

174.6 29.0 203.6 14.5 218.1

207.0 27.0 234.0 15.5 249.5

146.7 33.5 180.2 16.0 196.2

616.2 122.5 738.7 61.0 799.7

725.4 101.5 826.8 61.5 888.3

15.0% 20.6% 13.5% 6.8% 31.4% 32.1% 13.4% 13.3%

5.6% 5.0% 5.7% 10.4% 19.5% 8.0% -4.4% -4.5%

11.5% 3.7% 13.8% 11.9% 7.6% 28.0% 19.3% 17.9%

15.3% 12.7% 16.0% 29.6% 10.3% 27.3% 2.5% 1.6%

23.7% 14.6% 26.2% 30.4% 28.0% 40.0% 18.1% 18.2%

25.2% 21.3% 26.4% 38.4% 13.0% 54.8% 13.9% 13.0%

19.1% 13.2% 20.8% 27.2% 14.5% 37.6% 12.5% 11.8%

18.0% 16.0% 18.6% 19.2% 18.6% 22.5% 14.4% 15.7%

13.1% 13.5% 13.0% 14.3% 15.8% 19.1% 8.6% 8.8%

11.6% 10.4% 11.9% 12.5% 13.2% 15.6% 9.4% 10.0%

11.9% 10.0% 12.5% 14.3% 13.9% 13.3% 8.2% 9.1%

13.4% 12.3% 13.7% 14.9% 15.3% 17.3% 9.7% 10.3%

12.1% 12.2% 12.1% 12.2% 12.8% 10.8% 11.1% 11.9%

3.6% -28.6% 31.0%

25.3% 79.2% 15.6%

10.1% 13.7% 9.3%

-12.4% -22.4% -16.4%

-2.4% -26.9% 12.9%

20.1% 68.5% 10.8%

8.7% 14.9% 7.5%

-12.2% -23.0% -15.0%

22.2% 32.9% 10.0% 5.3% 70.4%

22.1% 34.4% 11.3% 5.4% 73.2%

21.9% 39.8% 12.4% 6.9% 81.0%

20.7% 36.7% 10.0% 5.5% 72.9%

19.8% 36.4% 10.0% 5.8% 72.0%

21.9% 34.8% 11.5% 7.0% 75.2%

21.0% 36.8% 10.9% 6.3% 74.9%

21.5% 40.2% 12.5% 7.2% 81.4%

20.8% 37.1% 10.2% 5.8% 73.9%

19.6% 36.7% 10.1% 6.0% 72.4%

21.5% 35.5% 11.7% 7.1% 75.8%

20.8% 37.3% 11.0% 6.5% 75.6%

20.8% 37.3% 11.1% 6.4% 75.6%

77.8% 18.7% 29.6% 32.0% 26.7%

77.9% 15.7% 26.8% 29.0% -24.1%

78.1% 12.2% 19.0% 21.6% 28.0%

79.3% 22.3% 27.1% 29.1% 3.1%

80.2% 23.7% 28.0% 30.0% 22.5%

78.1% 19.3% 24.8% 27.3% 14.1%

79.0% 19.9% 25.1% 27.4% 16.5%

78.5% 13.5% 18.6% 20.9% 16.6%

79.2% 22.4% 26.1% 28.0% 18.3%

80.4% 24.4% 27.6% 29.4% 24.0%

78.5% 19.7% 24.2% 26.3% 18.9%

79.2% 20.4% 24.4% 26.5% 19.4%

79.2% 21.4% 24.4% 26.2% 24.1%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

111

Lehman Brothers

Internet Data Book

April 2008

Figure 133: Expedia Segment Breakdown, 2005–09E ($ in millions, except per share data) 2005A 2,119 15.0%

2006A 2,238 5.6%

3/07A 551 11.5% 3.6%

6/07A 690 15.3% 25.3%

9/07A 760 23.7% 10.1%

12/07A 665 25.2% -12.4%

2007A 2,665 19.1%

3/08E 650 18.0% -2.4%

6/08E 780 13.1% 20.1%

9/08E 848 11.6% 8.7%

12/08E 745 11.9% -12.2%

2008E 3,022 13.4%

2009E 3,389 12.1%

EBITA Y/Y growth % margin

628 13.3% 29.6%

599 -4.5% 26.8%

104 17.9% 19.0%

187 1.6% 27.1%

213 18.2% 28.0%

165 13.0% 24.8%

669 11.8% 25.1%

121 15.7% 18.6%

204 8.8% 26.1%

234 10.0% 27.6%

180 9.1% 24.2%

739 10.3% 24.4%

827 11.9% 24.4%

Depreciation EBITDA Y/Y growth % margin

50.4 678 13.4% 32.0%

49 648 -4.5% 29.0%

14 119 19.3% 21.6%

14 201 2.5% 29.1%

15 228 18.1% 30.0%

16 181 13.9% 27.3%

60 729 12.5% 27.4%

15 136 14.4% 20.9%

15 218 8.6% 28.0%

16 250 9.4% 29.4%

16 196 8.2% 26.3%

61 800 9.7% 26.5%

62 888 11.1% 26.2%

12,065 15.8%

12,737 5.6%

10% 22,957 14.9%

10% 25,800 12.4%

100%

3,387 8.0% -11.3% 66% 1,218 22.5% -15.6% 24% 550 18.0% -1.5% 11% 5,154 12.1% -11.4% 100%

26% 2,610 18.0%

100%

3,818 8.5% -6.3% 66% 1,442 24.0% 8.9% 25% 558 20.0% -1.9% 10% 5,818 13.0% -2.5% 100%

23% 2,212 21.4%

8% 17,162 10.4%

4,077 9.5% 0.0% 68% 1,325 28.0% -5.6% 22% 569 22.0% 6.2% 10% 5,970 14.3% -0.7% 100%

64% 6,681 24.0%

6% 15,552 21.7%

4,075 14.5% 29.9% 68% 1,404 36.0% 41.2% 23% 536 26.0% 14.9% 9% 6,014 19.9% 30.9% 100%

67% 5,388 27.6%

17% 1,424 46.5%

3,136 17.6% -10.9% 68% 994 46.8% -14.5% 22% 466 35.5% 0.2% 10% 4,596 24.7% -10.7% 100%

16,508 7.5%

16% 972 NA

3,519 13.4% -5.5% 68% 1,163 46.8% 12.4% 23% 465 27.4% -0.2% 9% 5,147 20.8% -1.5% 100%

15,357 10.2%

74% 3,001 19.3%

3,723 8.1% 4.6% 71% 1,035 37.6% 0.3% 20% 466 26.6% 9.6% 9% 5,224 14.4% 4.1% 100%

13,937 9.4%

78% 2,515 6.8%

3,559 1.1% 33.5% 71% 1,032 32.3% 52.4% 21% 425 22.5% 23.5% 8% 5,016 7.9% 36.0% 100%

100%

100%

NA

1,666 NA

506 10.8% 24.5% 73% 145 29.5% 31.8% 21% 39 30.0% 14.7% 6% 690 15.3% 25.3% 100%

535 18.8% 5.7% 70% 183 36.6% 26.2% 24% 42 40.0% 7.7% 6% 760 23.7% 10.1% 100%

451 19.3% -15.6% 68% 169 39.7% -7.7% 25% 45 40.6% 7.1% 7% 665 25.2% -12.4% 100%

1,898 13.9%

546 8.0% 19.7% 70% 185 27.9% 24.7% 24% 48 23.9% 8.7% 6% 780 13.1% 20.1% 100%

573 7.1% 4.8% 68% 225 22.9% 21.3% 27% 50 19.6% 3.9% 6% 848 11.6% 8.7% 100%

484 7.3% -15.4% 65% 207 22.5% -8.0% 28% 53 18.5% 6.2% 7% 745 11.9% -12.2% 100%

2,196 6.6%

68% 766 26.2%

65% 955 24.7%

25% 196 22.7%

28% 238 21.0%

6% 3,022 13.4%

7% 3,389 12.1%

100%

456 12.3% 1.1% 70% 149 35.2% -12.0% 23% 44 30.7% -1.2% 7% 650 18.0% -2.4% 100%

2,060 8.5%

100%

407 6.5% 7.5% 74% 110 29.0% -9.1% 20% 34 25.9% 6.3% 6% 551 11.5% 3.6% 100%

100%

100%

NET REVENUE AS % OF CURRENT PERIOD BOOKINGS North America 13.1% NA Europe 15.1% NA Other 8.4% NA Total 13.6% 13.0%

11.4% 10.7% 8.0% 11.0%

13.6% 14.0% 8.4% 13.2%

15.2% 15.7% 9.0% 14.8%

14.4% 17.0% 9.7% 14.5%

13.6% 14.4% 8.8% 13.3%

11.2% 10.6% 8.3% 10.8%

13.4% 14.0% 8.5% 13.1%

15.0% 15.6% 9.0% 14.6%

14.3% 17.0% 9.7% 14.4%

13.4% 14.2% 8.9% 13.2%

13.3% 14.3% 9.1% 13.1%

NET REVENUE AS % OF PREVIOUS PERIOD BOOKINGS North America NA Europe NA Other NA Total NA

15.2% 16.2% 9.9% 14.9%

14.2% 14.1% 9.2% 13.8%

14.4% 17.7% 9.0% 14.5%

12.8% 14.5% 9.7% 12.9%

NA NA NA NA

3.3% 3.5% 2.4% 3.3%

13.4% 13.2% 9.0% 13.0%

14.0% 17.0% 8.8% 14.2%

12.7% 14.4% 9.6% 12.8%

NA NA NA NA

NA NA NA NA

Revenue Y/Y growth Q/Q Growth

GROSS BOOKINGS North America Y/Y Growth Q/Q Growth % of total bookings Europe Y/Y Growth Q/Q Growth % of total bookings Other Y/Y Growth Q/Q Growth % of total bookings Total Gross Bookings Y/Y Growth Q/Q Growth % of total bookings NET REVENUE North America Y/Y Growth Q/Q Growth % of total revenue Europe Y/Y Growth Q/Q Growth % of total revenue Other Y/Y Growth Q/Q Growth % of total revenue Total Net Revenue Y/Y Growth Q/Q Growth % of total revenue

NA

20% 119

2,119 15.0%

5% 2,238 5.6%

12,303 24.6%

13,667 11.1%

79% 1,889 6.4%

80% 2,259 19.6%

12% 1,360 21.4%

13% 1,236 -9.1%

9% 15,552

7% 17,162

GROSS BOOKINGS BY AGENCY/MERCHANT Agency 9,104 Y/Y Growth 23.9% Q/Q Growth % of total gross bookings 59% Merchant 6,448 Y/Y Growth 18.8% Q/Q Growth % of total gross bookings 41% Total Gross Bookings 15,552 EBITA North America Y/Y Growth Q/Q Growth % of total EBITA % Net Revenue Europe Y/Y Growth Q/Q Growth % of total EBITA % Net Revenue Other Y/Y Growth Q/Q Growth % of total EBITA % Net Revenue Total EBITA Y/Y Growth Q/Q Growth % of total EBITA % Net Revenue

-

April 07, 2008

10,151 11.5% 59% 7,011 8.7% 41% 17,162

735 123% 44% 158 26% 35% (295) -

-

-49% -

Source: Company reports, Lehman Brothers estimates

112

NA NA NA NA

2006A

2005A GROSS BOOKINGS BY BRAND Expedia Y/Y Growth Q/Q Growth % of total gross bookings Hotels.com Y/Y Growth Q/Q Growth % of total gross bookings Other Y/Y Growth Q/Q Growth % of total gross bookings Total Gross Bookings

74% 452 NA

NA

598 100% 27%

3/07A

6/07A

9/07A

12/07A

70% 4,224 40.8% 21% 1,822 27.9% 9% 19,983 16.4% 100%

71% 607 34.2% 23% 160 34.5% 6% 2,665 19.1%

2007A

4,039 9.2% 35.3% 81% 612 5.2% 34.2% 12% 365 -0.5% 48.4% 7% 5,016

4,129 14.3% 2.2% 79% 696 12.1% 13.7% 13% 399 20.9% 9.3% 8% 5,224

3,976 18.1% -3.7% 77% 730 21.7% 4.9% 14% 441 50.5% 10.5% 9% 5,147

3,621 21.3% -8.9% 79% 579 27.0% -20.7% 13% 396 61.0% -10.2% 9% 4,596

15,765 15.4%

2,910 7.9% 29.1% 58% 2,106 7.8% 46.9% 42% 5,016

3,025 10.9% 4.0% 58% 2,199 19.7% 4.4% 42% 5,224

2,866 15.9% -5.3% 56% 2,281 27.6% 3.7% 44% 5,147

2,703 19.9% -5.7% 59% 1,893 32.1% -17.0% 41% 4,596

11,504 13.3%

164 11.6% -4.7% 156% 40% 26 73.3% -52.7% 25% 24% (85) -81% 105 19.3% -28.1% 100% 19%

227 7.1% 38.4% 121% 45% 43 7.5% 65.4% 23% 30% (83) -44% 187 1.6% 78.1% 100% 27%

239 17.2% 5.3% 112% 45% 68 41.7% 58.1% 32% 37% (94) -44% 213 18.3% 13.9% 100% 28%

192 11.6% -19.7% 116% 43% 71 29.1% 4.4% 43% 42% (97) -58% 166 13.7% -22.1% 100% 25%

822 11.8%

79% 2,617 15.8% 13% 1,601 29.5% 8% 19,983

58% 8,479 20.9% 42% 19,983

123% 43% 208 31.6% 31% 34% (359) -54% 671 12.2% 100% 25%

12/08E

12/08E

12/08E

12/08E

4,751 17.6% 31.2% 79% 782 27.7% 35.0% 13% 481 31.8% 21.5% 8% 6,014

4,657 12.8% -2.0% 78% 836 20.1% 6.9% 14% 478 19.7% -0.7% 8% 5,970

4,527 13.8% -2.8% 78% 826 13.2% -1.1% 14% 465 5.5% -2.5% 8% 5,818

4,072 12.5% -10.0% 79% 670 15.7% -18.9% 13% 412 4.1% -11.4% 8% 5,154

3,410 17.2% 26.2% 57% 2,604 23.7% 37.6% 43% 6,014

3,433 13.5% 0.7% 58% 2,537 15.4% -2.6% 43% 5,970

3,258 13.7% -5.1% 56% 2,560 12.2% 0.9% 44% 5,818

2,990 10.6% -8.2% 58% 2,165 14.4% -15.4% 42% 5,154

2008E

2009E

18,006 14.2%

20,124 11.8%

78% 3,114 19.0%

78% 3,612 16.0%

14% 1,837 14.7%

14% 2,064 12.4%

8% 22,957

8% 25,800

13,091 13.8%

14,448 10.4%

57% 9,866 16.4%

56% 11,352 15.1%

43% 22,957

44% 25,800

Lehman Brothers

Internet Data Book

April 2008

Figure 134: Expedia Cash Flow Statement, 2005–09E ($ in millions, except per share data) 2005A Cash Flows from Operating Activities Net income Depreciation and amortization Amortization of non-cash distribution and marketing Amortization of non-cash compensation expense Amortization of deferred financing costs Deferred income taxes Unrealized loss on derivative instruments Equity in (income) losses of unconsolidated affiliates Minority interest Other Changes in working capital: Accounts and notes receivable Prepaids and other assets Accounts payable and accrued liabilities Deferred revenue Deferred merchant bookings Other, net Total change in working capital Net cash provided by (used in) operating activities Change in working capital as % of operating cash flow

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

228.7 176.5 12.6 91.7 16.1 6.0 (1.7) (0.8) 33.9

244.9 159.5 9.6 80.3 (10.7) (8.1) (2.5) 0.5 10.9

34.8 35.6 15.9 4.4 1.4 1.3 (0.5) 2.2

96.1 33.2 14.0 (3.7) 3.2 2.3 (0.0) (4.0)

99.6 33.9 14.4 (4.0) 1.4 0.3 (0.3) (13.5)

65.4 34.4 18.6 1.7 (0.2) (1.2) (1.2) (64.7)

295.9 137.1 62.8 (1.6) 5.7 2.6 (2.0) (80.0)

55.4 30.0 18.0 -

112.0 28.5 15.0 -

133.5 28.5 14.0 -

96.7 29.5 20.0 -

397.5 116.5 67.0 -

484.2 89.3 73.7 -

(21.8) (22.5) 293.6 1.7 45.1 296.1 859.2 35%

(32.1) (20.7) 123.1 3.2 59.5 132.9 617.4 22%

(71.6) (58.1) 91.0 1.3 480.4 442.9 538.1 82%

(21.9) (12.7) 205.8 1.1 71.3 243.6 384.6 63%

(0.9) 32.18 78.5 0.97 (199.7) (89.0) 42.7 NA

50.1 6.30 (222.5) (1.80) (138.0) (306.0) (253.3) NA

(44.4) (32.4) 152.8 1.6 213.9 291.5 712.1 41%

(134.8) 44.2 462.8 372.2 475.6 78%

12.7 102.0 (18.8) 96.0 251.4 38%

(17.0) 61.4 (120.4) (76.0) 100.0 -76%

53.3 (91.8) (113.6) (152.1) (5.9) 2557%

(85.7) 115.8 210.0 240.1 821.1 29%

(19.0) 201.0 78.8 260.8 907.9 29%

10.5 (52.3) (0.1)

(39.9) (18.3) -

(19.8) (20.6) -

(18.6) -

(29.0) -

(59.6) (86.7) -

(30.0) -

(35.0) -

(35.0) -

(45.0) -

(145.0) -

(156.6) -

1.0 (0.4) (757.2) (2.9) (801.3)

(32.5) (92.6) 13.2 (1.5) (113.5)

(28.5) (86.7)

(1.1) (41.5)

(0.1) (18.7)

(3.5) (32.6)

(33.2) (179.5)

(30.0)

(35.0)

(35.0)

(45.0)

(145.0)

(156.6)

Cash Flows from Financing Activities Short-term borrowings Proceeds from issuance of long-term debt Changes in restricted cash and cash equivalents Principal payments on long-term obligations Purchase of treasury stock Proceeds from sale of subsidiary stock, including stock options Excess tax benefit on equity awards Treasury stock activity Withholding taxes for stock option excercises Contribution from (distribution to) IAC, net Other, net Net cash provided by (used in) financing activities

230.7 (9.5) 29.1 (86.6) (52.8) (4.4) 106.5

(231.0) 495.3 4.6 35.3 1.3 (295.7) 9.8

(9.5) 8.3 0.8 (666.5) 0.4 (666.5)

(2.1) 26.6 0.8 (1.5) 23.7

1.0 10.5 1.1 (728.0) 498.8 (216.7)

585.0 4.1 9.6 93.0 (1.2) (121.2) (500.0) 69.4

585.0 (6.5) 55.0 95.7 (1,397.2) (121.2) (0.8) (790.0)

-

-

Effect of exchange-rate on cash and equivalents Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP

(8.6) 155.7 141.7 297.4

42.1 555.9 297.4 853.3

(0.4) (215.6) 853.3 637.7

17.8 (174.9) 1,011.4 836.5

(2.7) (219.1) 836.5 617.4

21.5 (235.9) 853.3 617.4

Free Cash Flow Calculation Net cash provided by operating activities Capital expenditures Free Cash Flow % change as % of EBITDA

859 (52) 806.9 7.7% 119%

617.4 (93) 524.8 -35.0% 81%

538 (18) 519.7 20.1% 438%

43 (19) 24.1 NA 11%

(253) (29) (282.3) NA -156%

712 (87) 625.4 19.2% 86%

Cash Flows from Investing Activities Acquisitions and deal costs, net of cash acquired Capital expenditures Purchases of marketable securities Proceeds from sale of business to a related party Proceeds from sale of marketable securities (Increase) decrease in long-term investments and notes receivable Transfers (to) from IAC Other, net Net cash provide by (used in) investing activities

6.9 373.7 637.7 1,011.4

385 (21) 363.9 51.4% 181%

-

445.62 617.4 1,063.0

476 (30) 445.6 -14.3% 328%

216.44 1,063.0 1,279.4

251 (35) 216.4 -40.5% 99%

65.03 1,279.4 1,344.5

100 (35) 65.0 169.9% 26%

(50.95) 1,344.5 1,293.5

(6) (45) (50.9) NA -26%

676.1 617.4 1,293.5

821 (145) 676.1 8.1% 85%

-

751.3 1,293.5 2,044.8

908 (157) 751.3 11.1% 85%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

113

Lehman Brothers

Internet Data Book

April 2008

Figure 135: Orbitz Snapshot

Strengths

Biggest Concerns

- Growth in the online travel space is attractive. According to PhoCusWright, 47% of U.S. travel was booked online in 2006, versus just 17% in Europe and Asia-Pacific. This compares to 59% of U.S. travel that is expected to be booked online in 2008, versus approximately 29% in Europe and Asia-Pacific and represents a projected 2006A-2008E CAGR of 24% in online travel bookings in these areas combined.

- Marketing and expenses associated with the Austin platform rollout to support the shift to non-air and international segments are likely to weigh on near-term profitability.

- International presence, while still a relatively small portion of Orbitz's business, provides a foundation for continued expansion.

- With the commoditization of online travel offerings, there is always the possibility of downward pressure on fees that Orbitz may receive which could impact profits.

- Margin expansion potential as business continues to shift to a larger percentage of higher-margin non-air. We project 17% adjusted EBITDA margin in 2008, growing to 19% in 2010.

- Online travel industry dynamics can change rapidly, as the space is directly affected by fluctuations in the overall travel industry and the macro economy.

- Healthy market position. In 2007, Orbitz had gross bookings of $10.8 billion, compared with $19.9 billion at Expedia, $10.9 billion at Travelocity, and $4.8 billion at Priceline.com. We wait to see if Orbitz is successful in gaining additional share of the online travel market as its marketing efforts and Austin rollout continue.

- Orbitz faces competition from a variety of sources, including other OTAs, Internet promotions, metasearch companies, suppliers, and offline travel companies.

- Advanced product offerings such as OrbitzTLC which provides mid-air alerts, mobile access, hotel alerts, pre-trip e-mails and Traveler Update, a user-generated service that allows travelers to share real-time traveler information via the Internet or mobile devices.

- Complicated financials, lack of near-term guidance.

What to Watch For

Guidance

- Continue to shift toward higher-margin non-air categories, namely hotels and dynamic packaging. In 2007, 26% of gross bookings and 56% of revenues were from the non-air segment.

- Cost of Revenues: 17-18% range for balance of 2007

- Continue to expand internationally. During 2007, 14% of gross bookings and 21% of revenues were from the international segment.

- 9-12% increase in WW gross bookings and revenue going forward

- Austin, Orbitz's global technology platform, is expected to create more operational efficiencies and improve coversion rates across all divisions and geographies. Austin was rolled out to ebookers in the UK during July, and is expected to roll out to the rest of Europe over the next 18 months.

- Steady, modest increase in non-air mix

- Travelport relationship: Currently travelport owns ~60% of Orbitz, and is also the company's GDS provider and utilitzes certain technologies of Orbitz.

- EBITDA margins mid-20s range over next 4-5 yrs

- We look to see if Orbitz can successfully rollout a White Label business and take share from Expedia, which has traditionally been the category leader. Source: Company reports, Lehman Brothers estimates

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Figure 136: Orbitz Income Statement, 2005–09E ($ in millions, except per share data) Gross Bookings Revenue Costs of revenue Gross profit Selling, General, & Administrative Depreciation & amortization Impairment of goodwill and intangibles Other Total operating expenses Operating income Interest income (expense), net Equity income (loss) in affiliates and other Other income, net Income (loss) before taxes and minority interest Income tax expense (benefit) Effective tax rate Minority interest GAAP Net Income (loss) Basic income (loss) per share Diluted income (loss) per share Basic shares outstanding Diluted shares outstanding Pro Forma Adj. Net Income Calculation Net income (loss) Amortization of intangibles Interest on debt Non-cash interest Stock based compensation Other adjustments Minority interest Tax Effect (book tax rate) PF Adjusted Net Income (loss) PF Adjusted Diluted EPS Adjusted diluted shares outstanding EBITDA Reconciliation: Net Income (loss) -- reported Interest expense Provision for income taxes Depreciation and amortization EBITDA

2005A 7,435.0 686.0 101.0 585.0 517.0 78.0 400.0 995.0 (410.0) (22.0) 2.0 (430.0) (42.0) 9.8% (388.0)

(388.0) 22.0 (42.0) 78.0 (330.0)

Adjusted EBITDA Reconciliation: EBITDA Goodwill and intangible impairment expense Purchase acctg adjustments Corp. alllocations and other corp costs Global platform expense (Austin) Stock based compensation Restructuring and moving expenses Travelport corp solutions adjustments Public company costs Adjusted EBITDA

2005A Y/Y GROWTH Gross Bookings Revenue Cost of goods sold Gross profit Selling, General, & Administrative Total operating expenses Adjusted EBITDA SEQUENTIAL GROWTH Revenue Adjusted EBITDA % OF REVENUES Cost of revenues Selling, General, & Administrative Depreciation & amortization Total operating expenses MARGINS Gross margin Operating margin Adj. EBITDA Margin Operating leverage (∆EBITDA / ∆Revenue)

274.2% 181.1% 134.9% 191.0% 138.2% 284.2% NA

2006A 10,025.0

3/07A 2,941.0

6/07A 2,993.0

9/07A 2,637.0

12/07A 2,356.0

2007A 10,927.0

3/08E 2,908.1

6/08E 3,083.8

9/08E 2,805.1

12/08E 2,603.8

2008E 11,400.8

2009E 12,381.0

752.0 113.0 639.0 579.0 55.0 122.0 756.0 (117.0) (27.0) 0.0 (144.0) 2.0 -1.4% (146.0) ($1.76) ($1.71) 82.9 85.6

212.0 38.0 174.0 152.0 13.0 165.0 9.0 (19.0) (10.0) 0.0% (10.0) ($0.12) ($0.12) 82.9 85.6

229.0 42.0 187.0 176.0 12.0 188.0 (1.0) (28.0) (29.0) 3.0 -10.3% (32.0) ($0.39) ($0.37) 82.9 85.6

221.0 36.0 185.0 149.0 17.0 166.0 19.0 (19.0) 0.0 32.0 NM (32.0) ($0.39) ($0.38) 83.0 83.1

197.0 41.0 156.0 126.0 15.0 141.0 15.0 (17.0) (2.0) 8.0 NM (1.0) (11.0) ($0.13) ($0.13) 83.1 83.2

859.0 157.0 702.0 603.0 57.0 660.0 42.0 (83.0) (41.0) 43.0 NM (1.00) (85.0) ($1.02) ($1.02) 83.0 83.0

213.0 40.5 172.5 144.9 18.0 162.9 9.7 (12.6) (2.9) (1.1) 37.5% (1.8) ($0.02) ($0.02) 83.7 83.8

231.7 41.7 190.0 154.5 18.0 172.5 17.4 (11.6) 5.8 2.2 37.5% 3.7 $0.04 $0.04 84.3 84.4

230.0 36.8 193.2 149.0 19.0 168.0 25.2 (11.3) 13.8 5.2 37.5% 8.6 $0.10 $0.10 84.9 85.0

212.6 36.1 176.4 138.2 20.0 158.2 18.3 (11.5) 6.8 2.5 37.5% 4.2 $0.05 $0.05 85.5 85.6

887.3 155.1 732.2 586.6 75.0 661.6 70.6 (47.0) 23.6 8.8 37.5% 14.7 $0.17 $0.17 84.6 84.7

953.5 166.9 786.6 619.8 90.0 709.8 76.9 (42.4) 34.5 12.9 37.5% 21.6 $0.25 $0.25 86.3 86.4

(146.0) 12.0 (40.0) 19.0 6.0 173.0 (17.0) 7.0 $0.07 85.6

(10.0) 5.0 3.0 3.0 1.0 8.0 2.0 12.0 $0.16 85.6

(32.0) 5.0 14.0 3.0 2.0 22.0 14.0 $0.15 85.6

(32.0) 5.0 3.0 5.0 0.5 6.0 32.0 19.5 $0.23 83.1

(11.0) 5.0 3.0 4.0 4.0 5.0 10.0 $0.12 83.2

(85.0) 20.0 20.0 14.0 7.5 40.0 39.0 55.5 $0.66 84.4

(1.8) 4.9 4.0 3.5 (2.1) (2.4) 6.1 $0.07 83.8

3.7 4.9 4.0 3.5 (2.1) (2.4) 11.6 $0.14 84.4

8.6 5.1 4.0 3.5 (2.1) (2.5) 16.7 $0.20 85.0

4.2 5.4 4.0 3.5 (2.1) (2.6) 12.5 $0.15 85.6

14.7 20.3 16.0 14.0 (8.3) (9.7) 47.0 $0.55 84.7

21.6 21.6 18.5 18.0 (14.0) (9.6) 56.1 $0.65 86.4

(146.0) 27.0 2.0 55.0 (62.0)

(10.0) 19.0 13.0 22.0

(32.0) 28.0 3.0 12.0 11.0

(32.0) 19.0 32.0 17.0 36.0

(11.0) 17.0 8.0 15.0 29.0

(85.0) 83.0 43.0 57.0 98.0

(1.8) 12.6 (1.1) 18.0 27.7

3.7 11.6 2.2 18.0 35.4

8.6 11.3 5.2 19.0 44.2

4.2 11.5 2.5 20.0 38.3

14.7 47.0 8.8 75.0 145.6

21.6 42.4 12.9 90.0 166.9

(62.0) 122.0 39.0 13.0 5.0 6.0 7.0 (3.0) (14.0) 113.0

22.0 6.0 3.0 2.0 1.0 (4.0) 30.0

11.0 22.0 2.0 2.0 (3.0) 34.0

36.0 3.0 3.0 1.0 1.0 (1.0) 43.0

29.0 0.0 1.0 4.0 1.0 2.0 37.0

98.0 6.0 28.0 8.0 8.0 2.0 2.0 (8.0) 144.0

27.7 -

35.4 -

44.2 -

38.3 -

166.9 -

3.5

3.5

3.5

3.5

0.4 (2.5) 29.1

0.4 (2.5) 36.9

0.4 (2.5) 45.6

0.4 (2.5) 39.7

145.6 14.0 1.7 (10.0) 151.3

2006A 34.8% 9.6% 11.9% 9.2% 12.0% -24.0% NA

3/07A

6/07A

9/07A

12/07A

20.9% 16.5% 31.0% 13.7% 4.8% 2.5% 200.0%

9.4% 10.6% 44.8% 5.1% 15.8% -34.5% -5.6%

8.5% 20.1% 20.0% 20.1% 5.7% 7.1% 22.9%

-2.9% 10.1% 64.0% 1.3% -10.6% -7.8% 15.6%

18.4% -6.3%

8.0% 13.3%

-3.5% 26.5%

-10.9% -14.0%

2007A 9.0% 14.2% 38.9% 9.9% 4.1% -12.7% 27.4%

3/08E

6/08E

9/08E

12/08E

-1.1% 0.5% 6.5% -0.8% -4.7% -1.3% -3.0%

3.0% 1.2% -0.7% 1.6% -12.2% -8.2% 8.4%

6.4% 4.1% 2.2% 4.4% 0.0% 1.2% 6.0%

10.5% 7.9% -11.9% 13.1% 9.7% 12.2% 7.3%

8.1% -21.3%

8.8% 26.6%

-0.7% 23.6%

-7.6% -12.9%

2008E

18.0

(14.0) 170.9

2009E

4.3% 3.3% -1.2% 4.3% -2.7% 0.2% 5.0%

8.6% 7.5% 7.6% 7.4% 5.7% 7.3% 13.0%

14.7% 75.4% 11.4% 145.0%

15.0% 77.0% 7.3% 100.5%

17.9% 71.7% 6.1% 95.8%

18.3% 76.9% 5.2% 100.4%

16.3% 67.4% 7.7% 91.4%

20.8% 64.0% 7.6% 92.4%

18.3% 70.2% 6.6% 95.1%

19.0% 68.0% 8.4% 95.4%

18.0% 66.7% 7.8% 92.5%

16.0% 64.8% 8.3% 89.1%

17.0% 65.0% 9.4% 91.4%

17.5% 66.1% 8.5% 92.0%

17.5% 65.0% 9.4% 91.9%

85.3% -59.8% NA NA

85.0% -15.6% 15.0% NA

82.1% 4.2% 14.2% 66.7%

81.7% -0.4% 14.8% -9.1%

83.7% 8.6% 19.5% 21.6%

79.2% 7.6% 18.8% 27.8%

81.7% 4.9% 16.8% 29.0%

81.0% 4.6% 13.7% -86.7%

82.0% 7.5% 15.9% 107.5%

84.0% 10.9% 19.8% 28.7%

83.0% 8.6% 18.7% 17.3%

82.5% 8.0% 17.0% 25.7%

82.5% 8.1% 17.9% 29.6%

Source: Company reports, Lehman Brothers estimates

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Figure 137: Orbitz Segment Breakdown, 2005–09E ($ in millions, except per share data) 2005A 686.0 181.1%

2006A 752.0 9.6%

3/07A 212.0 16.5% 18.4%

6/07A 229.0 10.6% 8.0%

9/07A 221.0 20.1% -3.5%

12/07A 197.0 10.1% -10.9%

2007A 859.0 14.2%

3/08E 213.0 0.5% 8.1%

6/08E 231.7 1.2% 8.8%

9/08E 230.0 4.1% -0.7%

12/08E 212.6 7.9% -7.6%

2008E 887.3 3.3%

2009E 953.5 7.5%

7,435.0 274.2%

10,025.0 34.8%

2,941.0 20.9% 21.2%

2,993.0 9.4% 1.8%

2,637.0 8.5% -11.9%

2,356.0 -2.9% -10.7%

10,927.0 9.0%

2,908.1 -1.1% 23.4%

3,083.8 3.0% 6.0%

2,805.1 6.4% -9.0%

2,603.8 10.5% -7.2%

11,400.8 4.3%

12,381.0 8.6%

Air Bookings Y/Y Growth % of Total Bookings

5,392.0 303.0% 72.5%

7,443.0 38.0% 74.2%

2,151.0 19.5% 73.1%

2,245.0 9.5% 75.0%

1,923.8 8.8% 73.0%

1,760.0 -4.1% 74.7%

8,079.8 8.6% 73.9%

2,086.5 -3.0% 71.7%

2,289.9 2.0% 74.3%

2,027.7 5.4% 72.3%

1,918.4 9.0% 73.7%

8,322.5 3.0% 73.0%

8,871.7 6.6% 71.7%

Non-Air + Other Bookings Y/Y Growth % of Total Bookings

2,043.0 214.8% 27.5%

2,582.0 26.4% 25.8%

790.0 25.0% 26.9%

749.0 9.2% 25.0%

713.2 7.5% 27.0%

596.0 0.7% 25.3%

2,848.2 10.3% 26.1%

821.6 4.0% 28.3%

793.9 6.0% 25.7%

777.4 9.0% 27.7%

685.4 15.0% 26.3%

3,078.3 8.1% 27.0%

3,509.3 14.0% 28.3%

Total Gross Bookings Y/Y Growth Q/Q Growth

7,435.0 274.2%

10,025.0 34.8%

2,941.0 20.9% 21.2%

2,993.0 9.4% 1.8%

2,637.0 8.5% -11.9%

2,356.0 -2.9% -10.7%

10,927.0 9.0%

2,908.1 -1.1% 23.4%

3,083.8 3.0% 6.0%

2,805.1 6.4% -9.0%

2,603.8 10.5% -7.2%

11,400.8 4.3%

12,381.0 8.6%

BOOKINGS BY REGION Domestic Bookings Y/Y Growth % of Total Bookings

6,334.0 255.4% 85.2%

8,748.0 38.1% 87.3%

2,530.0 18.8% 86.0%

2,597.0 7.5% 86.8%

2,262.0 8.2% 85.8%

2,004.0 -5.2% 85.1%

9,393.0 7.4% 86.0%

2,469.0 -2.4% 84.9%

2,639.8 1.6% 85.6%

2,392.7 5.8% 85.3%

2,213.2 10.4% 85.0%

9,714.7 3.4% 85.2%

10,499.1 8.1% 84.8%

International Bookings Y/Y Growth % of Total Bookings

1,101.0 437.1% 14.8%

1,277.0 16.0% 12.7%

411.0 35.6% 14.0%

396.0 23.8% 13.2%

375.0 10.3% 14.2%

352.0 12.1% 14.9%

1,534.0 20% 14.0%

439.1 6.8% 15.1%

444.1 12.1% 14.4%

412.3 10.0% 14.7%

390.6 11.0% 15.0%

1,686.1 9.9% 14.8%

1,881.9 11.6% 15.2%

Total Gross Bookings Y/Y Growth

7,435.0 274%

10,025.0 35%

2,941.0 20.9%

2,993.0 9.4%

2,637.0 8.5%

2,356.0 -2.9%

10,927.0 9.0%

2,908.1 -1.1%

3,083.8 3.0%

2,805.1 6.4%

2,603.8 10.5%

11,400.8 4.3%

12,381.0 8.6%

Air Revenue Y/Y Growth Revenue Take Rate % % of Total Revenue

323.0 275.6% 6.0% 47%

355.0 9.9% 4.8% 47%

99.0 11.2% 4.6% 46.7%

103.0 7.3% 4.6% 45.0%

92.0 8.2% 4.8% 41.6%

81.0 -4.7% 4.6% 41.1%

375.0 5.6% 4.6% 44%

93.9 -5.2% 4.5% 44.1%

103.0 0.0% 4.5% 44.5%

91.2 -0.8% 4.5% 39.7%

84.4 4.2% 4.4% 39.7%

372.6 -0.6% 4.5% 42.0%

381.5 2.4% 4.3% 40.0%

Non-Air + Other Revenue Y/Y Growth Revenue Take Rate % % of Total Revenue

363.0 129.7% 17.8% 53%

397.0 9.4% 15.4% 53%

113.0 21.5% 14.3% 53.3%

126.0 13.5% 16.8% 55.0%

129.0 30.3% 18.1% 58.4%

116.0 23.4% 19.5% 58.9%

484.0 21.9% 17.0% 56%

119.1 5.4% 14.5% 55.9%

128.6 2.1% 16.2% 55.5%

138.8 7.6% 17.9% 60.3%

128.2 10.5% 18.7% 60.3%

514.7 6.3% 16.7% 58.0%

572.0 11.1% 16.3% 60.0%

Total Revenue Y/Y Growth Revenue Take Rate %

686.0 181.1% 9.2%

752.0 9.6% 7.5%

212.0 16.5% 7.2%

229.0 10.6% 7.7%

221.0 20.1% 8.4%

197.0 10.1% 8.4%

859.0 14.2% 7.9%

213.0 0.5% 7.3%

231.7 1.2% 7.5%

230.0 4.1% 8.2%

212.6 7.9% 8.2%

887.3 3.3% 7.8%

953.5 7.5% 7.7%

REVENUE BY REGION Domestic Revenue Y/Y Growth Revenue Take Rate % % of Total Revenue

542.0 150.9% 8.6% 79.0%

611.0 12.7% 7.0% 81.3%

166.0 12.9% 6.6% 78.3%

185.0 10.8% 7.1% 80.8%

175.0 15.9% 7.7% 79.2%

153.0 4.8% 7.6% 77.7%

679.0 11.1% 7.2% 79.0%

163.4 -1.6% 6.6% 76.7%

182.6 -1.3% 6.9% 78.8%

180.6 3.2% 7.5% 78.5%

165.8 8.4% 7.5% 78.0%

692.3 2.0% 7.1% 78.0%

729.4 5.4% 6.9% 76.5%

International Revenue Y/Y Growth Revenue Take Rate % % of Total Revenue

144.0 414.3% 13.1% 21%

141.0 -2.1% 11.0% 19%

46.0 31.4% 11.2% 21.7%

44.0 10.0% 11.1% 19.2%

46.0 39.4% 12.3% 20.8%

44.0 33.3% 12.5% 22.3%

180.0 27.7% 11.7% 21.0%

49.6 7.9% 11.3% 23.3%

49.1 11.6% 11.1% 21.2%

49.5 7.5% 12.0% 21.5%

46.8 6.3% 12.0% 22.0%

195.0 8.3% 11.6% 22.0%

224.1 14.9% 11.9% 23.5%

Total Revenue Y/Y Growth Revenue Take Rate %

686.0 181.1% 9.2%

752.0 9.6% 7.5%

212.0 16.5% 7.2%

229.0 10.6% 7.7%

221.0 20.1% 8.4%

197.0 10.1% 8.4%

859.0 14.2% 7.9%

213.0 0.5% 7.3%

231.7 1.2% 7.5%

230.0 4.1% 8.2%

212.6 7.9% 8.2%

887.3 3.3% 7.8%

953.5 7.5% 7.7%

Total Revenue Y/Y Growth Q/Q Growth Total Gross Bookings Y/Y Growth Q/Q Growth

GROSS BOOKINGS

REVENUE

Source: Company reports, Lehman Brothers estimates

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Figure 138: Orbitz Base Financials, 2005–09E ($ in millions, except per share data) -adjusts for Travelbag, purchase accounting, and Travelport corporate solutions to arrive at base financials; excludes FX impacts 2005A

3/06A

6/06A

9/06A

12/06A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

GROSS BOOKINGS Reported Gross Bookings Y/Y Growth

7,435 NA

2,432 NA

2,735 NA

2,431 NA

2,427 NA

10,025 34.8%

2,941 20.9%

2,993 9.4%

2,637 8.5%

2,356 -2.9%

Adjustments: Travelbag Total Travelbag Air Travelbag Non-Air

NA NA NA

60 50 10

55 46 9

63 52 11

67 55 12

245 203 42

66 55 11

58 49 9

12 10 2

Adjusted Gross Bookings (BASE) Y/Y Growth

NA NA

2,372 NA

2,680 NA

2,368 NA

2,360 NA

9,780 NA

2,875 21.2%

2,935 9.5%

2,625 10.9%

2,356 -0.2%

686 NA

182 NA

207 NA

184 NA

179 NA

752 9.6%

212 16.5%

229 10.6%

221 20.1%

197 10.1%

-

-

21

18 1 7 4 3

39 4 28 16 12

-

-

8 5 3

-

-

10,927 9.0%

2,908 -1.1%

3,084 3.0%

2,805 6.4%

2,604 10.5%

11,401 4.3%

12,381 8.6%

-

-

-

-

-

-

10,791 10.3%

2,908 1.2%

3,084 5.1%

2,805 6.9%

2,604 10.5%

11,401 5.7%

12,381 8.6%

859 14.2%

213 0.5%

232 1.2%

230 4.1%

213 7.9%

887 3.3%

953 7.5%

136 114 22

REVENUE Total Revenue Reported Y/Y Growth Adjustments: Purchase Accounting Add-Back (+) Travelport corporate solutions Travelbag Total Travelbag Air Travelbag Non-Air

NA NA NA NA NA

Adjusted Revenue (BASE) Y/Y Growth Revenue Margin/Take Rate

1 7 3 4

2 6 4 2

-

NA NA NA

174 NA 7.3%

199 NA 7.4%

197 NA 8.3%

189 NA 8.0%

Reported Adjusted EBITDA Y/Y Growth

90 NA

10 NA

36 NA

35 NA

Adjustments: Travelbag Tecnovate

NA NA

(2) 1

1

Adj. EBITDA Ex-T'bag & Tecnovate (BASE) Y/Y Growth Adjusted EBITDA Margin Base

NA NA NA

11 NA 6.3%

35 NA 17.6%

6 -

6 15 8 7

-

-

-

-

-

-

7 4 3

6 3 3

2 1 1

759 NA 7.8%

211 21.3% 7.3%

223 12.1% 7.6%

219 11.2% 8.3%

197 4.2% 8.4%

850 12.0% 7.9%

213 1.0% 7.3%

232 3.9% 7.5%

230 5.0% 8.2%

213 7.9% 8.2%

887 4.4% 7.8%

953 7.5% 7.7%

32 NA

113 25.6%

30 200.0%

34 -5.6%

43 22.9%

37 15.6%

144 27.4%

29 -3.0%

37 8.4%

46 6.0%

40 7.3%

151 5.0%

171 13.0%

3 1

1 1

2 4

(1) 1

(1) 1

-

-

31 NA 15.7%

30 NA 15.9%

107 NA 14.1%

30 172.7% 14.2%

34 -2.9% 15.2%

43 38.7% 19.6%

37 23.3% 18.8%

ADJUSTED EBITDA

-

(2) 2 144 34.6% 16.9%

-

-

-

-

-

-

29 -3.0% 13.7%

37 8.4% 15.9%

46 6.0% 19.8%

40 7.3% 18.7%

151 5.0% 17.0%

171 13.0% 17.9%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

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Figure 139: Netflix Snapshot Strengths

Biggest Concerns

- Leadership position in online DVD rental market with ~71% share---7.5M subs vs. Blockbuster at ~3.0M

- Industry (NFLX + BBI) had net loss of subscribers in 3Q (NFLX +286k, BBI -500k), and 4Q showed signif Y/Y deceleration. Is by-mail DVD rental business maturing? Slowing?

- High quality service and proprietary technology lead to scale, cost leadership advantages, and barriers to entry

- Netflix digital limited by content & portability---Partnership with LG device is a start, but will partnerships be with the right platforms/devices. Consumer adoption? High content/encoding costs

- Digital content likely to remain limited in N-T as a majority of catalog content remains in L-T pay TV contracts --> lengthens DVD lifespan

- BBI strategy: 1) Total Access/By-Mail remains key part of "triple-play" strategy, with by-mail, in-store and digital delivery

- Well-run company with ability to balance growth and profitability

- Cable VOD day & date releases gaining some momentum, Comcast increasing HD content for VOD, but still very early

- Churn and usage should decline as lower priced plans gain traction with more casual movie watchers

- Headline risk as competing digital platforms, including AAPL rentals, AMZN Unbox, are launched and content improves, and as content producers explore new distribution channels

- Addt'l $100M stock buyback program in place for 2008. Repurchased $100M in '07.

- NFLX's primary levers are price and digital

- Reaching critical mass of subscribers at >5% HH penetration---driving stronger word-of-mouth advertising and further closures of traditional retail rental stores

What to Watch For

Guidance

- Stabilization in pricing for NFLX/BBI -- or are further price wars coming in '08? - Is 2008 subscriber growth conservative? Will the price reductions at NFLX/increases at BBI continue to slow churn at NFLX? - Will heavy usage subscribers weigh on profitability? - Adoption of LG/NFLX device; Other device partners in '08 to get "Watch Instantly" to TV - BBI digital strategy; Apple rental adoption, AppleTV adoption; Amazon Unbox adoption

Source: Company reports, Lehman Brothers estimates

118

April 07, 2008

Revenue

1Q08 $324M - $328M

2008 $1,345M - $1,385M

GAAP net income GAAP EPS Ending subscribers

$10M - $14M $0.15 - $0.22 8.16M - 8.26M

$75M - $83M $1.18 - $1.30 8.9M - 9.5M

Lehman Brothers

Internet Data Book

April 2008

Figure 140: Netflix Income Statement, 2005–09E ($ in millions, except per share data) ($ millions) Revenues Subscription DVD & Advertising Sales Total Net Revenues Cost of Sales Revenue sharing DVD amortization Postage & packaging Amortization of intangibles Total Cost of subscription revenue Fulfillment DVD & Advertising Sales Total Cost of Sales Gross profit

2008E

2009E

682.2 --$682.2

996.7 $996.7

305.3 $305.3

303.7 $303.7

294.0 $294.0

302.4 $302.4

1,205.3 $1,205.3

326.0 $326.0

339.8 $339.8

346.5 $346.5

363.6 $363.6

1,375.9 $1,375.9

1,640.1 $1,640.1

126.2 91.8 174.3 1.4 393.8 70.8 464.6 217.7

152.4 134.0 246.0 0.3 532.6 93.4 626.1 370.6

43.4 47.0 74.8 0.1 165.2 29.6 194.8 110.5

43.7 48.4 74.4 1.0 167.6 29.0 196.6 107.1

40.2 45.8 72.0 5.6 163.7 30.6 194.4 99.6

41.4 52.0 73.8 1.5 168.7 31.3 200.0 102.4

168.8 193.2 295.0 8.1 665.1 120.6 785.7 419.6

46.0 63.2 78.2 187.4 31.9 219.3 106.7

47.6 59.0 83.3 189.8 33.0 222.8 117.1

46.4 59.3 84.9 190.6 36.7 227.3 119.2

47.6 64.6 85.4 197.6 38.9 236.5 127.1

187.6 246.0 331.8 765.4 140.5 905.9 470.0

213.2 314.6 380.5 908.3 170.6 1,078.9 561.2

Operating expenses Technology and development Marketing General and administrative Restructuring related and other (gain on disposal of DVDs) Stock-based compensation Amortization of other intangibles Total operating expenses Operating income Operating income (ex. stock comp) Interest income Interest expense Total non-operating income (expenses) Pre-tax income Income tax provision Income tax rate GAAP Net income (loss) GAAP Basic income (loss) per share GAAP Diluted income (loss) per share Basic shares outstanding Diluted shares outstanding

30.9 142.0 29.4 (2.0) 14.3 214.7 3.0 17.3 5.8 (0.4) 5.3 8.3 (33.7) NA 42.0 $0.79 $0.64 53.5 65.5

44.8 223.4 30.1 (4.8) 12.7 306.2 64.4 77.1 15.9 15.9 80.3 31.2 38.9% 49.1 $0.78 $0.71 62.6 69.1

15.0 71.6 10.8 (0.9) 2.8 99.3 11.2 14.0 5.4 5.4 16.6 6.7 40.5% 9.9 $0.14 $0.14 68.7 70.7

18.1 44.7 12.5 (9.3) 2.8 68.8 38.3 41.1 5.0 5.0 43.2 17.7 40.8% 25.6 $0.38 $0.37 68.0 69.9

17.2 48.6 11.4 (2.3) 3.1 78.1 21.6 24.7 5.1 5.1 26.6 10.9 40.9% 15.7 $0.24 $0.23 66.5 68.1

17.5 51.2 12.1 (1.7) 3.2 82.3 20.1 23.4 4.9 4.9 25.1 9.3 37.0% 15.8 $0.24 $0.24 65.2 67.0

67.7 216.1 46.8 (14.2) 12.0 328.4 91.2 103.1 20.3 20.3 111.5 44.5 40.0% 67.0 $1.00 $0.97 67.1 68.9

18.6 54.6 12.4 (2.5) 3.3

21.4 46.9 13.3 (2.5) 3.0

22.2 50.7 13.5 (2.5) 3.0

23.6 56.0 14.2 (2.5) 2.1

86.3 20.3 23.6 3.1 3.1 23.4 9.4 40.0% 14.0 $0.23 $0.22 61.7 63.5

82.0 35.0 38.0 3.2 3.2 38.2 15.3 40.0% 22.9 $0.38 $0.36 61.2 63.0

86.9 32.3 35.3 3.5 3.5 35.7 14.3 40.0% 21.4 $0.35 $0.34 61.2 63.0

Non-GAAP Fully Taxed EPS Reconciliation: GAAP Pre-tax net income Stock-based compensation Restructuring related and other Non-GAAP Pre-tax income Tax effect Non-GAAP Fully taxed net income (loss) Non-GAAP Fully taxed basic income (loss) per share Non-GAAP Fully taxed diluted income (loss) per share Basic shares outstanding Diluted shares outstanding

8.3 14.3 3.2 25.9 12.1 13.7 $0.26 $0.21 53.5 65.5

80.3 12.7 93.0 36.2 56.8 $0.91 $0.82 62.6 69.1

16.6 2.8 19.4 7.8 11.5 $0.17 $0.16 68.7 70.7

43.2 2.8 (7.0) 39.1 16.0 23.1 $0.34 $0.33 68.0 69.9

26.6 3.1 29.8 12.2 17.6 $0.26 $0.26 66.5 68.1

25.1 3.2 28.3 10.5 17.8 $0.27 $0.27 65.2 67.0

111.5 12.0 (7.0) 116.5 46.4 70.0 $1.04 $1.02 67.1 68.9

23.4 3.3 26.7 10.7 16.0 $0.26 $0.25 61.7 63.5

38.2 3.0 41.2 16.5 24.7 $0.40 $0.39 61.2 63.0

EBITDA Reconciliation: Operating Income Depreciation of PP&E Amortization of DVD Library Amortization of Intangibles Stock-based comp, other non-cash charges EBITDA EBITDA (excluding add-back of DVD Amortization)

3.0 9.1 96.9 1.0 17.5 127.5 30.6

64.4 15.9 141.2 0.1 12.7 234.2 93.1

11.2 4.6 49.4 0.0 2.8 68.1 18.6

38.3 5.1 51.0 0.0 2.8 97.2 46.2

21.6 5.8 48.2 0.0 3.1 78.7 30.4

20.1 5.9 54.8 0.1 3.2 84.1 29.4

91.2 21.4 203.4 0.2 12.0 328.1 124.7

20.3 6.0 66.5 3.3 96.1 29.6

34.8% 53.7% 22.6% 52.1% 25.0% 25.7% 35.1% 44.9% 80.5% 47.5% -84.6% -51.8% -61.7% 94.6% -30.1%

46.1% 20.7% 46.0% 41.1% 32.0% 70.3% 44.7% 57.3% 2.5% 47.4% 2055.0% 345.3% 863.6% 16.8% 203.9%

36.2% 11.2% 82.2% 21.9% 36.0% 45.2% 46.1% 36.6% 60.0% 40.3% NA 73.2% 129.0% 124.0% 59.2%

26.9% 18.1% 59.8% 21.7% 33.5% 20.3% 61.7% -3.8% 134.9% 19.5% 60.2% 52.3% 56.7% 50.1% 49.9%

14.9% 4.8% 33.1% 15.5% 31.1% 2.3% 55.9% -17.4% 35.8% -1.3% 26.4% 22.0% 22.5% 23.1% 25.2%

9.1% 9.1% 19.8% 20.7% 17.9% -5.3% 41.8% -22.1% 25.7% -7.8% 7.7% 7.1% 5.5% 6.2% 12.0%

20.9% 10.7% 44.2% 19.9% 29.1% 13.2% 51.2% -3.3% 55.5% 7.3% 41.5% 33.8% 38.8% 36.4% 33.9%

6.8% 6.0% 34.5% 4.6% 7.8% -3.5% 24.2% -23.8% 14.5% -12.2% 81.2% 68.5% 41.4% 42.4% 58.9%

10.1%

-0.5%

-3.2%

2.9%

7.8%

4.3%

2.0%

4.9%

18.5% 13.5% 25.6% 57.7% 10.4% 68.1% 4.5% 20.8% 4.3% 29.7%

15.3% 13.4% 24.7% 53.4% 9.4% 62.8% 4.5% 22.4% 3.0% 29.9%

14.2% 15.4% 24.5% 54.1% 9.7% 63.8% 4.9% 23.5% 3.5% 31.9%

14.4% 15.9% 24.5% 55.2% 9.6% 64.7% 6.0% 14.7% 4.1% 24.8%

13.7% 15.6% 24.5% 55.7% 10.4% 66.1% 5.9% 16.5% 3.9% 26.3%

13.7% 17.2% 24.4% 55.8% 10.3% 66.1% 5.8% 16.9% 4.0% 26.7%

14.0% 16.0% 24.5% 55.2% 10.0% 65.2% 5.6% 17.9% 3.9% 27.4%

14.1% 19.4% 24.0% 57.5% 9.8% 67.3% 5.7% 16.7% 3.8% 26.2%

14.0% 17.4% 24.5% 55.9% 9.7% 65.6% 6.3% 13.8% 3.9% 24.0%

13.4% 17.1% 24.5% 55.0% 10.6% 65.6% 6.4% 14.6% 3.9% 24.9%

31.9% 0.4% 2.5% 18.7% 4.5% -7.5%

37.2% 6.5% 7.7% 23.5% 9.3% 19.9%

36.2% 3.7% 4.6% 22.3% 6.1% 8.5%

35.3% 12.6% 13.5% 32.0% 15.2% 23.9%

33.9% 7.3% 8.4% 26.8% 10.4% 16.1%

33.9% 6.7% 7.7% 27.8% 9.7% 12.5%

34.8% 7.6% 8.6% 27.2% 10.3% 15.1%

32.7% 6.2% 7.2% 29.5% 9.1% 53.2%

34.4% 10.3% 11.2% 31.2% 12.9% -6.2%

34.4% 9.3% 10.2% 29.9% 11.9% 20.6%

GROWTH AND MARGINS Y/Y GROWTH Total Revenue Revenue sharing DVD amortization Postage & packaging Fulfillment Gross profit Technology and content Marketing General and administrative Total cash operating expenses Operating income Operating income (ex stock comp) Pre-tax income GAAP net income EBITDA (excluding add back of DVD Amortization) Q/Q GROWTH Total revenue % OF REVENUES Revenue sharing as a % of subscription revenue DVD amortization as a % of subscription revenue Postage & packaging as a % of subscription revenue Total cost of subscription rev as a % of subscription rev. Fulfillment Total Cost of sales Technology and development Marketing General and administrative Total cash operating expenses MARGINS Gross margin Operating margin Operating margin (ex. stock comp) EBITDA margin EBITDA margin (excluding add back of DVD Amortization) Operating Leverage/Flow-through

2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

93.4 33.6 35.7 3.7 3.7 37.3 14.9 40.0% 22.4 $0.37 $0.36 61.2 63.0

85.8 208.2 53.3 (10.0) 11.4 348.7 121.2 132.6 13.5 13.5 134.7 53.9 40.0% 80.8 $1.32 $1.28 61.3 63.2

105.0 221.1 62.3 (11.0) 10.8 388.2 173.0 183.8 18.4 18.4 191.4 76.6 40.0% 114.8 $1.87 $1.81 61.5 63.4

35.7 3.0 38.7 15.5 23.2 $0.38 $0.37 61.2 63.0

37.3 2.1 39.4 15.8 23.7 $0.39 $0.38 61.2 63.0

134.7 11.4 146.1 58.5 87.7 $1.43 $1.39 61.3 63.2

191.4 10.8 202.2 80.9 121.3 $1.97 $1.92 61.5 63.4

35.0 6.0 62.1 3.0 106.1 44.0

32.3 6.0 62.4 3.0 103.6 41.3

33.6 6.0 68.0 2.1 109.7 41.7

121.2 24.0 258.9 11.4 415.6 156.6

173.0 28.0 327.7 10.8 539.5 211.8

11.9% 8.8% 21.8% 11.9% 13.5% 9.3% 18.4% 4.8% 6.3% 8.3% -8.5% -7.5% -11.6% -10.3% -4.8%

17.9% 15.4% 29.3% 17.9% 19.8% 19.7% 28.8% 4.4% 18.2% 11.9% 49.7% 43.0% 34.1% 36.2% 35.6%

20.2% 15.0% 24.1% 15.8% 24.4% 24.1% 35.4% 9.4% 16.9% 16.2% 67.2% 53.0% 49.1% 42.0% 42.2%

14.2% 11.2% 27.3% 12.5% 16.5% 12.0% 26.7% -3.7% 13.9% 6.2% 33.0% 28.6% 20.8% 20.7% 25.6%

19.2% 13.7% 27.9% 14.7% 21.4% 19.4% 22.3% 6.2% 16.9% 11.3% 42.7% 38.6% 42.1% 42.1% 35.2%

13.1% 17.8% 23.5% 54.4% 10.7% 65.1% 6.5% 15.4% 3.9% 25.8%

13.6% 17.9% 24.1% 55.6% 10.2% 65.8% 6.2% 15.1% 3.9% 25.2%

13.0% 19.2% 23.2% 55.4% 10.4% 65.8% 6.4% 13.5% 3.8% 23.7%

34.9% 9.3% 9.8% 30.2% 11.5% 20.2%

34.2% 8.8% 9.6% 30.2% 11.4% 18.7%

34.2% 10.5% 11.2% 32.9% 12.9% 20.9%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

119

Lehman Brothers

Internet Data Book

April 2008

Figure 141: Netflix Subscriber and Revenue Analysis, 2005–09E ($ in millions, except per share data) SUBSCRIBER & REVENUE ANALYSIS

2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

Subscribers: Beginning of Period

2,610

4,179

6,316

6,797

6,742

7,028

6,316

7,479

8,227

8,449

8,774

7,479

9,340

Plus: Gross Additions Y/Y Growth Q/Q Growth

3,729 37.3%

5,250 40.8%

1,520 10.4% 0.5%

1,028 -3.9% -32.4%

1,297 -1.0% 26.2%

1,495 0.1% 15.3%

5,340 1.7%

1,854 22.0% 6.7%

1,439 40.0% -22.4%

1,556 20.0% 8.1%

1,839 23.0% 18.1%

6,689 25.3%

7,291 9.0%

Less: Cancellations Y/Y Growth Q/Q Growth Monthly Churn (cancels/(BOP subs + gross sub adds))

2,160 35.6%

3,113 44.1%

1,011 23.7% -6.6% 4.2%

1,044 24.4% 3.3% 4.1%

1,106 6.4% 5.9% 4.0%

1,218 12.5% 10.1% 4.2%

1,231 21.7% 1.0% 4.1%

1,274 22.0% 3.5% 4.0%

4,828 15.6%

5,358 11.0%

4.1%

1,083 41.2% 4.2% 4.6%

4,177 34.2%

4.5%

1,039 50.6% 23.8% 4.4%

4.1%

4.0%

Net additions TOTAL SUBSCRIBERS, END OF PERIOD Y/Y Growth Q/Q Growth Average Subscribers

1,569 4,179 60.1%

2,137 6,316 51.1%

286 7,028 24.1% 4.2% 6,885

451 7,479 18.4% 6.4% 7,254

221 8,449 25.3% 2.7% 8,338

326 8,774 24.8% 3.9% 8,611

565 9,340 24.9% 6.4% 9,057

1,933 11,273 20.7%

6,898

748 8,227 21.0% 10.0% 7,853

1,861 9,340 24.9%

5,248

(55) 6,742 30.4% -0.8% 6,770

1,163 7,479 18.4%

3,395

481 6,797 39.7% 7.6% 6,557

8,409

10,306

Free Subscribers: end of period % Change Y/Y Free subscribers as a % of ending subscribers

153 23.4% 3.7%

162 5.9% 2.6%

121 -8.3% 1.8%

133 -12.5% 2.0%

183 5.8% 2.6%

153 -5.6% 2.0%

153 -5.6% 2.0%

145 20.0% 1.8%

158 19.0% 1.9%

198 8.0% 2.3%

161 5.0% 1.7%

161 5.0% 1.7%

169 5.0% 1.5%

Paid Subscribers: end of period Y/Y Growth Q/Q Growth Average Paid Subscribers

4,026 61.9%

6,154 52.9%

6,845 24.7% 3.6% 6,727

7,326 19.0% 7.0% 7,086

8,290 25.4% 2.6% 8,186

8,577 25.3% 3.5% 8,434

9,179 25.3% 7.0% 8,878

11,104 21.0%

6,740

8,082 21.1% 10.3% 7,704

9,179 25.3%

5,090

6,609 31.7% -1.0% 6,643

7,326 19.0%

3,256

6,676 41.0% 8.5% 6,415

8,252

10,141

3.7% 96.3% 100.0%

2.6% 97.4% 100.0%

1.8% 98.2% 100.0%

2.0% 98.0% 100.0%

2.6% 97.4% 100.0%

2.0% 98.0% 100.0%

2.0% 98.0% 100.0%

1.8% 98.2% 100.0%

1.9% 98.1% 100.0%

2.3% 97.7% 100.0%

1.7% 98.3% 100.0%

1.7% 98.3% 100.0%

1.5% 98.5% 100.0%

Subscription revenue per average paid sub (monthly) Y/Y Growth Q/Q Growth

$17.46 -18.3%

$16.32 -6.5%

$15.83 -7.2% -0.3%

$15.24 -6.9% -3.7%

$14.57 -10.3% -4.4%

$14.22 -10.4% -2.4%

$14.89 -8.7%

$14.10 -10.9% -0.8%

$13.84 -9.2% -1.9%

$13.70 -6.0% -1.0%

$13.65 -4.0% -0.3%

$13.89 -6.7%

$13.48 -3.0%

TOTAL SUBSCRIPTION REVENUE Y/Y Growth Q/Q Growth

$682.2 36.3%

$996.7 46.1%

$304.6 35.9% 9.9%

$303.7 26.9% -0.3%

$294.0 14.9% -3.2%

$302.3 9.0% 2.8%

$1,204.6 20.9%

$326.0 7.0% 7.8%

$339.8 11.9% 4.3%

$346.5 17.8% 2.0%

$363.6 20.3% 4.9%

$1,375.9 14.2%

$1,640.1 19.2%

$682.2 34.8%

$996.7 46.1%

$304.6 35.9% 9.9%

$303.7 26.9% -0.3%

$294.0 14.9% -3.2%

$302.3 9.0% 2.8%

$1,204.6 20.9%

$326.0 7.0% 7.8%

$339.8 11.9% 4.3%

$346.5 17.8% 2.0%

$363.6 20.3% 4.9%

$1,375.9 14.2%

$1,640.1 19.2%

3,729 $37.87 4.8%

5,250 $43.01 13.6%

1,297 $37.91 -16.4% -13.9% 49.2 -17.2% 8.7% 49.1

1,495 $34.60 -21.9% -8.7% 51.7 -21.8% 5.2% 51.7

1,854 $29.43 -38.0% -15.0% 54.6 -24.4% 5.5%

1,439 $32.57 -26.0% 10.7% 46.9 3.6% -14.1%

1,556 $32.60 -14.0% 0.1% 50.7 3.2% 8.2%

1,839 $30.45 -12.0% -6.6% 56.0 8.2% 10.3%

6,689 $31.26 -23.7%

7,291 $30.32 -3.0%

225.5 58.8%

1,028 $44.02 0.2% -7.2% 45.3 -3.8% -37.3% 45.3

5,340 $41.00 -4.7%

142.0 44.9%

1,520 $47.46 23.4% 7.1% 72.1 36.2% 9.0% 72.1

208.2 -4.6%

221.1 6.2%

Subscriber breakdown Free Subscribers as % of subs Paid Subscriber as % of subs Total Subscribers

4.3%

DVD & ADVERTISING SALES REVENUE Y/Y Growth Q/Q Growth TOTAL REVENUE Y/Y Growth Q/Q Growth MARKETING EXPENSES Number of New Subscribers Subscriber Acquisition Cost (SAC) - consolidated Y/Y Growth Q/Q Growth Calculated Marketing Expense Y/Y Growth Q/Q Growth Reported marketing expense

Source: Company reports, Lehman Brothers estimates

120

April 07, 2008

218.3 -3.2%

Lehman Brothers

Internet Data Book

April 2008

Figure 142: Netflix Cash Flow Statement, 2005–09E ($ in millions, except per share data) ($ millions) Cash Flows from Operating Activities Net income (loss) Adjustments to reconcile net income (loss) to net cash Depreciation of property and equipment Amortization of DVD library Amortization of intangible assets Noncash charges for equity instruments granted Stock-based compensation expense Stock option income tax benefits Loss on disposal of short term investments Loss on disposal of property and equipment Gain on disposal of DVD's Non-cash interest expense Deferred income taxes Changes in Working Capital Prepaid expenses and other current assets Accounts payable Accrued expenses Deferred revenue Deferred rent Change in Working Capital Net cash provided by (used in) operating activities Cash Flows from Investing Activities Purchases of short term investments Proceeds from sale of short term investments Purchases of property and equipment Acquisition of intangible asset Acquisitions of DVD library Proceeds from sale of DVD's Deposits and other assets Net cash provide by (used in) investing activities Cash Flows from Financing Activities Proceeds from issuance of common stock Proceeds from issuance of stock via employee plans Net Proceeds from issuance of sub. notes / warrants Repurchase of Common stock Proceeds from issuance of notes payable Excess tax benefits from stock-based compensation Principal payments on notes payable & capital leases Net cash provided by (used in) financing activities

2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

42.0

49.1

9.9

25.6

15.7

15.8

67.0

14.0

22.9

21.4

22.4

80.8

114.8

9.1 96.9 1.0 14.3 (3.6) 0.0 (34.9)

15.9 141.2 0.1 12.7 (13.2) (0.0) (9.1) 16.2

4.6 49.4 0.0 (0.1) 2.8 (4.1) (0.1) (2.6) (0.3)

5.1 51.0 0.0 0.0 2.8 (12.0) (0.0) (5.2) (0.5)

5.8 48.2 0.0 0.0 3.1 (5.2) (0.2) 0.1 (3.9) (0.3)

5.9 54.8 0.1 0.1 3.2 (5.0) (0.3) 0.0 (2.9) 0.4

21.4 203.4 0.2 0.0 12.0 (26.2) (0.7) 0.1 (14.6) (0.7)

6.0 66.5

6.0 62.1

6.0 62.4

6.0 68.0

3.3 (6.0) (4.0) -

3.0 (6.0) (4.0) -

3.0 (6.0) (4.0) -

2.1 (6.0) (4.0) -

24.0 258.9 11.4 (24.0) (16.0) -

28.0 327.7 10.8 (24.0) (16.0) -

(4.9) 8.2 12.4 16.6 0.2 32.6 157.5

(7.1) 3.2 17.6 21.1 0.3 35.1 247.9

(10.3) 11.4 7.7 (5.4) 0.1 3.5 63.0

5.7 (17.8) 14.2 (3.7) 0.0 (1.6) 65.1

0.1 6.0 11.4 (4.2) 0.7 14.1 77.6

0.2 (2.5) (0.6) 15.3 (0.1) 12.4 84.408

(4.3) (2.9) 32.8 2.0 0.7 28.3 290.1

(3.2) (6.7) 9.2 13.1 12.4 92.2

(0.7) 4.2 5.3 3.6 12.4 96.5

(0.3) 8.9 4.5 1.7 14.8 97.6

(0.1) 5.5 (2.7) 0.8 3.4 91.9

(4.4) 11.9 16.3 19.2 43.0 378.2

(6.3) 14.9 12.9 15.7 37.1 478.5

(27.7) (0.5) (111.4) 5.8 0.6 (133.2)

(27.3) (0.6) (169.5) 12.9 (1.3) (185.9)

(264.2) 95.4 (18.0) (68.5) 5.6 (0.1) (249.8)

(53.9) 28.7 (9.0) (57.4) 7.4 0.3 (83.9)

(52.0) 41.3 (7.4) (39.5) 4.8 0.6 (52.2)

(35.2) 35.5 (9.9) (0.6) (56.4) 3.9 (0.5) (63.192)

(405.3) 200.8 (44.3) (0.6) (221.8) 21.7 0.3 (449.1)

(10.4)

(10.9)

(11.1)

(11.6)

(78.2) 7.5 (81.2)

(71.4) 7.5 (74.7)

(69.3) 7.5 (72.9)

(76.4) 7.5 (80.5)

(44.0) (295.3) 30.0 (309.3)

(45.9) (364.1) 27.5 (382.5)

2.7 (30.2) 12.0 (15.5)

0.4 (35.3) 5.2 (29.7)

5.7 (34.3) 5.0 (23.6)

9.6 (99.9) 26.2 (64.0)

24.0 24.0

13.4 (0.1) 13.3

113.0 13.2 126.2

0.8 4.1 4.8

6.0

6.0

6.0

6.0

(94.0)

6.0

6.0

6.0

(100.0) 24.0 (76.0)

(100.0)

-

-

-

-

-

-

-

-

174.5 37.8 212.3

212.3 188.2 400.4

400.4 (182.0) 218.5

218.5 (34.3) 184.2

184.2 (4.4) 179.8

179.8 (2.4) 177.4

400.4 (223.0) 177.4

177.4 (82.9) 94.5

94.5 27.7 122.2

122.2 30.7 152.9

152.9 17.4 170.3

177.4 (7.1) 170.3

170.3 120.0 290.3

157.5 (27.7) (111.4) 5.8 0.6 24.7 -29% $0.34

247.9 (27.3) (169.5) 12.9 (1.3) 62.6 153% $0.91

63.0 (18.0) (68.5) 5.6 (0.1) (18.0) -254% ($0.25)

65.1 (9.0) (57.4) 7.4 0.3 6.5 17% $0.09

77.6 (7.4) (39.5) 4.8 0.6 36.1 61% $0.53

84.4 (9.9) (56.4) 3.9 (1.0) 21.0 -7% $0.31

290.1 (44.3) (221.8) 21.7 0.3 46.1 -26% $0.67

92.2 (10.4) (78.2) 7.5 11.1 -162% $0.17

96.5 (10.9) (71.4) 7.5 21.7 237% $0.34

97.6 (11.1) (69.3) 7.5 24.7 -32% $0.39

91.9 (11.6) (76.4) 7.5 11.4 -46% $0.18

378.2 (44.0) (295.3) 30.0 68.9 50% $1.09

478.5 (45.9) (364.1) 27.5 96.0 39% $1.51

Cash Flow Statement Assumptions Acquisitions of DVDs Revenue Acquisitions of DVDs Y/Y Growth Acquisitions of DVDs as a % of revenue

682.2 111.4 8% 16.3%

996.7 169.5 52% 17.0%

305.3 68.5 130% 22.4%

303.7 57.4 24% 18.9%

294.0 39.5 6% 13.4%

302.4 56.4 0% 18.7%

1,205.3 221.8 31% 18.4%

326.0 78.2 14% 24.0%

339.8 71.4 24% 21.0%

346.5 69.3 76% 20.0%

363.6 76.4 35% 21.0%

1,375.9 295.3 33% 21.5%

1,640.1 364.1 23% 22.2%

Amortization of DVD library Acquisitions of DVDs Average DVD library balance Amortization of DVD library Amortization of DVD library as a % of Acquisition of DVDs Amortization of DVD library as a % of Avg DVD library balance

111.4 54.8 96.9 86.9% 44.2%

169.5 81.0 141.2 83.3% 43.6%

68.5 109.5 49.4 72.1% 45.1%

57.4 114.0 51.0 88.9% 44.7%

39.5 114.1 48.2 122.3% 42.3%

56.4 123.4 54.8 97.1% 44.4%

221.8 118.7 203.4 91.7% 42.8%

78.2 138.3 66.5 85.0% 48.1%

71.4 148.8 62.1 87.0% 41.7%

69.3 156.9 62.4 90.0% 39.7%

76.4 164.6 68.0 89.0% 41.3%

295.3 150.6 258.9 87.7% 43.0%

364.1 187.0 327.7 90.0% 43.8%

Capex Revenue Capex Capex as a % of revenue

682.2 27.7 4.1%

996.7 27.3 2.7%

305.3 18.0 5.9%

303.7 9.0 3.0%

294.0 7.4 2.5%

302.4 9.9 3.3%

1,205.3 44.3 3.7%

326.0 10.4 3.2%

339.8 10.9 3.2%

346.5 11.1 3.2%

363.6 11.6 3.2%

1,375.9 44.0 3.2%

1,640.1 45.9 2.8%

Effect of exchange rate changes Cash & equivalents - BOP Net change in cash Cash & equivalents - EOP Free Cash Flow Calculation Operating cash flow Purchases of fixed assets (property and equipment) Acquisitions of DVD library Proceeds from sale of DVD's Deposits and other assets Free Cash Flow % change Y/Y Free Cash Flow per share

0.2

Source: Company reports, Lehman Brothers estimates

April 07, 2008

121

Lehman Brothers

Internet Data Book

April 2008

Figure 143: Blue Nile Snapshot Strengths

Biggest Concerns

- Internet is in the early stages of impacting the $60B jewelry market; Blue Nile well positioned to benefit

Still early in macro cycle; high-end consumer being impacted

- Contractual agreements with suppliers for exclusive online merchandise provide barrier to entry

Valuation still challenging: 38x 2008 P/E, but 5.5% FCF Yield

- Access to inventory creates a competitive advantage versus both traditional and online jewelers

- Tough top-line comps and macro could lead to flat 1Q08 growth

- Low capex, high inventory turns, & favorable payment terms lead to strong free cash flow generation

- We think it is likely that AMZN will ultimately become a competitor through an alternative brand

- International expansion into the UK and Canada provide additional revenue streams; now shipping to 12 new international markets--Japan site next?

- Higher commodities costs could negatively impact gross margins; not passing on to consumers

- Strong balance sheet with $123 million in cash & equivalents at YE '07

- Rising online advertising prices, particularly in sponsored search, could weigh on traffic generation

- $150M share repurchase authorization; we'd expect company to be a buyer in near-term

- Real time inventory purchase requirements means the company is more subject to pricing changes - ASPs may trend lower as company expands offering in non-engagement diamond and non-diamond jewelry

What to Watch For

Guidance

- Mix-shift toward non-engagement, non-diamond could drive higher gross margins Net Sales - Enhanced international focus; potential entry into Japan

Y/Y Growth (implied) Net Income per diluted share

- Double digit top-line growth with macro challenges and steady increases in online marketing costs - Gross margin stability amid potential inflation of input costs (platinum, gold, etc) - Whether conversion rates can continue to improve with traffic gains - Demand at higher price points -- has been weak in '08 thus far -- $25K+ = 15% of business - Closings of traditional jewelry stores/independents Source: Company reports, Lehman Brothers estimates

122

April 07, 2008

1Q08 ~$68M

2008 ~$352M

0%

10%

$0.11 - $0.14

~$1.04

Adjusted EBITDA (implied) Y/Y Growth (implied) Effective Tax Rate Capex Stock Comp

~$33.3M 10% 35.0% $0.07

35.0% $2.5M $0.29

Lehman Brothers

Internet Data Book

April 2008

Figure 144: Blue Nile Income Statement, 2005–09E ($ in thousands, except per share data) 2005A 203,169 158,025 45,144

2006A 251,587 200,761 50,826

1Q07A 67,910 54,661 13,249

2Q07A 72,093 57,150 14,943

3Q07A 67,355 53,998 13,357

4Q07A 111,906 88,251 23,655

2007A 319,264 254,060 65,204

1Q08E 69,902 56,271 13,631

2Q08E 78,639 62,125 16,514

3Q08E 76,516 60,983 15,533

4Q08E 129,384 101,566 27,817

2008E 354,440 280,945 73,495

2009E 396,105 314,507 81,598

27,095 18,049

34,269 16,557

9,564 3,685

9,909 5,034

9,744 3,613

13,575 10,080

42,792 22,412

11,254 2,377

11,639 4,876

11,309 4,224

15,526 12,291

49,728 23,767

54,662 26,935

2,499 5 2,504

3,323 100 3,423

973 203 1,176

803 12 815

947 13 960

1,037 187 1,224

3,760 415 4,175

1,085 1,085

839 839

795 795

943 943

3,661 3,661

3,730 3,730

Income (loss) before income taxes- EBT Provision (benefit) for income taxes Effective Tax Rate Net Income (loss) Attr. to Common (GAAP) Basic income (loss) per share Diluted income (loss) per share Basic shares outstanding Diluted shares outstanding

20,553 7,400 36.0% 13,153 $0.75 $0.71 17,550 18,606

19,980 6,916 34.6% 13,064 $0.79 $0.76 16,563 17,278

4,861 1,698 34.9% 3,163 $0.20 $0.19 15,874 16,545

5,849 2,068 35.4% 3,781 $0.24 $0.23 15,802 16,617

4,573 1,601 35.0% 2,972 $0.19 $0.18 15,959 16,912

11,304 3,761 33.3% 7,543 $0.47 $0.45 16,039 16,925

26,587 9,128 34.3% 17,459 $1.10 $1.04 15,919 16,814

3,461 1,211 35.0% 2,250 $0.14 $0.13 15,989 16,875

5,714 2,000 35.0% 3,714 $0.23 $0.22 15,964 16,850

5,018 1,756 35.0% 3,262 $0.20 $0.19 15,939 16,825

13,235 4,632 35.0% 8,602 $0.54 $0.51 15,889 16,775

27,429 9,600 35.0% 17,829 $1.12 $1.06 15,945 16,831

30,665 10,733 35.0% 19,932 $1.24 $1.18 16,020 16,906

PF Net Income (loss) Attr. to Common PF Diluted income (loss) per share Diluted shares outstanding

13,153 $0.71 18,606

15,899 $0.92 17,278

3,994 $0.24 16,545

4,676 $0.28 16,617

3,872 $0.23 16,912

8,669 $0.51 16,925

21,212 $1.26 16,814

3,420 $0.20 16,875

4,949 $0.29 16,850

4,497 $0.27 16,825

9,902 $0.59 16,775

22,769 $1.35 16,831

25,613 $1.52 16,906

EBITDA Reconciliation Operating income (loss) Depreciation and other amortization Stock-based compensation EBITDA

18,049 1,717 -19,766

16,557 1,868 4,339 22,764

3,685 391 1,277 5,353

5,034 385 1,385 6,804

3,613 408 1,385 5,406

22,412 1,772 5,735 29,919

2,377 500 1,800 4,677

4,876 500 1,900 7,276

4,224 500 1,900 6,624

23,767 2,000 7,600 33,367

26,935 2,160 8,740 37,835

Net Sales Cost of Sales Gross profit Operating expenses Selling, General, and Administrative Restructuring charges Operating income (loss) Interest income Interest expense Other income Other income, net

2005A Y/Y GROWTH Total Revenue Gross profit Selling, general and administrative expenses Operating income Pre-Tax Income (Loss) - EBT GAAP Net income GAAP EPS EBITDA SEQUENTIAL GROWTH Net sales Cost of Sales Gross profit % OF REVENUES Cost of Sales Selling, General, and Administrative MARGINS Gross margin Operating margin Net margin EBITDA margin Operating Leverage (∆ Oper income / ∆ Revenues)

20.0% 19.9% 18.9% 21.5% 31.5% 31.7% 26.6% 20.8%

2006A 23.8% 12.6% 26.5% -8.3% -2.8% -0.7% 7.0% 15.2%

1Q07A

2Q07A

3Q07A

10,080 588 1,688 12,356 4Q07A

34.0% 28.1% 24.6% 38.3% 33.2% 34.3% 48.0% 33.1%

26.7% 31.7% 27.9% 39.8% 27.6% 20.7% 27.6% 35.1%

26.5% 28.1% 17.8% 67.3% 61.5% 62.9% 60.6% 38.3%

23.3% 26.5% 28.4% 24.0% 26.8% 31.1% 29.2% 26.1%

-25.2% -24.1% -29.2%

6.2% 4.6% 12.8%

-6.6% -5.5% -10.6%

66.1% 63.4% 77.1%

2007A 26.9% 28.3% 24.9% 35.4% 33.1% 33.6% 37.3% 31.4%

1Q08E

2Q08E

3Q08E

12,291 500 2,000 14,791 4Q08E

2.9% 2.9% 17.7% -35.5% -28.8% -28.9% -30.3% -12.6%

9.1% 10.5% 17.5% -3.1% -2.3% -1.8% -3.1% 6.9%

13.6% 16.3% 16.1% 16.9% 9.7% 9.8% 10.3% 22.5%

15.6% 17.6% 14.4% 21.9% 17.1% 14.0% 15.1% 19.7%

-37.5% -36.2% -42.4%

12.5% 10.4% 21.2%

-2.7% -1.8% -5.9%

69.1% 66.5% 79.1%

2008E

2009E

11.0% 12.7% 16.2% 6.0% 3.2% 2.1% 2.0% 11.5%

11.8% 11.0% 9.9% 13.3% 11.8% 11.8% 11.3% 13.4%

77.8% 13.3%

79.8% 13.6%

80.5% 14.1%

79.3% 13.7%

80.2% 14.5%

78.9% 12.1%

79.6% 13.4%

80.5% 16.1%

79.0% 14.8%

79.7% 14.8%

78.5% 12.0%

79.3% 14.0%

79.4% 13.8%

22.2% 8.9% 6.5% 9.7% 9.4%

20.2% 6.6% 5.2% 9.0% -3.1%

19.5% 5.4% 4.7% 7.9% 5.9%

20.7% 7.0% 5.2% 9.4% 9.4%

19.8% 5.4% 4.4% 8.0% 10.3%

21.1% 9.0% 6.7% 11.0% 9.2%

20.4% 7.0% 5.5% 9.4% 8.7%

19.5% 3.4% 3.2% 6.7% -65.7%

21.0% 6.2% 4.7% 9.3% -2.4%

20.3% 5.5% 4.3% 8.7% 6.7%

21.5% 9.5% 6.6% 11.4% 12.7%

20.7% 6.7% 5.0% 9.4% 3.9%

20.6% 6.8% 5.0% 9.6% 7.6%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

123

Lehman Brothers

Internet Data Book

April 2008

Figure 145: Blue Nile Cash Flow Statement, 2005–09E ($ in thousands, except per share data) 2005A Cash Flows from Operating Activities Net income (loss) Depreciation and amortization Loss on disposal of assets Stock based compensation Warrant-based interest expense Restructuring charge Deferred income taxes Excess tax benefit from exercise of stock options Changes in working capital: Receivables, net Inventories, net Prepaid expenses and other assets Accounts Payable Accrued liabilities Deferred rent Total Change in Working Capital Net cash provided by (used in) operating activities

2006A

1Q07A

13,153 1,717 11 342 7,062 -

13,064 1,868 5 4,434 2,654 2,567

3,163 391 1,304

(849) (1,850) (41) 12,382 (452) (203) 8,987 31,272

236 (2,852) 88 16,468 2,194 (208) 15,704 40,518

(1,072) 8 (156,870) 156,000 (119) (2,053)

(1,908) 1 (75,030) 98,000 2 21,065

(17,372) 575 (16,797)

(57,387) 172 2,251 (54,964)

Effect of exchange-rate on cash and equivalents Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP

12,422 59,499 71,921

6,619 71,921 78,540

Capex Analysis Capex Capex as % of revenues

(1,072) 0.5%

31,272 (1,072) 30,200 8.2% NA

Cash Flows from Investing Activities Purchases of property and equipment Purchases of intangible assets Proceeds from the sale of property and equipment Purchases of marketable securities Proceeds from the sale of marketable securities Transfers to restricted cash Net cash provide by (used in) investing activities Cash Flows from Financing Activities Proceeds from sale of mandatorily redeemable preferred Proceeds from sale of common stock, net of issuance costs Purchase of restricted and common stock Net repayments on line of credit Payments on subordinated party note payable Borrowings on related party note payable Payments on notes payable to related party Payments on notes payable Payments on capital lease Excess tax benefit from exercise of stock options Proceeds from warrant and stock option exercises Net cash provided by (used in) financing activities

Free Cash Flow Calculation Operating cash flow Purchases of fixed assets Free Cash Flow Y/Y growth Cumulative Free Cash Flow last four quarters Y/Y growth Free Cash Flow Conversion of Operating Cash Flow Free Cash Flow Conversion of EBITDA Free Cash Flow Conversion of Revenue (FCF Margin)

97% 153% 15%

Source: Company reports, Lehman Brothers estimates

124

April 07, 2008

2Q07A

3Q07A

4Q07A

2007A

1Q08E

2Q08E

3Q08E

4Q08E

3,714 500

3,262 500

8,602 500

1,800

1,900

1,900

2,000

2009E

3,781 385 (6) 1,419

2,972 408 1,406

7,543 588 (2) 1,703

(459) 656

(104) 1,998

(246) 1,956

(598) 391

396 (876) 201 (28,425) (2,476) (56) (31,236) (26,181)

(334) 823 (2,043) 4,301 (658) (39) 2,050 9,523

(625) (630) (1,503) (2,167) 954 93 (3,878) 2,618

(1,372) (5,608) 3,039 45,532 4,414 (135) 45,870 55,495

17,459 1,772 (8) 5,832 (1,407) 5,001 (1,935) (6,291) (306) 19,241 2,234 (137) 12,806 41,455

(193)

(1,873)

(1,511)

10,000 (20,094)

(10,287)

(9,992) (136) 40,000 120 28,119

(1,511)

(1,320) 15 (1,305)

(4,897) 23 (20,230) 40,000 120 15,016

(13,532)

-

-

48 656 (12,828)

272 2,012 2,284

1,279 2,698 3,977

(6,464) (22) 248 509 (5,729)

(19,996) (22) 1,847 5,875 (12,296)

(14,600)

(14,600)

(14,600)

(49,296) 78,540 29,244

(5) 39,921 29,244 69,165

50 5,134 69,165 74,299

78 44,253 78,540 122,793

(43,776) 122,793 79,017

3,670 79,017 82,687

(14,015) 82,687 68,672

(1,908) 0.8%

(193) 0.3%

(1,873) 2.6%

(1,511) 2.2%

(1,320) 1.2%

(4,897) 1.5%

(559) 0.8%

(629) 0.8%

(612) 0.8%

(906) 0.7%

(2,706) 0.8%

(3,169) 0.8%

40,518 (1,908) 38,610 27.8% NA NA 95% 170% 15%

(26,181) (193) (26,374) NA 32,620 10.1% 101% -493% -39%

9,523 (1,873) 7,650 14.4% 33,582 14.9% 80% 112% 11%

2,618 (1,511) 1,107 -78.9% 29,445 4.0% 42% 20% 2%

55,495 (1,320) 54,175 15.1% 36,558 -5.3% 98% 438% 48%

41,455 (4,897) 36,558 -5.3% NA NA 88% 122% 11%

(28,617) (559) (29,176) NA 33,756 3.5% 102% -624% -42%

18,899 (629) 18,270 138.8% 44,376 32.1% 97% 251% 23%

1,197 (612) 585 -47.2% 43,854 48.9% 49% 9% 1%

57,801 (906) 56,895 5.0% 46,575 27.4% 98% 385% 44%

49,281 (2,706) 46,575 27.4% NA NA 95% 140% 13%

56,451 (3,169) 53,282 14.4% NA NA 94% 141% 13%

33 48,494 74,299 122,793

2,250 500

2008E

(400)

(400)

(400)

(400)

17,829 2,000 7,600 (1,600)

2,038 634 (32,041) (3,398) (32,767) (28,617)

(428) 2,185 10,660 769 13,185 18,899

(329) (277) (3,272) (187) (4,065) 1,197

(2,104) (4,214) 48,764 4,652 47,099 57,801

(823) (1,671) 24,110 1,837 23,452 49,281

(1,146) (1,189) 27,868 1,686 27,219 56,451

(559)

(629)

(612)

(906)

(559)

(629)

(612)

(906)

(2,706) (2,706)

(3,169) (3,169)

(15,000)

(15,000)

(15,000)

(15,000)

(14,600)

(60,000) 1,600 (58,400)

(40,000) 1,600 (38,400)

42,295 68,672 110,968

(11,825) 122,793 110,968

14,882 110,968 125,850

400

400

400

400

19,932 2,160 8,740 (1,600)

Lehman Brothers

Internet Data Book

April 2008

Figure 146: Greenfield Online Snapshot Strengths

Biggest Concerns

- Well-positioned to benefit from the secular shift of market research toward the Internet.

- Continued survey pricing pressure and increased competition.

- Ciao provides exposure to high growth, high margin comparison shopping business.

- Full-service market research firms could build or acquire internal panels, reducing dependency on Greenfield.

- Online data collection model can be highly scalable. Company has returned to solid doubledigit growth in global survey business.

- Client consolidation.

- Sizable market opportunity: about $3B-$4B of the $20B+ worldwide market research industry is spent on fieldwork.

- Clients are market research firms, so Greenfield does not have a direct relationship with the enduser.

- Diversifying from panel toward real-time sampling.

- Any potential deceleration in Ciao Europe business.

What to Watch For

Guidance

- Whether NA & Europe survey businesses can drive sustainable growth amidst pricing pressure.

2008

- Whether Ciao can maintain its leadership position in European comparision shopping versus eBay's Shopping.com, Yahoo!'s Kelkoo, etc.

Revenues

- Progress of Ciao launch in U.S.

Gross Margins

- Continued cost cutting , lean operations.

Adjusted EBITDA (implied)

- Is Ciao U.S. spending the right amount of money? --$2M revenues with $800K operating loss in 2008

Adjusted EBITDA Margin

$143M-$153M (+11%-19%). 74% - 75% $38.6M-$42.8M 27%-28%

Depreciation & Amortization

$13.7M-$14.2M

Stock Based Compensation

$2.7M-$3.5M

- Whether Ciao can maintain organic traffic generation, strong growth in Europe.

Effective Tax Rate

29%-31%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

125

Lehman Brothers

Internet Data Book

April 2008

Figure 147: Greenfield Online Income Statement, 2005–09E ($ in thousands, except per share data) 2005A 89,179 24,327 64,852

2006A 100,342 24,086 76,256

3/07A 27,469 7,139 20,330

6/07A 30,826 8,258 22,568

9/07A 32,325 8,624 23,701

12/07A 38,393 8,692 29,701

2007A 129,013 32,713 96,300

3/08E 32,191 8,370 23,821

6/08E 35,601 9,505 26,096

9/08E 37,567 9,580 27,988

12/08E 44,859 10,093 34,765

2008E 150,218 37,548 112,670

2009E 172,458 42,769 129,688

Operating expenses Selling, general and administrative Panel acquisition expenses Depreciation and Amortization Research and Development Impairment and restructuring charge Total operating expenses

40,683 3,762 6,965 2,836 91,305 145,551

44,730 5,527 9,225 3,864 236 63,582

12,980 1,048 2,153 1,132 17,313

14,208 778 2,168 1,004 18,158

14,737 859 2,242 1,175 19,013

19,512 648 2,289 1,198 23,647

61,437 3,333 8,852 4,509 78,131

15,484 1,223 2,414 1,352 20,474

16,376 926 2,563 1,210 21,076

16,830 1,014 2,630 1,277 21,751

19,827 897 2,916 1,346 24,986

68,518 4,060 10,523 5,186 88,287

76,744 5,001 12,417 6,208 100,370

Operating income

(80,699)

12,674

3,017

4,410

4,688

6,054

18,169

Net sales Cost of Sales Gross profit

Interest income (Expense) Other income, net Total non-operating expenses, net Pre-tax income Provision for Taxes Reported tax rate Net income Reported EPS to diluted Operational EPS to diluted Fully taxed EPS to diluted Pro forma fully diluted shares outstanding EBITDA Reconciliation Operating Income Other adjustments Depreciation and other amortization EBITDA Stock Compensation charges Adjusted EBITDA

Y/Y Growth Net sales Gross profit Selling, general and administrative Panel acquisition expenses Depreciation and Amortization Research and Development Total operating expenses Operating income Pre-tax income Net income Adjusted EBITDA Sequential Growth Net sales % of Revenues Cost of sales Selling, general and administrative Panel acquisition expenses Depreciation and Amortization Research and Development Total operating expenses Margins Gross margin Operating margin Pre-tax income margin Net income margin Net income to common margin Adjusted EBITDA margin Operating Leverage (∆ EBITDA / ∆ Revenues)

(507) (54) (561)

109 (310) (201)

143 (23) 120

408 (6) 402

355 (241) 114

(81,260) (15,746) NA (65,514) ($2.67) $0.45 $0.24

12,473 4,019 32.2% 8,454 $0.33 $0.33 $0.33

3,137 1,178 37.6% 1,959 $0.07 $0.07 $0.07

4,812 1,712 35.6% 3,100 $0.11 $0.11 $0.11

4,802 1,479 30.8% 3,323 $0.12 $0.12 $0.12

24,558

25,698

(80,698) 92,288 9,347 20,937 878 21,815

12,674 494 12,180 25,348 2,524 27,872

3,017 (23) 2,941 5,935 901 6,836

4,410 (6) 2,990 7,394 742 8,136

100.7% 94.5% 89.6% 63.6% 383.7% 183.0% 455.6% -1228.5% -1425.9% -1245.8% 112.0%

12.5% 17.6% 9.9% 46.9% 32.4% 36.2% -56.3% -115.7% -115.3% -112.9% 27.8%

27.6% 27.2% 36.1% -38.6% -7.0% 20.3% 18.0% 128.9% 160.8% 132.9% 31.8%

26.1% 19.5% 32.6% -36.8% -9.7% 22.3% 19.5% 19.1% 34.3% 37.5% 11.8%

-6.8% 27.3% 45.6% 4.2% 7.8% 3.2% 163.2%

24.0% 44.6% 5.5% 9.2% 3.9% 63.4%

26.0% 47.3% 3.8% 7.8% 4.1% 63.0%

72.7% -90.5% -91.1% -73.5% -73.5% 24.5% 25.8%

76.0% 12.6% 12.4% 8.4% 8.4% 27.8% 54.3%

74.0% 11.0% 11.4% 7.1% 7.1% 24.9% 27.8%

26,461

27,004

27,088

3,348

5,020

6,236

9,779

24,383

29,318

702

1,608 (270) 1,338

200 200

172 172

218 218

268 268

858 858

1,577 1,577

6,756 2,197 32.5% 4,559 $0.17 $0.17 $0.17

19,507 6,566 33.7% 12,941 $0.48 $0.48 $0.48

3,548 1,064 30.0% 2,484 $0.09 $0.09 $0.09

5,192 1,558 30.0% 3,634 $0.13 $0.13 $0.13

6,454 1,936 30.0% 4,518 $0.17 $0.17 $0.17

702

10,047 3,014 30.0% 7,033 $0.26 $0.26 $0.26

25,241 7,572 30.0% 17,669 $0.65 $0.65 $0.65

30,895 10,195 33.0% 20,700 $0.75 $0.75 $0.75

27,239

27,041

27,241

27,243

27,245

27,247

27,244

27,444

4,688 (241) 3,154 7,601 908 8,509

6,491 596 3,299 10,386 914 11,300

18,606 326 12,384 31,316 3,465 35,244

3,348 3,139 6,487 825 7,312

5,020 3,332 8,352 800 9,152

6,236 3,419 9,655 850 10,505

9,779 3,791 13,570 875 14,445

24,383 13,680 38,063 3,350 41,413

29,318 16,142 45,460 3,350 48,810

29.9% 25.4% 27.0% -36.4% -7.6% 20.8% 15.9% 88.0% 89.3% 80.3% 26.2%

30.2% 32.1% 51.5% -47.7% 10.0% 6.1% 36.5% 17.3% 31.2% 29.7% 30.4%

28.6% 26.3% 37.4% -39.7% -4.0% 16.7% 22.9% 43.4% 56.4% 53.1% 26.4%

17.2% 17.2% 19.3% 16.7% 12.1% 19.4% 18.3% 11.0% 13.1% 26.8% 7.0%

15.5% 15.6% 15.3% 19.0% 18.2% 20.6% 16.1% 13.8% 7.9% 17.2% 12.5%

16.2% 18.1% 14.2% 18.1% 17.3% 8.7% 14.4% 33.0% 34.4% 36.0% 23.5%

16.8% 17.1% 1.6% 38.5% 27.4% 12.3% 5.7% 61.5% 48.7% 54.3% 27.8%

16.4% 17.0% 11.5% 21.8% 18.9% 15.0% 13.0% 34.2% 29.4% 36.5% 17.5%

14.8% 15.1% 12.0% 23.2% 18.0% 19.7% 13.7% 20.2% 22.4% 17.2% 17.9%

12.2%

4.9%

18.8%

-16.2%

10.6%

5.5%

19.4%

26.8% 46.1% 2.5% 7.0% 3.3% 58.9%

26.7% 45.6% 2.7% 6.9% 3.6% 58.8%

22.6% 50.8% 1.7% 6.0% 3.1% 61.6%

25.4% 47.6% 2.6% 6.9% 3.5% 60.6%

26.0% 48.1% 3.8% 7.5% 4.2% 63.6%

26.7% 46.0% 2.6% 7.2% 3.4% 59.2%

25.5% 44.8% 2.7% 7.0% 3.4% 57.9%

22.5% 44.2% 2.0% 6.5% 3.0% 55.7%

25.0% 45.6% 2.7% 7.0% 3.5% 58.8%

24.8% 44.5% 2.9% 7.2% 3.6% 58.2%

73.2% 14.3% 15.6% 10.1% 10.1% 26.4% 13.5%

73.3% 14.5% 14.9% 10.3% 10.3% 26.3% 23.7%

77.4% 15.8% 17.6% 11.9% 11.9% 29.4% 29.5%

74.6% 14.1% 15.1% 10.0% 10.0% 27.3% 25.7%

74.0% 10.4% 11.0% 7.7% 7.7% 22.7% 10.1%

73.3% 14.1% 14.6% 10.2% 10.2% 25.7% 21.3%

74.5% 16.6% 17.2% 12.0% 12.0% 28.0% 38.1%

77.5% 21.8% 22.4% 15.7% 15.7% 32.2% 48.6%

75.0% 16.2% 16.8% 11.8% 11.8% 27.6% 29.1%

75.2% 17.0% 17.9% 12.0% 12.0% 28.3% 33.3%

Source: Company reports, Lehman Brothers estimates

Figure 148: Greenfield Online Sum-of-the-Parts Analysis ($ in thousands, except per share date) 2008E Sales Consolidated Operations: North American Survey Solutions Ciao/European Survey Solutions Ciao Comparison Shopping Total Consolidated Operations

77,032 26,775 46,411 150,218

2008E EBITDA

2008E EBITDA Mgn

12,710 6,961 21,741 41,413

16.5% 26.0% 46.8% 27.6%

EBITDA Multiple

2008E

7.5x 7.0x 14.0x 10.8x

95,327 48,730 304,379 $448,435

Total Greenfield EV

$448,435

Less: Debt Plus: Cash Value to Common Shareholders

972 66,639 $514,102

Total shares outstanding Value per Greenfield Online share Source: Company reports, Lehman Brothers estimates

126

April 07, 2008

27,244 $18.87

Lehman Brothers

Internet Data Book

April 2008

Figure 149: Greenfield Online Segment Breakdown, 2005–09E ($ in thousands, except per share data) 2005A REVENUE North American Survey Solutions Sales % Y/Y change % Q/Q change

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

63,886 43.8%

60,353 -5.5%

15,454 13.9% -6.8%

17,108 15.3% 10.7%

18,219 18.6% 6.5%

19,678 18.7% 8.0%

70,459 16.7%

17,154 11.0% -12.8%

18,819 10.0% 9.7%

19,768 8.5% 5.0%

21,292 8.2% 7.7%

77,032 9.3%

83,965 9.0%

Ciao Internet Survey Solutions Sales % Y/Y change % Q/Q change

16,686 NA

20,152 20.8%

5,255 15.4% -9.3%

6,223 15.5% 18.4%

5,927 34.2% -4.8%

6,983 20.6% 17.8%

24,388 21.0%

5,844 11.2% -16.3%

6,889 10.7% 17.9%

6,431 8.5% -6.6%

7,611 9.0% 18.4%

26,775 9.8%

29,318 9.5%

Total Survey Solutions Sales % Y/Y change % Q/Q change

80,572 81.4%

80,505 -0.1%

20,709 14.3% -7.4%

23,331 15.4% 12.7%

24,146 22.0% 3.5%

26,661 19.2% 10.4%

94,847 17.8%

22,998 11.1% -13.7%

25,708 10.2% 11.8%

26,198 8.5% 1.9%

28,903 8.4% 10.3%

103,807 9.4%

113,283 9.1%

8,607 NA

19,837 83.7%

6,760 98.4% -4.9%

7,495 77.1% 10.9%

8,179 60.7% 9.1%

11,732 65.0% 43.4%

34,166 72.2%

9,194 36.0% -21.6%

9,893 32.0% 7.6%

11,369 39.0% 14.9%

15,956 36.0% 40.3%

46,411 35.8%

59,174 27.5%

89,179 43.8%

100,342 12.5%

27,469 27.6% -6.8%

30,826 26.1% 12.2%

32,325 29.9% 4.9%

38,393 30.2% 18.8%

129,013 28.6%

32,191 17.2% -16.2%

35,601 15.5% 10.6%

37,567 16.2% 5.5%

44,859 16.8% 19.4%

150,218 16.4%

172,458 14.8%

16,917 NA

13,931 -17.7%

2,839 -5.9% -40.4% 18.4%

3,448 8.2% 21.5% 20.2%

4,403 48.5% 27.7% 24.2%

4,051 -15.0% -8.0% 20.6%

14,741 5.8%

1,863 5.5% -31.1% 35.5%

2,066 -38.3% 10.9% 33.2%

1,888 -20.1% -8.6% 31.9%

3,624 34.1% 91.9% 51.9%

9,441 -7.3%

4,702 -1.7% -37.0% 22.7%

5,514 -15.6% 17.3% 23.6%

6,291 18.1% 14.1% 26.1%

7,675 2.8% 22.0% 28.8%

24,182 0.3%

3,983 141.4% 3.7% 58.9%

4,205 59.2% 5.6% 56.1%

4,165 33.2% -1.0% 50.9%

5,990 56.0% 43.8% 51.1%

18,343 62.9%

8,685 35.0% -23.2% 31.6%

9,719 5.9% 11.9% 31.5%

10,456 23.7% 7.6% 32.3%

13,665 20.9% 30.7% 35.6%

42,525 20.2%

2/8/07 39 90 43.3%

5/10/07 40 91 44.0%

21,000 76.4%

25,000 81.1%

2/7/07 40 91 44.0%

5/10/07 40 91 44.0%

8/8/07 39 92 42.4%

11/7/07 38 92 41.3%

2/7/08 40 92 43.5%

15,000 72.4%

18,000 77.2%

19,000 78.7%

20,000 75.0%

16,000 69.6%

Ciao Comparison Shopping Sales % Y/Y change % Q/Q change TOTAL SALES % Y/Y change % Q/Q change

SEGMENT OPERATING INCOME North American Survey Operating Income % Y/Y change % Q/Q change Operating Margin Ciao Internet Survey Operating Income % Y/Y change % Q/Q change Operating Margin Total Survey Solutions Operating Income % Y/Y change % Q/Q change Operating Margin Ciao Comparison Shopping Operating Income % Y/Y change % Q/Q change Operating Margin TOTAL SEGMENT OPERATING INCOME % Y/Y change % Q/Q change Operating Margin

26.5%

23.1%

8,301 NA

10,183 22.7%

49.7%

50.5%

25,218 NA

24,114 -4.4%

31.3%

30.0%

4,237 NA

11,258 165.7%

49.2%

56.8%

29,455 NA

35,372 20.1%

33.0%

35.3%

Overall Backlog Information Backlog as of … Days into the quarter Total days in quarter % of Quarter Backlog % of Total Revenue

Survey Backlog Information Backlog as of … Days into the quarter Total days in quarter % of Quarter Backlog % of Survey Revenue

20.9%

38.7%

25.5%

53.7%

33.0%

* as of 3Q07, Backlog excludes expected comparison shopping and advertising revenues

Source: Company reports, Lehman Brothers estimates

April 07, 2008

127

Lehman Brothers

Internet Data Book

April 2008

Figure 150: Greenfield Online Cash Flow Statement, 2005–09E ($ in thousands, except per share data) 2005A

2006A

3/07A

6/07A

9/07A

Cash Flows from Operating Activities Net income (loss) Deferred income tax provision Depreciation and amortization Amortization of contract asset Stock-based compensation Non-cash interest expense (income) Impairment and restructuring Loss on disposal of property and equipment Gain on sale of Custom Research Business Provision for doubtful accounts and other Amortization of debt discount Changes in working capital: Accounts receivable Deferred projects costs Other current assets Additions (refunds) of security deposits Accounts payable Accrued expenses Other assets Payments for management change Payments for restructuring charges Income taxes payable Deferred project revenues Net cash provided by (used in) operating activities

(65,959) (18,392) 9,347 872 92,795 55 575 4,368 (350) (286) 443 (242) (805) 3,919 1,564 125 23,661

8,454 147 12,180 2,524 236 73 59 (239) (4,215) 288 (122) 514 929 1,071 (36) (435) (583) 2,299 51 23,434

1,959 (132) 2,941 901 -

640 858 (91) (21) 26 (421) (619) (108) 1,124 (108) 6,374

1,572 (791) (152) (78) 148 150 339 (97) (111) 1,876 288 7,567

(4,110) 134 98 (759) (21) 406 1,007 (2) (95)

Cash Flows from Investing Activities Purchases of marketable securities Sales of marketable securities Proceeds from sale of Custom Research Business Expenses paid in connection with Custom sale Security deposits, other Acquisitions, net of cash acquired Proceeds from sale of property and equipment Additions to property, equipment, and intangibles Net cash provided by (used in) investing activities

(8,249) 25,649 (113,645) 11 (5,474) (101,708)

(20,569) 5,695 30 (4,923) (19,767)

(5,223)

(4,056) 6,421

(8,326) 3,970

(1,709) (6,932)

1 (2,449) (83)

22 (3,090) (7,424)

Cash Flows from Financing Activities Proceeds from issuance of capital stock Proceeds from borrowings under debt/credit facility Repayments under credit facility Other long-term liabilities Contribution to capital Increase (decrease) in book overdraft Proceeds from borrowings under bridge notes Repayments under term loan Proceeds of options exercised Proceeds of employee stock purchase plan Repayment of Series C-2 Preferred Repayment of Series B Preferred IPO Proceeds Proceeds from subscriptions receivable from mgmt Principal payments under capital lease obligations Net cash provided by (used in) financing activities

4,200 18,848 (18,848) (65) 27 244 151 (1,622) 2,935

(49) 387 127 (4,309) (3,844)

Effect of exchange-rate on cash and equivalents

3,100 (1,049) 2,990 742 -

3,323 (132) 3,154 908 -

12/07E

4,559 2,861 914 -

40

212

(52)

1,603 40

1,845 37

(9) 694

(10) 1,581

(3) 1,879 824

9/08E

12/08E

2008E

2009E

(4) 5,164

3,634 3,332 800 1,152 (304) (304) 333 1,315 112 8,919

4,518 3,419 850 734 (348) (663) 473 1,319 (48) 9,521

7,033 3,791 875 (1,303) (3,680) (1,167) 1,453 2,070 20 10,395

17,669 13,680 3,350 271 (1,566) (1,768) 2,077 1,661 (133) 34,970

20,700 16,142 3,350 (688) (2,039) (620) 328 1,597 46 39,504

(3,114) (3,114)

(17,605) 10,391 23 (10,362) (17,553)

(2,000)

(3,000)

(3,500)

(3,000)

(11,500) (11,500)

(9,000) (9,000)

-

-

-

-

-

-

(3,170) (5,611) (1,092) 551 2,986

-

625 38

6/08E

2,484 3,139 825 (312) 2,765 366 (182) (3,043) (218) 6,135

228

(4,861) (17) 3,355

3/08E

12,941 (1,313) 11,946 3,465 (16) 505 (5,068) (5,410) (145) (1,950) 153 686 3,713 (99) (314) (1,861) 159 22,460

(16) 65

2007E

-

(12) 4,073 115 (22) 4,154

(347)

427

62

849

-

-

-

-

-

-

-

Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP

(75,459) 96,082 20,623

250 20,623 20,873

198 20,873 21,071

9,914 21,071 30,985

(1,366) 30,985 29,619

2,050 29,619 31,669

9,061 20,873 29,934

6,135 31,669 37,804

8,919 37,804 46,723

9,521 46,723 56,244

10,395 56,244 66,639

23,470 29,934 53,404

30,504 53,404 83,908

Free Cash Flow Calculation Operating cash flow Purchases of equipment/software through capital leases Purchases of fixed assets Free Cash Flow % change Cumulative Free Cash Flow last four quarters Free Cash Flow Conversion of Operating Cash Flow Free Cash Flow Conversion of EBITDA

23,661 (1,622) (5,474) 16,565 927.6% 16,565 70% 76%

23,434 (263) (4,923) 18,248 10.2% 18,248 78% 65%

6,374 (1,709) 4,665 17.1% 18,928 73% 68%

7,567 (2,449) 5,118 29.8% 20,103 68% 63%

3,355 (3,090) 265 -94.0% 15,930 8% 3%

5,164 (3,114) 2,050 -65.1% 12,098 40% 18%

22,460 (10,362) 12,098 -33.7% 12,098 54% 34%

6,135 (2,000) 4,135 -11.4% 11,568 67% 57%

8,919 (3,000) 5,919 15.6% 12,369 66% 65%

9,521 (3,500) 6,021 2171.9% 18,125 63% 57%

10,395 (3,000) 7,395 260.7% 23,470 71% 51%

34,970 (11,500) 23,470 94.0% 23,470 67% 57%

39,504 (9,000) 30,504 30.0% 30,504 77% 62%

Special/One-Time Items Normalized Free Cash Flow Normalized Free Cash Flow Conversion of EBITDA

16,565 76%

18,248 65%

4,665 68%

5,118 63%

265 3%

2,050 18%

12,098 34%

4,135 57%

5,919 65%

6,021 57%

7,395 51%

23,470 57%

30,504 62%

Source: Company reports, Lehman Brothers estimates

128

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 151: Harris Interactive Snapshot Strengths

Biggest Concerns

- The leader in transitioning market research to the Internet.

- Continued challenges in healthcare (the company's largest research group) vertical.

- Company has sophisticated, highly scalable technology platform and six years of online research experience.

- Long-term trackers and multi-national contracts slowing conversion from bookings to revenue.

- Strong consulting business with deep vertical expertise---potential price increases going forward.

- The company's lack of footprint in certain geographies has limited opportunities, with globalization a focus moving forward.

-Well-established brand name through Harris Poll.

What to Watch For

Guidance

- Integration of recent acquisitions in Germany, Canada, and Asia.

2008 Net Sales

low end of $258M - $265M

- Large market opportunity: about $9B-$10B of the $23B spent on market research could move online---currently at $1.9B worldwide.

EPS

$0.17-$0.18 (as of FY1Q08)

- Competition from larger traditional research companies like TNS' NFO Worldwide and WPP's Kantar Group.

Adjusted EBITDA

$30M - $31M (as of FY1Q08)

- Trends within major verticals: healthcare, CLM, technology.

Adjusted EBITDA Margin

~12% (as of FY1Q08)

- How quickly new salespeople can ramp. - Health of big Pharma industry. Source: Company reports, Lehman Brothers estimates

April 07, 2008

129

Lehman Brothers

Internet Data Book

April 2008

Figure 152: Harris Interactive Income Statement, Fiscal 2005–09E ($ in millions, except per share data) FY05 F05A $197.0 93.3 103.6

FY06 F06A $212.2 102.1 110.1

1QFY07 9/06A $48.0 23.2 24.8

Operating expenses Sales & Marketing General & Administrative Depreciation and Amortization Restructuring related and other Total operating expenses

20.5 65.6 7.4 1.1 94.6

20.5 68.2 7.2 0.3 96.2

4.6 17.4 1.7 23.8

5.3 17.0 1.6 (0.4) 23.5

5.6 17.0 1.6 24.2

5.5 17.5 1.9 (0.0) 24.8

Operating income

$9.0

$13.9

$1.0

$5.8

$1.5

$4.2

0.6 0.6

0.6 0.6

0.6 0.6

0.5 (0.3) 0.2

2.2 (0.3) 2.0

4.4 1.0 24.0% $0.08

14.3 5.3 37.3% $0.25

Net sales Cost of Sales Gross profit

Interest income Interest expense Total non-operating expenses, net Inc before Income Taxes Provision for Taxes Tax Rate Pre-tax income per share Income (loss) before change in accounting Income (loss) from discontinued operations GAAP Net income (loss) Basic income (loss) per share Diluted income (loss) per share Basic shares outstanding Diluted shares outstanding Fully Taxed EPS - Continued Operations EBITDA Reconciliation Operating Income Depreciation and other amortization EBITDA Stock based compensation Adjusted EBITDA Y/Y Growth Net sales Gross profit Sales & Marketing General & Administrative Total operating expenses Operating income GAAP Net income GAAP EPS Pre-tax income Pre-tax EPS Fully taxed EPS EBITDA % of Revenues Cost of sales Sales & Marketing General & Administrative Total cash operating expenses Margins Gross margin Operating margin Pre-tax income margin EBITDA margin Operating Leverage (∆ EBITDA / ∆ Revenues) Adjusted EBITDA margin

0.7 (0.1) 0.6

1.5 (0.0) 1.5

9.6 5.1 52.8% $0.16

15.4 6.2 40.3% $0.25

4.5 (3.0) $1.6 $0.03 $0.03 60.3 61.2 $0.07

April 07, 2008

6.4 2.7 43.1% $0.11

3QFY07 3/07A $52.6 26.8 25.7

2.1 0.9 43.7% $0.04

4QFY07 6/07A $57.1 28.1 29.0

FY07 F07A $211.8 103.3 108.5

21.2 68.7 6.8 (0.5) 96.2 $12.3

1QFY08 9/07E $59.9 28.9 31.0

2QFY08 12/07E $68.2 32.7 35.5

3QFY08 3/08E $62.9 31.8 31.1

4QFY08 6/08E $70.6 34.5 36.2

FY08 F08E $261.7 127.9 133.8

FY09 F09E $273.1 132.5 140.7

5.5 21.4 2.5 29.5

6.1 20.2 2.5 28.8

6.2 20.1 2.5 28.9

6.5 21.3 2.5 30.3

24.4 83.1 10.0 117.5

24.0 86.0 10.0 120.1

$1.6

$6.6

$2.3

$5.8

$16.3

$20.6

0.6 (0.5) 0.0

0.9 (0.7) 0.2

0.9 (0.8) 0.1

0.9 (0.8) 0.1

3.2 (2.7) 0.4

2.7 (2.0) 0.7

1.6 0.7 41.5% $0.03

6.8 2.8 41.5% $0.13

2.4 1.0 41.5% $0.04

6.0 2.5 41.5% $0.11

16.8 7.0 41.5% $0.32

21.3 8.8 41.5% $0.40

9.2 -

0.9 -

3.6 -

1.2 -

3.3 -

9.0 -

0.9 -

4.0 -

1.4 -

3.5 -

9.8 -

12.5 -

$9.2 $0.15 $0.15 61.5 61.8

$0.9 $0.02 $0.02 59.3 59.6

$3.6 $0.06 $0.06 58.7 59.0

$1.2 $0.02 $0.02 57.4 57.7

$3.3 $0.06 $0.06 52.8 53.1

$9.0 $0.16 $0.16 56.1 56.4

$0.9 $0.02 $0.02 52.8 53.1

$4.0 $0.08 $0.08 52.8 53.1

$1.4 $0.03 $0.03 52.8 53.1

$3.5 $0.07 $0.07 52.8 53.1

$9.8 $0.19 $0.18 52.8 53.1

$12.5 $0.24 $0.23 52.8 53.1

$0.15

$0.02

$0.06

$0.02

$0.06

$0.16

$0.02

$0.08

$0.03

$0.07

$0.18

$0.23

9.0 7.4 $16.4 $16.4

13.9 7.2 $21.1 3.1 $24.2

1.0 1.7 $2.7 1.0 $3.8

5.8 1.6 $7.4 0.9 $8.3

1.5 1.6 $3.1 0.9 $4.0

4.2 1.9 $6.0 0.7 $6.7

12.3 6.8 $19.1 3.5 $22.6

1.6 2.5 $4.1 0.9 $5.0

6.6 2.5 $9.1 0.9 $10.0

2.3 2.5 $4.8 0.9 $5.7

5.8 2.5 $8.3 1.0 $9.3

16.3 10.0 $26.3 3.7 $30.0

20.6 10.0 $30.6 3.9 $34.5

42.2% 40.2% 72.7% 49.2% 54.2% -31.9% -94.7% -95.0% -30.2% -34.5% -51.0% -9.4%

7.7% 6.2% 0.0% 4.0% 3.0% 53.9% 481.2% 475.4% 60.1% 58.5% 100.7% 28.7%

-1.8% -2.2% -6.2% 5.7% 3.0% -49.4% -24.8% -22.1% -27.9% -25.2% -22.1% -30.5%

3.2% 6.4% 7.1% 1.2% 2.5% 45.6% 54.2% 61.7% 51.1% 58.4% 61.7% 28.0%

0.6% -7.3% 9.2% 1.4% 3.2% -64.0% -54.4% -51.1% -54.3% -51.0% -51.1% -47.0%

-2.8% -2.6% 0.6% -4.2% -3.1% 4.3% 3.7% 20.3% -6.5% 8.5% 20.3% 4.4%

-0.2% -1.4% 3.0% 0.8% 1.3% -11.3% -2.7% 6.6% -7.3% 1.5% 6.6% -9.5%

24.7% 25.2% 19.7% 23.0% 22.3% 53.7% 1.2% 13.7% 0.7% 13.0% 13.7% 48.7%

20.6% 21.3% 16.5% 18.7% 18.2% 15.4% 9.9% 22.2% 6.9% 18.9% 22.2% 24.0%

19.7% 21.1% 11.3% 18.3% 16.5% 54.3% 20.4% 30.9% 15.8% 25.9% 30.9% 54.8%

23.7% 24.7% 18.5% 21.7% 20.9% 40.0% 5.2% 5.2% 36.7% 36.7% 5.2% 38.2%

23.5% 23.4% 15.3% 21.0% 19.7% 32.6% 9.5% 16.3% 17.4% 24.8% 16.3% 37.9%

4.4% 5.1% -1.4% 3.5% 2.4% 26.1% 27.2% 27.2% 27.2% 27.2% 27.2% 16.2%

47.4% 10.4% 33.3% 43.7%

48.1% 9.7% 32.1% 41.8%

48.4% 9.6% 36.3% 45.9%

48.3% 9.3% 30.1% 39.4%

51.1% 10.6% 32.4% 43.0%

49.2% 9.6% 30.7% 40.3%

48.8% 10.0% 32.4% 42.4%

48.2% 9.2% 35.8% 45.0%

48.0% 9.0% 29.6% 38.6%

50.5% 9.9% 32.0% 41.9%

48.8% 9.2% 30.2% 39.4%

48.9% 9.3% 31.8% 41.1%

48.5% 8.8% 31.5% 40.3%

52.6% 4.6% 4.9% 8.3% -2.9% 8.3%

51.9% 6.5% 7.3% 9.9% 30.9% 11.4%

51.6% 2.1% 3.3% 5.7% NA 7.9%

51.7% 10.2% 11.3% 13.0% 92.5% 14.7%

48.9% 2.8% 3.9% 5.9% -896.7% 7.6%

50.8% 7.3% 7.6% 10.6% -15.2% 11.8%

51.2% 5.8% 6.7% 9.0% 525.7% 10.7%

51.8% 2.6% 2.7% 6.8% 11.2% 8.3%

52.0% 9.7% 10.0% 13.4% 15.2% 14.7%

49.5% 3.6% 3.8% 7.6% 16.3% 9.0%

51.2% 8.3% 8.4% 11.8% 17.0% 13.2%

51.1% 6.2% 6.4% 10.1% 14.5% 11.5%

51.5% 7.5% 7.8% 11.2% 37.2% 12.6%

Source: Company reports, Lehman Brothers estimates

130

1.6 0.7 41.8% $0.03

2QFY07 12/06A $56.6 27.3 29.2

Lehman Brothers

Internet Data Book

April 2008

Figure 153: Harris Interactive Segment Breakdown, Fiscal 2005–09E ($ in millions, except per share data) FY05 F05A NET SALES United States Non-Internet % change Internet % change Total U.S. Sales % change

FY06 F06A

1QFY07 9/06A

2QFY07 12/06A

3QFY07 3/07A

4QFY07 6/07A

FY07 F07A

1QFY08 9/07E

2QFY08 12/07E

3QFY08 3/08E

4QFY08 6/08E

FY08 F08E

FY09 F09E

52.2 73.5% 97.7 19.3% $150.0 33.8%

56.7 8.5% 112.1 14.7% $168.8 12.6%

11.4 -6.9% 24.3 -1.9% $35.8 -3.6%

14.0 -3.2% 28.4 -2.7% $42.4 -2.9%

12.8 -11.0% 27.3 -2.5% $40.1 -5.4%

11.2 -27.9% 30.2 0.4% $41.4 -9.2%

49.5 -12.8% 110.3 -1.6% $159.7 -5.4%

11.8 3.0% 25.4 4.5% 37.2 4.0%

14.3 2.0% 29.8 5.0% 44.1 4.0%

13.4 4.0% 28.7 5.0% 42.0 4.7%

11.9 6.5% 31.9 5.7% 43.8 5.9%

51.3 3.8% 115.9 5.1% $167.2 4.7%

52.8 2.8% 119.6 3.2% $172.3 3.1%

International Non-Internet % change Internet % change Total International Sales % change Other Revenue

34.9 34.3% 11.6 165.4% $46.5 53.1% 0.5

32.7 -6.4% 13.3 14.6% $46.0 -1.1% -

7.0 -18.9% 4.5 39.3% $11.4 -3.1% -

9.4 17.5% 4.0 25.6% $13.4 19.9% -

8.1 22.0% 3.5 7.9% $11.5 17.4% -

10.0 5.7% 5.7 52.9% $15.7 18.9% -

34.5 5.4% 17.6 32.3% $52.0 13.2% -

15.3 120.0% 7.4 65.0% 22.7 98.6%

17.1 82.0% 7.0 75.0% 24.1 79.9%

14.5 80.0% 6.4 85.0% 20.9 81.5%

18.6 85.0% 8.2 45.0% 26.8 70.6%

65.5 90.1% 29.0 64.8% $94.5 81.5% -

70.1 7.0% 30.7 6.0% $100.8 6.7% -

Total Consolidated Sales Non-Internet % change Internet % change Total Consolidated Sales % change

87.2 55.3% 109.3 26.7% $196.5 38.0%

89.4 2.6% 125.4 14.7% $214.8 9.3%

18.4 -11.9% 28.8 2.8% $47.2 -3.5%

23.4 4.2% 32.4 0.1% $55.8 1.8%

20.9 -0.7% 30.7 -1.4% $51.7 -1.0%

21.2 -15.1% 35.9 6.2% $57.1 -2.9%

83.9 -6.1% 127.8 2.0% $211.8 -1.4%

27.1 47.3% 32.8 13.9% $59.9 27.0%

31.3 34.1% 36.9 13.7% $68.2 22.2%

27.9 33.3% 35.1 14.0% $62.9 21.7%

30.5 43.7% 40.1 11.9% $70.6 23.7%

116.8 39.2% 144.8 13.3% $261.7 23.6%

122.9 5.2% 150.3 3.8% $273.1 4.4%

SHARE OF REVENUE BY CATEGORY United States Sales Non-Internet Internet International Sales Non-Internet Internet Total Consolidated Sales Non-Internet Internet

100% 35% 65% 100% 75% 25% 100% 44% 56%

100% 34% 66% 100% 71% 29% 100% 42% 58%

100% 32% 68% 100% 61% 39% 100% 39% 61%

100% 33% 67% 100% 70% 30% 100% 42% 58%

100% 32% 68% 100% 70% 30% 100% 40% 59%

100% 27% 73% 100% 64% 36% 100% 37% 63%

100% 31% 69% 100% 66% 34% 100% 40% 60%

100% 32% 68% 100% 68% 32% 100% 45% 55%

100% 32% 68% 100% 71% 29% 100% 46% 54%

100% 32% 68% 100% 69% 31% 100% 44% 56%

100% 27% 73% 100% 69% 31% 100% 43% 57%

100% 31% 69% 100% 69% 31% 100% 45% 55%

100% 31% 69% 100% 70% 30% 100% 45% 55%

SHARE OF REVENUE BY GEOGRAPHY United States International Total

76% 24% 100%

79% 21% 100%

76% 24% 100%

76% 24% 100%

78% 22% 100%

73% 27% 100%

75% 25% 100%

62% 38% 100%

65% 35% 100%

67% 33% 100%

62% 38% 100%

64% 36% 100%

63% 37% 100%

SHARE OF CATEGORY BY GEOGRAPHY Non-Internet United States International Internet United States International Total Consolidated Sales United States International

100% 60% 40% 100% 89% 11% 100% 76% 24%

100% 63% 37% 100% 89% 11% 100% 79% 21%

100% 62% 38% 100% 85% 15% 100% 76% 24%

100% 60% 40% 100% 88% 12% 100% 76% 24%

100% 61% 39% 100% 89% 11% 100% 78% 22%

100% 53% 47% 100% 84% 16% 100% 73% 27%

100% 59% 41% 100% 86% 14% 100% 75% 25%

100% 43% 57% 100% 78% 22% 100% 62% 38%

100% 46% 54% 100% 81% 19% 100% 65% 35%

100% 48% 52% 100% 82% 18% 100% 67% 33%

100% 39% 61% 100% 80% 20% 100% 62% 38%

100% 44% 56% 100% 80% 20% 100% 64% 36%

100% 43% 57% 100% 80% 20% 100% 63% 37%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

131

Lehman Brothers

Internet Data Book

April 2008

Figure 154: Harris Interactive Cash Flow Statement, Fiscal 2005–09E ($ in millions, except per share data) FY05 F05A Cash Flows from Operating Activities Net income (loss) Income (loss) from discontinued operations Stock-based compensation Depreciation and amortization Cash outflows for restr. and asset impair. Amort. of def. comp and mktbl sec./other Changes in working capital: Accounts receivable, net and other Prepaids, other Accounts payable Accrued expenses and other current Billings in excess of cost Net cash provided by (used in) operating activities

FY06 F06A

1QFY07 9/06A

2QFY07 12/06A

3QFY07 3/07A

4QFY07 6/07E

FY07 F07E

1QFY08 9/07E

2QFY08 12/07E

3QFY08 3/08E

4QFY08 6/08E

FY08 F08E

FY09 F09E

1.6 4.1 7.4 0.5 0.8 3.2 (6.2) 3.6 1.7 3.4 0.8 17.5

9.5 3.1 7.2 (0.3) 1.1 7.3 (0.1) 3.6 1.8 (0.8) 2.8 27.9

0.9 1.0 1.7 1.0 (2.9) 3.2 0.5 (1.5) (3.9) (1.2) 1.7

3.6 0.9 1.6 (0.4) 2.6 0.2 (8.7) 0.0 (0.8) 3.6 6.1 8.5

1.2 0.9 1.6 (0.8) (0.1) 9.1 (0.5) (2.7) (3.0) (2.8) 2.8

3.3 0.7 1.9 (4.3) (2.4) (4.3) (0.1) 3.9 (1.5) 1.6

9.0 3.5 6.8 (0.4) 2.8 (7.1) 1.2 (4.3) (5.2) 0.6 0.6 14.7

0.9 0.9 2.5 8.8 5.3 (1.1) 6.9 (5.8) 3.4 13.2

4.0 0.9 2.5 12.3 6.2 (2.3) (2.7) 5.1 6.0 19.7

1.4 0.9 2.5 (5.7) (6.7) 2.3 (0.3) 1.8 (2.7) (0.9)

3.5 1.0 2.5 1.0 2.0 1.8 (0.7) (1.0) (1.3) 8.0

9.8 3.7 10.0 16.4 6.9 0.9 3.2 0.1 5.4 39.9

12.5 3.9 10.0 20.0 1.0 1.8 8.4 6.1 2.7 46.3

Cash Flows from Investing Activities Purchase of marketable securities, acquisitions Proceeds from maturities & sales of mktbl sec., other Capital expenditures Net cash provide by (used in) investing activities

(48.1) 47.5 (13.4) (14.0)

(49.2) 27.0 (2.1) (24.3)

(28.3) 34.4 (0.8) 5.3

(11.2) 29.1 (1.1) 16.7

(19.2) 37.4 (0.9) 17.3

(1.4) (1.4)

(58.7) 100.9 (4.3) 37.9

(24.1) (1.8) (25.9)

(1.8) (1.8)

(1.8) (1.8)

(1.8) (1.8)

(24.1) (7.0) (31.1)

(7.0) (7.0)

Cash Flows from Financing Activities Repurchase of common stock Decrease in short-term borrowings Principal payments on long-term debt Issuance of common stock and stock options, other Net cash provided by (used in) financing activities

(6.1) 2.3 (3.8)

(5.4) (5.4)

(11.0) 0.2 (10.8)

(2.2) 0.6 (1.6)

(27.5) 0.7 (26.8)

19.6 19.6

(41) 21.1 (19.7)

-

-

-

-

-

Effect of exchange-rate on cash and equivalents Net cash from discontinued operations Net change in cash Cash & equivalents - BOP Cash & equivalents - EOP

0.2 0.7 0.6 12.5 13.1

-

-

-

0.2 (1.7) 13.1 11.422

(0.0)

0.2

0.0

0.2

-

(3.8) 11.4 7.6

23.9 7.6 31.5

(6.7) 31.5 24.8

19.8 24.8 44.6

33.1 11.4 44.6

(12.7) 44.6 31.9

17.9 31.9 49.8

(2.6) 49.8 47.2

6.2 47.2 53.4

41.5 4.0% 0.4 1.1 8.5%

31.2 4.0% 0.3 1.0 8.0% (0.1)

0.7 1.0

67.4 3.3% 0.6 20.6 9.8% (0.5)

88.3 4.0% 0.9 20.6 9.3% (0.7)

103.7 3.3% 0.9 20.6 9.8% (0.8)

107.2 3.3% 0.9 20.6 9.8% (0.8)

(2.7)

77.5 3.5% 2.7 20.6 9.6% (2.0)

13.2 (1.8) 11.4 1158.3% 87%

19.7 (1.8) 17.9 143.0% 91%

(0.9) (1.8) (2.6) -238.3% 299%

8.0 (1.8) 6.2 3289.8% 78%

39.9 (7.0) 32.9 217.5% 82%

46.3 (7.0) 39.3 19.4% 85%

Average Cash Balance Annualized Interest Rate Calculated Interest Income Average Debt Balance Interest Expense on Debt Calculated Interest Expense Free Cash Flow Calculation Operating cash flow Purchases of fixed assets Free Cash Flow % change Free Cash Flow Conversion of Operating Cash Flow

17.5 (9.4) 8.1 -47.8% 46%

Source: Company reports, Lehman Brothers estimates

132

April 07, 2008

27.9 (2.1) 25.7 217.7% 92%

1.7 (0.8) 0.9 8.7% 52%

8.5 (1.1) 7.4 -26.5% 87%

2.8 (0.9) 1.9 -78.7% 67%

-

1.6 (1.4) 0.2 -96.9% 12%

14.7 (4.3) 10.4 -59.7% 71%

-

-

8.8 44.6 53.4

3.2

39.3 53.4 92.7

Lehman Brothers

Internet Data Book

April 2008

Figure 155: Alloy Snapshot Strengths

Biggest Concerns

- Targets the youth market through various platforms including: 1) newspaper and radio; 2) event marketing; 3) location media; 4) print and interactive.

- Inconsistent operational performance and limited track record as a standalone company.

- Alloy places ~90% of national college newspaper advertising and is the leader in on-campus marketing.

- Has yet to reap benefits from Sconex acquisition; investing in product development and user experience.

- Relatively defensible position in out-of-home market on college and high school campuses.

- Model shifting away from youth/college market to more out-of-home, potentially increases growth profile but also results in higher margin for error.

- Alloy Media and Marketing should be more focused as a standalone company.

- Larger media companies targeting youth market more aggressively through web properties. - Heavy investment in Channel One.

What to Watch For

Guidance

- Company must balance investment and growth opportunities with continued cost-cutting efforts.

2007

2008 $225M - $240M

$9M - $11M

$20M - $24M

Revenues - Acquisition of Sconex, a social networking website aimed at high school students, in March 2006 could drive higher online advertising exposure.

- Shift to higher margin products: out-of-home, online, database.

Adjusted EBITDA

$14.6M ($9.9M of which for Channel One)

Capex

- Will Channel One pay off?

Source: Company reports, Lehman Brothers estimates

Figure 156: Alloy Revenue and EBITDA Estimates, Fiscal 2005–09E ($ in millions, except per share data)

Revenue Y/Y Growth Q/Q Growth Adjusted EBITDA % Margin Corporate Adjusted EBITDA TOTAL Adjusted EBITDA Y/Y Growth % Margin

FY06A FY07E FY05A FY06A FY07E FY08E FY09E 1/31/2006 4/30/2006 7/31/2006 10/31/2006 1/31/2007 1/31/2007 4/30/2007 7/31/2007 10/31/2007 1/31/2008 1/31/2008 1/31/2009 1/31/2010 FY05A 1Q06A 2Q06A 3Q06A 4Q06A FY06A 1Q07A 2Q07A 3Q07A 4Q07E FY07E FY08E FY09E 195.3 44.8 46.7 63.7 40.9 196.1 37.8 51.7 66.5 46.4 202.3 230.7 258.4 6.0% 3.7% 1.4% 1.4% -5.4% 0.4% -15.7% 10.6% 4.5% 13.5% 3.2% 14.0% 12.0% 3.8% 4.2% 36.3% -35.8% -7.5% 36.7% 28.7% -30.3% 25.8 13.2%

3.8 8.6%

5.4 11.6%

12.8 20.1%

5.6 13.6%

(8.5)

(2.3)

17.3 258.6% 8.8%

1.5 13.4% 3.4%

(2.0)

(1.7)

3.4 -12.0% 7.3%

11.1 22.4% 17.4%

Enterprise Value Calculation Price per share Shares outstanding Market Capitalization + Debt - Cash Enterprise Value Adjusted EBITDA EV/EBITDA

27.6 14.1%

2.3 6.1%

3.5 6.8%

11.7 17.5%

3.2 7.0%

20.7 10.2%

32.3 14.0%

37.5 14.5%

(2.5)

(8.6)

(2.4)

(2.6)

(2.3)

(3.2)

(10.6)

(11.0)

(12.0)

3.0 0.4% 7.4%

19.0 10.2% 9.7%

(0.1) -107.2% -0.3%

0.9 -74.0% 1.7%

9.3 -15.7% 14.0%

0.0 -98.5% 0.1%

10.2 -46.6% 5.0%

21.3 109.7% 9.2%

25.5 19.6% 9.9%

FY06A $12.00 14.3 $171.6 12.7 29.4 $154.9 19.0 8.2x

FY07E $12.00 14.3 $171.6 1.4 38.0 $135.0 10.2 13.3x

FY08E $12.00 14.3 $171.6 1.4 56.1 $116.9 21.3 5.5x

FY09E $12.00 14.3 $171.6 1.4 77.7 $95.3 25.5 3.7x

Source: Company reports, Lehman Brothers estimates

April 07, 2008

133

Lehman Brothers

Internet Data Book

April 2008

Figure 157: TechTarget Snapshot

Strengths

Biggest Concerns

- Beneficiary of growth in online advertising market as well trends in corporate IT spending. B2B online advertising of $2.4 billion in the U.S. in 2007E represents 24% growth year-over-year.

- Limited operating metrics and lack of visibility given the short-term nature of advertising contracts. Campaigns typically run for less than 90 days and are cancellable with less than 30 days notice. Visibility is dependent on the company’s ability to forecast spending and not based on any backlog or bookings metrics

- Over 4.9 million registered users consisting primarily of IT professionals and purchase decision makers with detailed user information contributing to a valuable database of potential leads for advertisers.

- Organic revenue growth: we estimate 2008 organic growth of 16%.

- Network of 40+ highly-specialized sector specific websites, featuring over 20,000 pieces of original content per year tailored for specific audiences. Leader in distribution of White Papers via BitPipe network. Online represented 67% of revenues in '07.

- Continued erosion of Print business will offset some total revenue growth in the near-term.

- Highly targeted database-driven campaigns are more effective at providing measurable ROI and compare favorably to traditional CPM based campaigns which dominate the Web.

- Relatively high customer concentration creates risk (in 2006 top advertiser accounted for 11% of total revenue). Concentration could make company more susceptible to volatile quarter-to-quarter trends and product launches of individual advertisers.

- Experienced management team with background in both business-tobusiness and technology sectors as well as over 7 years of operating history at TechTarget and several years together prior to founding TechTarget.

- Client base is highly concentrated within the technology sector. As a result, the macro environment around overall technology spending and online advertising is critical.

What to Watch For

Guidance

- International expansion opportunity -- less than 1% of TechTarget's 2006 revenue was International yet 30% of TechTarget's audience of users is based overseas and 50% of global IT spending is based overseas.

Revenue Adjusted EBITDA Implied adj EBITDA Margin

- Scalable entry into new technology verticals such as vertical software markets and Channel. Company can launch new sites in a cost efficient and timely manner. - Print revenue declines are expected, but deceleration could be greater than anticipated - TechTarget likely has room to exercise pricing power if it continues to deliver attractive ROI. - Tuck-in acquisitions in specific verticals: acquisition of KnowledgeStorm contributed ~$1M in GAAP revenue to 4Q07 results, but ~$1M in EBITDA loss as cost synergies not yet realized.

Source: Company reports, Lehman Brothers estimates

134

April 07, 2008

1Q08 $23M - $24M $3M - $3.8M 13% - 15.8%

2008 $118M - $122M $33M - $35M 28% - 28.7%

Lehman Brothers

Internet Data Book

April 2008

Figure 158: TechTarget Income Statement, 2005–09E ($ in thousands, except per share data) 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

2008E

2009E

24,838 8,617 1,052 34,506

88,378 26,682 4,677 119,737

102,518 28,817 4,349 135,685

5,856 2,030 889 8,776 21,264

5,713 2,585 589 8,887 25,619

22,019 8,595 3,180 33,794 85,943

24,604 9,308 3,045 36,957 98,728

7,510 2,103 3,244 500 1,300 2,400 17,057 4,207 6,607

7,936 2,070 3,451 400 1,200 2,600 17,657 7,962 10,562

30,468 8,471 12,932 2,200 5,270 9,670 69,011 16,932 26,602

34,600 9,769 14,111 2,200 5,270 10,088 76,038 22,690 32,778

Revenue Online Events Print Total Revenue

43,662 14,595 8,489 66,746

51,176 19,708 8,128 79,012

13,709 2,939 1,697 18,345

16,330 6,350 1,924 24,604

14,687 6,912 1,702 23,301

18,960 8,053 1,402 28,415

63,686 24,254 6,725 94,665

19,056 3,350 1,273 23,679

23,189 7,112 1,212 31,513

21,296 7,603 1,140 30,040

Cost of Revenue Cost of Revenue - Online Cost of Revenue - Events Cost of Revenue - Print Total Cost of Revenue Gross Profit

10,476 6,202 5,322 22,000 44,746

12,901 6,462 5,327 24,690 54,322

3,455 1,360 1,120 5,934 12,411

3,830 2,399 989 7,218 17,386

3,753 2,263 863 6,879 16,422

4,348 2,536 801 7,685 20,730

15,386 8,558 3,773 27,716 66,949

4,954 1,675 865 7,495 16,184

5,496 2,304 836 8,636 22,876

Operating Expenses Selling and Marketing Product Development General and Administrative Depreciation Amortization Stock-based Compensation Total Operating Expenses Operating Income PF Operating Income (ex. stock-based comp)

18,174 5,756 7,539 1,792 5,172 78 38,511 6,235 6,313

19,699 6,205 8,332 1,144 5,029 1,250 41,659 12,663 13,913

5,616 1,675 2,240 330 759 1,071 11,691 720 1,791

5,800 1,523 2,497 364 1,041 1,198 12,423 4,963 6,161

6,341 1,593 2,760 401 1,171 1,653 13,919 2,503 4,156

7,292 2,195 2,852 515 1,769 1,912 16,535 4,195 6,107

25,049 6,986 10,349 1,610 4,740 5,834 54,568 12,381 18,215

7,364 2,155 3,055 720 1,470 2,320 17,083 (900) 1,420

7,658 2,143 3,183 580 1,300 2,350 17,213 5,663 8,013

Interest Income (Expense), net

377

897

624

1,831

450

457

522

581

2,010

2,997

Pre-tax Income

6,205

12,984

653

5,340

3,400

4,819

14,212

(450)

6,120

4,729

8,543

18,942

25,687

Benefit from (Provision for) Income Taxes Reported Tax Rate

2,681 NA

(5,811) 44.8%

(336) 51.5%

(2,092) 39.2%

(1,568) 46.1%

(2,050) 42.5%

(6,046) 42.5%

198 44.0%

(2,693) 44.0%

(2,081) 44.0%

(3,759) 44.0%

(8,334) 44.0%

(11,302) 44.0%

GAAP Net Income (loss) Basic EPS GAAP Diluted EPS

8,886 $0.30 $0.30

7,173 $0.22 $0.20

317 $0.01 $0.01

3,248 $0.09 $0.08

1,832 $0.05 $0.04

2,769 $0.07 $0.06

8,166 $0.21 $0.20

(252) ($0.01) ($0.01)

3,427 $0.08 $0.08

2,648 $0.06 $0.06

4,784 $0.11 $0.10

10,607 $0.25 $0.23

14,385 $0.33 $0.31

29,484 29,484

33,190 35,933

33,540 36,290

37,474 39,993

40,355 43,336

40,690 43,833

38,015 40,863

41,490 44,783

42,190 45,333

42,790 45,783

42,890 45,883

42,340 45,446

43,748 46,801

8,886 78 8,964 $0.30 $0.30

7,173 1,250 8,423 $0.25 $0.23

317 1,071 1,388 $0.04 $0.04

3,248 1,198 4,446 $0.12 $0.11

1,832 1,653 3,485 $0.09 $0.08

2,769 1,912 4,681 $0.12 $0.11

8,166 5,834 14,000 $0.37 $0.34

(252) 2,320 2,068 $0.05 $0.05

3,427 2,350 5,777 $0.14 $0.13

2,648 2,400 5,048 $0.12 $0.11

4,784 2,600 7,384 $0.17 $0.16

10,607 9,670 20,277 $0.48 $0.45

14,385 10,088 24,473 $0.56 $0.52

78

1,250

1,071

1,198

1,653

1,912

5,834

2,320

2,350

2,400

2,600

9,670

10,088

6,235 6,964 78 13,277

12,662 6,173 1,250 20,085

720 1,089 1,071 2,880

4,963 1,405 1,198 7,566

2,503 1,572 1,653 5,728

4,195 2,284 1,912 8,391

12,381 6,350 5,834 24,565

(900) 2,190 2,320 3,610

5,663 1,880 2,350 9,893

4,207 1,800 2,400 8,407

7,962 1,600 2,600 12,162

16,932 7,470 9,670 34,072

22,690 7,470 10,088 40,248

39.3% 51.3% 47.9% 42.8% 47.2% 28.8% 40.3% 10.6% 14.0% -283.2% 119.2% NA NA 148.1%

17.2% 35.0% -4.3% 18.4% 21.4% 8.4% 7.8% 10.5% 8.2% 103.1% -19.3% -33.8% -22.9% 51.3%

32.1% 26.3% -23.2% 23.0% 29.2% 26.7% 7.1% 27.1% 28.6% 38.6% -27.9% -28.6% 193.6% 55.7%

27.5% 10.6% -11.0% 18.8% 19.3% 12.2% -2.0% 20.0% 18.3% 21.9% 36.8% 22.9% 65.7% 31.1%

16.9% 17.3% -5.9% 15.0% 20.6% 29.9% -0.9% 31.0% 35.0% -24.4% 15.5% -4.3% 72.2% 14.0%

22.9% 40.1% -28.0% 22.9% 25.5% 39.9% 48.2% 19.8% 40.6% -11.9% -0.1% -18.1% -0.7% 12.7%

24.4% 23.1% -17.3% 19.8% 23.2% 27.2% 12.6% 24.2% 31.0% -2.2% 13.8% 0.1% 46.2% 22.3%

39.0% 14.0% -25.0% 29.1% 30.4% 31.1% 28.6% 36.4% 46.1% -225.0% -179.4% -164.4% 20.8% 25.4%

42.0% 12.0% -37.0% 28.1% 31.6% 32.0% 40.7% 27.5% 38.6% 14.1% 5.5% -6.9% 14.6% 30.8%

45.0% 10.0% -33.0% 28.9% 29.5% 18.4% 32.0% 17.5% 22.5% 68.1% 44.5% 36.8% 37.1% 46.8%

31.0% 7.0% -25.0% 21.4% 23.6% 8.8% -5.7% 21.0% 6.8% 89.8% 72.8% 65.1% 50.7% 44.9%

38.8% 10.0% -30.5% 26.5% 28.4% 21.6% 21.2% 25.0% 26.5% 36.8% 29.9% 16.8% 30.2% 38.7%

16.0% 8.0% -7.0% 13.3% 14.9% 13.6% 15.3% 9.1% 10.2% 34.0% 35.6% 31.7% 17.2% 18.1%

24.0% 42.5% 62.7% 33.0% 27.2% 8.6% 11.3% 57.7%

25.2% 32.8% 65.5% 31.2% 24.9% 7.9% 10.5% 52.7%

25.2% 46.3% 66.0% 32.3% 30.6% 9.1% 12.2% 63.7%

23.5% 37.8% 51.4% 29.3% 23.6% 6.2% 10.1% 50.5%

25.6% 32.7% 50.7% 29.5% 27.2% 6.8% 11.8% 59.7%

22.9% 31.5% 57.1% 27.0% 25.7% 7.7% 10.0% 58.2%

24.2% 35.3% 56.1% 29.3% 26.5% 7.4% 10.9% 57.6%

26.0% 50.0% 68.0% 31.7% 31.1% 9.1% 12.9% 72.1%

23.7% 32.4% 69.0% 27.4% 24.3% 6.8% 10.1% 54.6%

27.5% 26.7% 78.0% 29.2% 25.0% 7.0% 10.8% 56.8%

23.0% 30.0% 56.0% 25.8% 23.0% 6.0% 10.0% 51.2%

24.9% 32.2% 68.0% 28.2% 25.4% 7.1% 10.8% 57.6%

24.0% 32.3% 70.0% 27.2% 25.5% 7.2% 10.4% 56.0%

76.0% 57.5% 37.3% 67.0% 9.3% 13.3% 19.9% 39.6%

74.8% 67.2% 34.5% 68.8% 16.0% 9.1% 25.4% 55.5%

74.8% 53.7% 34.0% 67.7% 3.9% 1.7% 15.7% 30.0%

76.5% 62.2% 48.6% 70.7% 20.2% 13.2% 30.8% 46.2%

74.4% 67.3% 49.3% 70.5% 10.7% 7.9% 24.6% 23.2%

77.1% 68.5% 42.9% 73.0% 14.8% 9.7% 29.5% 17.9%

75.8% 64.7% 43.9% 70.7% 13.1% 8.6% 25.9% 28.6%

74.0% 50.0% 32.0% 68.3% -3.8% -1.1% 15.2% 13.7%

76.3% 67.6% 31.0% 72.6% 18.0% 10.9% 31.4% 33.7%

72.5% 73.3% 22.0% 70.8% 14.0% 8.8% 28.0% 39.8%

77.0% 70.0% 44.0% 74.2% 23.1% 13.9% 35.2% 61.9%

75.1% 67.8% 32.0% 71.8% 14.1% 8.9% 28.5% 37.9%

76.0% 67.7% 30.0% 72.8% 16.7% 10.6% 29.7% 38.7%

Basic Shares Outstanding Diluted Shares Outstanding Adjusted EPS Reconciliation Net Income Stock-based Compensation One-time Items Adjusted Net Income Adjusted Basic EPS Adjusted Diluted EPS Total Stock-based Compensation EBITDA Reconciliation Operating Income Depreciation & Amortization Stock-based Compensation EBITDA Y/Y GROWTH Online Revenue Events Revenue Print Revenue Total Revenue Gross Profit Selling and Marketing Product Development General and Administrative Total Operating Expenses Operating Income Net Income Diluted EPS Adjusted Diluted EPS EBITDA % OF REVENUES Cost of Online Rev as a % of Online Rev Cost of Events Rev as a % of Events Rev Cost of Print Rev as a % of Print Rev Total Cost of Revenue Selling and Marketing Product Development General and Administrative Total Operating Expenses MARGINS Gross Margin - Online Gross Margin - Events Gross Margin - Print Gross Margin Operating Margin Net Margin EBITDA Margin Operating Leverage/EBITDA Flow-through

(30)

321

(67)

12/08E

Source: Company reports, Lehman Brothers estimates

April 07, 2008

135

Lehman Brothers

Internet Data Book

April 2008

Figure 159: TechTarget Segment Breakdown, 2005–09E ($ in thousands, except per share data) Segment Detail 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

2009E

TOTAL ONLINE REVENUE Y/Y Growth Q/Q Growth

43,662 39.3%

51,176 17.2%

13,709 32.1% -11.1%

16,330 27.5% 19.1%

14,687 16.9% -10.1%

18,960 22.9% 29.1%

63,686 24.4%

19,056 39.0% 0.5%

23,189 42.0% 21.7%

21,296 45.0% -8.2%

24,838 31.0% 16.6%

88,378 38.8%

102,518 16.0%

TOTAL EVENTS REVENUE Y/Y Growth Q/Q Growth

14,595 51.3%

19,708 35.0%

2,939 26.3% -48.9%

6,350 10.6% 116.1%

6,912 17.3% 8.9%

8,053 40.1% 16.5%

24,254 23.1%

3,350 14.0% -58.4%

7,112 12.0% 112.3%

7,603 10.0% 6.9%

8,617 7.0% 13.3%

26,682 10.0%

28,817 8.0%

8,489 47.9%

#REF! 8,128 -4.3%

1,697 -23.2% -12.8%

1,924 -11.0% 13.4%

1,702 -5.9% -11.5%

1,402 -28.0% -17.6%

6,725 -17.3%

1,273 -25.0% -9.2%

1,212 -37.0% -4.8%

1,140 -33.0% -5.9%

1,052 -25.0% -7.8%

4,677 -30.5%

4,349 -7.0%

66,746 42.8%

79,012 18.4%

18,345 23.0% -20.6%

24,604 18.8% 34.1%

23,301 15.0% -5.3%

28,415 22.9% 21.9%

94,665 19.8%

23,679 29.1% -16.7%

31,513 28.1% 33.1%

30,040 28.9% -4.7%

34,506 21.4% 14.9%

119,737 26.5%

135,685 13.3%

2005A 65%

2006A 65%

3/07A 75%

6/07A 66%

9/07A 63%

12/07A 67%

2007A 67%

3/08E 80%

6/08E 74%

9/08E 71%

12/08E 72%

2008E 74%

2009E 76%

Events Revenue

22%

25%

16%

26%

30%

28%

26%

14%

23%

25%

25%

22%

21%

Print Revenue

13%

10%

9%

8%

7%

5%

7%

5%

4%

4%

3%

4%

3%

Total Revenue

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

TOTAL PRINT REVENUE Y/Y Growth Q/Q Growth TOTAL REVENUE

Metrics Segment Breakdown Online Revenue

Revenue Seasonality Online Revenue

100%

100%

22%

26%

23%

30%

100%

22%

26%

24%

28%

Events Revenue

100%

100%

12%

26%

28%

33%

100%

13%

27%

28%

32%

100%

Print Revenue

100%

100%

25%

29%

25%

21%

100%

27%

26%

24%

22%

100%

Total Revenue

100%

100%

19%

26%

25%

30%

100%

20%

26%

25%

29%

100%

457

474

511

Full-time employees

Source: Company reports, Lehman Brothers estimates

136

April 07, 2008

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April 2008

Figure 160: TechTarget Cash Flow Statement, 2005–09E ($ in thousands, except per share data) 2005A Operating activities: Net income (loss) Adjustments: Depreciation Amortization of intangible assets Provision for bad debt Stock-based compensation expense Interest expense related to amortization of debt issuance costs Deferred income taxes Realized gain/loss on foreign currency Excess tax benefit - stock options

2006A

3/07A

6/07A

9/07A

12/07E

2007E

3/08E (252)

6/08E

9/08E

12/08E

2008E

2009E

8,886

7,173

317

2,714

1,542

2,769

7,342

3,427

2,648

4,784

10,607

14,385

1,792 5,172 (124) 78 24 (2,995) -

1,144 5,029 366 1,250 92 174 -

330 759 24 1,071 253 232 -

364 1,041 37 1,198 57 246 (2,295)

401 1,171 56 1,653 92 (223)

515 1,769 56 1,912 500 -

1,610 4,740 173 5,834 310 1,070 (2,518)

720 1,470 56 2,320 500 -

580 1,300 56 2,350 500 -

500 1,300 56 2,400 500 -

400 1,200 56 2,600 450 -

2,200 5,270 224 9,670 1,950 -

2,200 5,270 224 10,088 1,200 -

Changes in operating assets and liabilities: Accounts receivable, net Other receivables Prepaid expenses and other assets Accounts payable Income taxes payable Accrued expenses and other current liabilities Accrued compensation expense Deferred revenue Deferred rent expense/Other liabilities Total changes in working capital Net cash provided (used in) operating activities

1,161 (383) 1,204 315 30 (2,305) (1,642) 122 (1,498) 11,335

(3,247) (813) (741) 1,539 399 446 (418) (54) (2,889) 12,339

1,099 (1,878) 448 (1,757) (380) (1,399) 3,129 (35) (773) 2,213

(2,424) 1,713 93 (97) (200) 387 (57) (39) (624) 2,738

884 984 (348) 236 469 (26) (36) 2,163 6,855

(2,779) 1,497 (121) 1,031 914 821 (1,829) (466) 7,055

(3,220) 2,316 72 (823) 570 278 1,217 300 18,861

(785) 825 552 (105) (446) 41 4,855

(1,349) (124) (401) 153 467 (1,254) 6,959

810 (121) 754 1,384 (177) 2,650 10,054

(2,284) 2 (455) (1,421) (672) (4,829) 4,661

(3,608) 582 451 11 (828) (3,392) 26,530

(2,904) (384) 349 (42) 459 (2,522) 30,845

Investing activities: Acquisition of property and equipment Acquisition of businesses, net of cash acquired Proceeds from sale of assets Purchases of short-term investments Proceeds from sale of short-term investments Net cash provided by (used in) investing activities

(2,141) 233 33,000 31,092

(1,263) (15,017) (16,280)

(897) (1,013) (1,910)

(792) (14,002) (1,013) (126,100) 55,790 (86,117)

(655) (158,147) 140,556 (18,246)

(650) (52,000) (40,731) 83,000 (10,381)

(2,994) (67,015) (1,013) (324,978) 279,346 (116,654)

(725) (725)

(750) (750)

(750) (750)

(775) (775)

(3,000) (3,000)

(3,500) (3,500)

(3,000) 238 -

10,000 (23,000) 892 -

(750) 121 -

83,161 (750) 12,000 (12,000) 652 2,295 85,358

(750) 204 223 (323)

(6,000) (750) -

77,161 (3,000) 12,000 (12,000) 977 -

(750) -

(750) -

(750) -

(750) -

(3,000) -

(2,919) -

(6,750)

75,138

(11,714) 32,483 20,769

(10,076) 20,769 10,693

(22,655) 30,830 8,175

-

Financing activities: IPO Proceeds Proceeds from issuance of Series B preferred stock Proceeds from issuance of Series C preferred stock Proceeds from bank term loan payable Payments of term loan payable Proceeds from credit facility Payments toward credit facility Proceeds from exercise of warrants/stock options Purchase of stock options through tender offer Purchase of common and preferred stock through tender offer Excess tax benefits - stock options Net cash provided (used in) financing activities

(2,762)

(12,108)

(629)

Total increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period Cash and cash equivalents, end of period

39,665 7,214 46,878

(16,049) 46,878 30,830

(326) 30,830 30,503

2,141 3.2% 16.1%

1,263 1.6% 6.3%

897 4.9% 31.1%

792 3.2% 10.5%

655 2.8% 11.4%

650 2.3% 7.7%

2,994 3.2% 12.2%

725 3.1% 20.1%

750 2.4% 7.6%

750 2.5% 8.9%

775 2.2% 6.4%

3,000 2.5% 8.8%

3,500 2.6% 8.7%

11,335 (2,141) 9,194 79.7%

12,339 (1,263) 11,076 20.5%

2,213 (897) 1,316 1485.4%

2,738 (792) 1,946

6,855 (655) 6,200

7,055 (650) 6,405

18,861 (2,994) 15,867 43.3%

4,855 (725) 4,130 213.9%

6,959 (750) 6,209 219.1%

10,054 (750) 9,304 50.1%

4,661 (775) 3,886 -39.3%

26,530 (3,000) 23,530 48.3%

30,845 (3,500) 27,345 16.2%

81.1% 69.2%

89.8% 55.1%

59.5% 45.7%

71.1% 25.7%

90.4% 108.2%

90.8% 76.3%

84.1% 64.6%

85.1% 114.4%

89.2% 62.8%

92.5% 110.7%

83.4% 31.9%

88.7% 69.1%

88.7% 67.9%

Capex Analysis: Capex Capex as % of revenue Capex as % of EBITDA Free Cash Flow Reconciliation: Cash flow from operations Capex Free Cash Flow % Y/Y Change Free cash flow per share FCF as a % of CFO FCF as a % of EBITDA

1,979 30,503 32,483

(750) 3,380 8,175 11,555

(750) 5,459 11,555 17,014

(750) 8,554 17,014 25,568

(750) 3,136 25,568 28,704

(3,000)

(2,919)

20,530 8,175 28,704

24,426 28,704 53,130

Source: Company reports, Lehman Brothers estimates

April 07, 2008

137

Lehman Brothers

Internet Data Book

April 2008

Figure 161: Dice Holdings Snapshot Strengths

Biggest Concerns

-Beneficiary of growth in online employment advertising market as well as positive growth trends within technology and financial sectors specifically. U.S. online employment advertising totaled $2.2 billion in 2006 and is expected to grow to $4.5 billion in 2010, a 19.6% CAGR.

-Heavily concentrated within the U.S. In addition, heavily concentrated in the U.S. technology sector, with Dice.com, the company's flagship site which serves only the U.S. currently.

-Over 11,000 paying customers with no single customer accounting for more than 0.5% of revenue in 2006.

-Overall adjusted EBITDA margins of ~40% are significantly higher than largest competitor, Monster Worldwide, which has the resources to spend on sales and marketing efforts more aggressively, putting pressure on Dice's business and making margin expansion challenging.

-Solid revenue visibility, as the company books deferred revenue, reflecting recruitment package customers who have signed advertising contracts which extend beyond the current period. We est. ~75% of Dice customers are on annual contracts, ~10%-12% are on month-to-month contracts, and the remaining % are on varied contract term lengths.

-Client base is highly concentrated within the technology sector and to a lesser extent, the financial sector. As a result, the macro environment around these two broad industries will likely directly impact hiring trends and Dice's results.

-Growing portfolio of specialized job sites, across various sectors: Dice.com (technology/engineering), eFinancialCareers (financial services/banking), JobsInTheMoney (accounting), ClearanceJobs (gov't clearance), which provide both job-seekers and employers a targeted and efficient way to either search jobs or search for applicants.

-Sales and marketing expenses are significant, with approximately 38% of total revenues devoted to acquiring employer/recruiter customers as well as job-seekers. Marketing and advertising costs to acquire job-seekers can potentially increase rapidly, as the type of targeted placement which Dice prefers is typically more expensive than general run-of-network advertising online.

-Dice user base is typically more experienced, qualified and educated than the typical user on a generalist job board. 75% have more than 5 years experience, almost half have 10+ yrs; Over 75% are currently employed (often more desirable candidates); Avg Dice candidate earns $73,000; 70% have bachelor's degree or higher (based on company data)

-Increased competition could drive up online acquisition costs for Dice. Larger more established competitors, such as Monster Worldwide, Careerbuilder, and Yahoo!'s HotJobs could potentially afford to spend more to acquire new customers online as they have greater resources.

What to Watch For

Guidance

-International expansion opportunity as ~21% of Dice's 2007 pro forma revenue was International yet technology field is increasingly global with cross-border hiring becoming more commonplace, and local foreign markets growing faster than the U.S. in many cases. Revenues

1Q08 $39M - $40M

2008 $161M - $173M

$15.5M - $16.5M 40% - 41%

$68M - $76M 42% - 44%

$16M - $16.5M

$63M - $65M

-Scalable entry into new verticals which are very skill-based and require advanced sorting/search functionality, such as healthcare, or fields which are large and growing significantly, such as sales and marketing. Adjusted EBITDA Adjusted EBITDA Margin -Dice likely has room to exercise pricing power if it continues to deliver highlyqualified applicants in an efficient way to employers and recruiters. Dice is currently priced at or below competitors for typical monthly recruitment packages.

Sales & Marketing Expense Capex

-Potential further slow down in the macro-economy may negatively impact employment trends and subsequently employment advertising budgets could be reduced.

Source: Company reports, Lehman Brothers estimates

138

April 07, 2008

$5M

Lehman Brothers

Internet Data Book

April 2008

Figure 162: Dice Holdings Income Statement, 2005–09E ($ in thousands, except per share data) Dice Online eFinancialCareers (ex-U.S.) Other Total Revenue Operating Expenses Cost of revenues Product development Sales and marketing General and administrative Share based compensation Depreciation Amortization Impairments and other charges Total operating expenses Operating Income (loss) Interest expense Interest income Other income (expense) Income (loss) from cont. ops b4 taxes Income tax expense (benefit) Income Tax Rate % Income (loss) from cont. ops b4 minority interes Income (loss) from discontinued operations Income tax benefit (expense) from discontinued o Minority interest in net loss of subsidiary Dividends Net Income (loss) to common shareholders Basic Shares Diluted Shares GAAP Earnings Per Share Basic EPS Diluted EPS

2005A 48,986 1,892 50,878

2006A 77,285 2,924 3,192 83,401

3/07A 23,351 5,145 1,894 30,390

6/07A 25,233 6,497 2,628 34,358

9/07A 26,557 8,349 3,183 38,089

12/07A 27,074 9,667 2,773 39,514

2007A 102,215 29,658 10,478 142,351

3/08E 27,224 9,004 3,106 39,334

6/08E 28,716 9,746 3,416 41,877

9/08E 28,729 10,854 3,820 43,402

12/08E 29,991 11,117 3,189 44,297

2008E 114,659 40,720 13,531 168,910

2009E 130,214 49,678 18,267 198,159

3,579 1,645 21,958 7,862 1,370 5,416

4,628 2,359 33,456 8,796 1,467 1,699 13,092

1,826 980 13,214 3,375 574 619 5,228

1,946 982 13,797 3,202 1,208 702 4,773

2,443 1,178 13,469 4,075 1,138 827 4,661

8,646 4,187 53,427 15,093 4,100 2,971 19,051

2,203 1,141 16,127 4,169 1,500 900 4,700

2,345 1,173 16,751 3,978 1,500 1,000 4,500

2,691 1,259 16,059 4,427 1,600 1,000 4,500

2,613 1,152 15,592 4,651 1,600 1,000 4,600

9,852 4,724 64,529 17,226 6,200 3,900 18,300

11,493 5,548 76,093 19,816 3,600 5,000 15,400

41,830

65,497

25,816

26,610

27,791

2,431 1,047 12,947 4,441 1,180 823 4,389 2,879 30,137

107,475

30,740

31,247

31,535

31,209

124,731

136,951

9,048

17,904

4,574

7,748

10,298

9,377

31,997

8,594

10,630

11,867

13,088

44,179

61,209

(2,034) 518 (160) 7,372 3,216 43.6% 4,156 (525) 200 312 4,143 10 11

(4,788) 234 13,350 5,110 38.3% 8,240 (2,767) 1,010 296 6,779 55,300 62,300

(2,347) 74 2,301 (907) 3,208 (949) 5,619 7,878 55,300 62,300

(4,293) 82 3,536 1,689 47.8% 1,847 109 (463) 121 1,614 55,200 58,450

(3,387) 371 7,282 2,779 38.2% 4,503 (460) 154

(3,077) 520 6,820 3,131 45.9% 3,689 (284) (1,329) (255)

(3,373) 698 5,919 2,368 40.0% 3,551

(3,318) 874 8,187 3,275 40.0% 4,912

(3,263) 977 9,581 3,832 40.0% 5,749

(3,194) 1,034 10,928 4,371 40.0% 6,557

(13,148) 3,583 34,615 13,846 40.0% 20,769

(10,965) 5,881

4,197 62,000 64,400

1,821 62,500 65,769

(13,104) 1,047 19,939 6,692 33.6% 13,247 (1,584) 3,981 (134) 15,510 58,750 62,730

3,551 63,500 66,769

4,912 64,000 67,269

5,749 64,500 67,769

6,557 65,500 68,769

20,769 64,375 67,644

33,675 65,663 68,997

$0.12 $0.11

$0.14 $0.13

$0.03 $0.03

$0.07 $0.07

$0.03 $0.03

$0.26 $0.25

$0.06 $0.05

$0.08 $0.07

$0.09 $0.08

$0.10 $0.10

$0.32 $0.31

$0.51 $0.49

6,779 1,467 13,092 (5,824) 15,514 55,300 62,300

7,878 574 5,228 (2,321) 0 11,359 55,300 62,300

1,614 1,208 4,773 (2,392) 5,203 55,200 58,450

4,197 1,138 4,661 (2,320) 7,676 62,000 64,400

1,821 1,180 4,389 (2,228) 5,162 62,500 65,769

15,510 4,100 19,051 (9,260) 29,401 58,750 62,730

3,551 1,500 4,700 (2,480) 7,271 63,500 66,769

4,912 1,500 4,500 (2,400) 8,512 64,000 67,269

5,749 1,600 4,500 (2,440) 9,409 64,500 67,769

6,557 1,600 4,600 (2,480) 10,277 65,500 68,769

20,769 6,200 18,300 (9,800) 35,469 64,375 67,644

33,675 3,600 15,400 (7,600) 45,075 65,663 68,997

$0.28 $0.25

$0.21 $0.18

$0.09 $0.09

$0.12 $0.12

$0.08 $0.08

$0.50 $0.47

$0.11 $0.11

$0.13 $0.13

$0.15 $0.14

$0.16 $0.15

$0.55 $0.52

$0.69 $0.65

17,904 1,467 1,699 13,092 2,967 37,129

4,574 574 619 5,228 758 11,753

7,748 1,208 702 4,773 518 14,949

10,298 1,138 827 4,661 248 17,172

9,377 1,180 823 4,389 2,879 18,648

31,997 4,100 2,971 19,051 4,403 62,522

8,594 1,500 900 4,700

10,630 1,500 1,000 4,500

11,867 1,600 1,000 4,500

13,088 1,600 1,000 4,600

44,179 6,200 3,900 18,300

61,209 3,600 5,000 15,400

15,694

17,630

18,967

20,288

72,579

85,209

NA NA

PF Net Income Reconciliation: GAAP Net Income Share based compensation Amortization of intangibles Tax effect Non-recurring items Pro Forma Net income (loss) Basic Shares Diluted Shares

4,143 5,416 (2,166) 7,393 10 11

Pro Forma Earnings Per Share Basic PF EPS Diluted PF EPS

NA NA

Adjusted EBITDA Reconciliation: EBIT (reported) Share based compensation Depreciation Amortization Deferred revenue adjustments/Other Adjusted EBITDA

Yr/Yr Growth Net revenues Cost of revenues Product development Sales and marketing General and administrative Share based compensation Total operating expenses Operating income Adjusted EBITDA GAAP Net Income Pro Forma Net Income Sequential Growth Net revenues % of Revenues Cost of revenues Product development Sales and marketing General and administrative Total operating expenses Margins Net income margin Operating margin EBITDA margin Operating Leverage/Incremental Margin

9,048 517 1,370 5,416 16,351

57.8% 49.6% 5.7% 46.4% 25.9% NA 46.2% 149.5% 115.6% NA NA

63.9% 29.3% 43.4% 52.4% 11.9% NA 56.6% 97.9% 127.1% NA NA

7.0% 3.2% 43.2% 15.5% 82.2%

5.5% 2.8% 40.1% 10.5% 78.5%

8.1% 17.8% 32.1% 47.0%

8.1% 21.5% 44.5% 63.9%

89.3% 67.7% 130.6% 87.3% 89.9% 142.2% 85.3% 115.4% 70.0% NA NA

78.9% 91.5% 75.0% 73.3% 65.6% 399.2% 78.3% 80.9% 78.3% NA NA

76.5% 118.5% 142.4% 64.7% 93.6% 364.5% 80.3% 67.0% 73.8% NA NA

48.8% 73.0% 18.0% 26.2% 49.0% 58.8% 42.0% 75.8% 56.0% NA NA

70.7% 86.8% 77.5% 59.7% 71.6% 179.5% 64.1% 78.7% 68.4% 128.8% 89.5%

14.4%

13.1%

10.9%

3.7%

6.0% 3.2% 43.5% 11.1% 84.9%

5.7% 2.9% 40.2% 9.3% 77.4%

6.4% 3.1% 35.4% 10.7% 73.0%

6.2% 2.6% 32.8% 11.2% 76.3%

6.1% 2.9% 37.5% 10.6% 75.5%

25.9% 15.1% 38.7% 33.8%

4.7% 22.6% 43.5% 43.3%

11.0% 27.0% 45.1% 44.2%

4.6% 23.7% 47.2% 51.7%

10.9% 22.5% 43.9% 43.1%

29.4% 20.6% 16.4% 22.0% 23.5% 161.3% 19.1% 87.9% 33.5% -54.9% -36.0%

21.9% 20.5% 19.4% 21.4% 24.2% 24.2% 17.4% 37.2% 17.9% 204.3% 63.6%

13.9% 10.1% 6.8% 19.2% 8.6% 40.6% 13.5% 15.2% 10.5% 37.0% 22.6%

12.1% 7.5% 10.0% 20.4% 4.7% 35.6% 3.6% 39.6% 8.8% 260.1% 99.1%

-0.5%

6.5%

3.6%

2.1%

5.6% 2.9% 41.0% 10.6% 78.2%

5.6% 2.8% 40.0% 9.5% 74.6%

6.2% 2.9% 37.0% 10.2% 72.7%

9.0% 21.8% 39.9% 44.1%

11.7% 25.4% 42.1% 35.7%

13.2% 27.3% 43.7% 33.8%

56,124 22,450 40.0% 33,675

18.7% 14.0% 12.8% 20.8% 14.1% 51.2% 16.1% 38.1% 16.1% 33.9% 20.6%

17.3% 16.7% 17.5% 17.9% 15.0% -41.9% 9.8% 38.5% 17.4% 62.1% 27.1%

5.9% 2.6% 35.2% 10.5% 70.5%

5.8% 2.8% 38.2% 10.2% 73.8%

5.8% 2.8% 38.4% 10.0% 69.1%

14.8% 29.5% 45.8% 34.3%

12.3% 26.2% 43.0% 37.9%

17.0% 30.9% 43.0% 43.2%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

139

Lehman Brothers

Internet Data Book

April 2008

Figure 163: Dice Holdings Segment Breakdown, 2005–09E ($ in thousands, except per share data) 2006A 7,101 36.2%

3/07A 8,050 27.7% 5.9%

6/07A 8,650 22.7% 7.5%

9/07A 8,900 19.5% 2.9%

12/07A 8,850 16.4% -0.6%

2007A 8,613 21.3%

3/08E 8,983 11.6% 1.5%

6/08E 9,207 6.4% 2.5%

9/08E 9,299 4.5% 1.0%

12/08E 9,299 5.1% 0.0%

2008E 9,299 8.0%

2009E 9,997 7.5%

$703

$783 11.0%

$839 5.5% 1.1% 26,557 27.6% 5.2%

$852 4.8% 1.5% 27,074 20.3% 1.9%

$859 4.0% 0.8% 27,224 16.6% 0.6%

$863 4.0% 0.5% 28,716 13.8% 5.5%

$864 3.0% 0.1% 28,729 8.2% 0.0%

$882 3.5% 2.0% 29,991 10.8% 4.4%

$867 3.6%

$897 3.5%

77,285 57.8%

$830 7.5% 0.5% 25,233 36.3% 8.1%

$837 6.8%

48,986 52.0%

$826 9.7% 1.6% 23,351 51.2% 3.7%

114,659 12.2%

130,214 13.6%

eFC Revenue Y/Y Growth Q/Q Growth

-

2,924

5,145

6,497 62.1% 26.3%

8,349 78.1% 28.5%

9,667 230.6% 15.8%

29,658 914.3%

9,004 75.0% -6.9%

9,746 50.0% 8.2%

10,854 30.0% 11.4%

11,117 15.0% 2.4%

40,720 37.3%

49,678 22.0%

76.0%

Other Revenue Y/Y Growth Q/Q Growth

1,892

3,192 69%

1,894 207.5% 68.4%

2,628 279.8% 38.8%

3,183 319.4% 21.1%

2,773 146.5% -12.9%

10,478 228.3%

3,106 64.0% 12.0%

3,416 30.0% 10.0%

3,820 20.0% 11.8%

3,189 15.0% -16.5%

13,531 29.1%

18,267 35.0%

Total Revenue Y/Y Growth Q/Q Growth

50,878 57.8%

83,401 63.9%

30,390 89.3% 14.4%

34,358 78.9% 13.1%

38,089 76.5% 10.9%

39,514 48.8% 3.7%

142,351 70.7%

39,334 29.4% -0.5%

41,877 21.9% 6.5%

43,402 13.9% 3.6%

44,297 12.1% 2.1%

168,910 18.7%

198,159 17.3%

2009E 66% 25% 9% 100%

Avg. Dice Recruitment Pkg Customers Y/Y Growth Q/Q Growth Avg Monthly Revenue Per Customer Y/Y Growth Q/Q Growth Total Dice Revenue Y/Y Growth Q/Q Growth

Revenue Breakdown Dice eFC Other Total Revenue Seasonality Dice eFC Other Total

2005A 5,214

2005A 96% 0% 4% 100%

2006A 93% 4% 4% 100%

3/07A 77% 17% 6% 100%

6/07A 73% 19% 8% 100%

9/07A 70% 22% 8% 100%

12/07A 69% 24% 7% 100%

2007A 72% 21% 7% 100%

3/08E 69% 23% 8% 100%

6/08E 69% 23% 8% 100%

9/08E 66% 25% 9% 100%

12/08E 68% 25% 7% 100%

2008E 68% 24% 8% 100%

100% 100% 100% 100%

23% 17% 18% 21%

25% 22% 25% 24%

26% 28% 30% 27%

26% 33% 26% 28%

100% 100% 100% 100%

24% 22% 23% 23%

25% 24% 25% 25%

25% 27% 28% 26%

26% 27% 24% 26%

100% 100% 100% 100%

Source: Company reports, Lehman Brothers estimates

140

April 07, 2008

102,215 32.3%

Lehman Brothers

Internet Data Book

April 2008

Figure 164: Dice Holdings Pro Forma Analysis, 2005–08E ($ in thousands, except per share data) 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

REPORTED GAAP REVENUE Dice eFinancialCareers (non-U.S.) Other Total GAAP Revenue

48,986

77,285

23,351

25,233

26,557

27,074

102,215

27,224

28,716

28,729

29,991

114,659

-

2,924

5,145

6,497

8,349

9,667

29,658

9,004

9,746

10,854

11,117

40,720

1,892

3,192

1,894

2,628

3,183

2,773

10,478

3,106

3,416

3,820

3,189

13,531

50,878

83,401

30,390

34,358

38,089

39,514

142,351

39,334

41,877

43,402

44,297

168,910

16,350

34,152

10,995

14,431

16,924

18,648

60,998

15,694

17,630

18,967

20,288

72,579

-

-

-

-

-

-

-

-

-

-

379

301

147

-

827

-

-

-

-

-

REPORTED EBITDA Reported Adjusted EBITDA

PRO FORMA REVENUE ADJUSTMENTS Dice

3,644

2,049

eFinancialCareers (non-U.S.)

9,207

13,997

Other

3,256

4,937

379

217

101

-

697

-

-

-

-

-

16,107

20,983

758

518

248

-

1,524

-

-

-

-

-

5,537

6,575

758

518

248

-

1,524

-

-

-

-

-

52,630

79,334 50.7%

23,351 40.3%

25,233 31.7%

26,557 26.4%

27,074 20.2%

102,215 28.8%

27,224 16.6%

28,716 13.8%

28,729 8.2%

29,991 10.8%

114,659 12.2%

eFinancialCareers (non-U.S.) Y/Y Growth

9,207

16,921 83.8%

5,524 67.0%

6,798 69.6%

8,496 81.3%

9,667 96.5%

30,485 80.2%

9,004 63.0%

9,746 43.4%

10,854 27.8%

11,117 15.0%

40,720 33.6%

Other Y/Y Growth

5,148

8,129 57.9%

2,273 22.9%

2,845 38.8%

3,284 55.9%

2,773 30.6%

11,175 37.5%

3,106 36.7%

3,416 20.1%

3,820 16.3%

3,189 15.0%

13,531 21.1%

66,985 73.1%

104,384 55.8%

31,148 42.9%

34,876 38.3%

38,337 37.9%

39,514 33.7%

143,875 37.8%

39,334 26.3%

41,877 20.1%

43,402 13.2%

44,297 12.1%

168,910 17.4%

21,887 188.9%

40,727 86.1%

11,752 51.5%

14,950 70.2%

17,171 64.1%

18,648 73.6%

62,521 53.5%

15,694 33.5%

17,630 17.9%

18,967 10.5%

20,288 8.8%

72,579 16.1%

Pro Forma EBITDA Margin Operating Flow-Through/Incremental Margin

32.7% 50.6%

39.0% 50.4%

37.7% 42.7%

42.9% 63.8%

44.8% 63.7%

47.2% 79.4%

43.5% 55.2%

39.9% 48.2%

42.1% 38.3%

43.7% 35.5%

45.8% 34.3%

43.0% 40.2%

Reported Sales and Marketing Expense eFinancialCareers PF Adjustment Total PF Sales and Marketing Expense Y/Y Growth Sales and Marketing as % of PF Revenue

21,958

33,456 8,119 41,575 89% 39.8%

13,214 13,214 47% 42.4%

13,797 13,797 34% 39.6%

13,469 13,469 22% 35.1%

12,947 12,947 15% 32.8%

53,427 53,427 29% 37.1%

16,127 16,127 22% 41.0%

16,751 16,751 21% 40.0%

16,059 16,059 19% 37.0%

15,592 15,592 20% 35.2%

64,529 64,529 21% 38.2%

Pro Forma Revenue Adjustments

PRO FORMA EBITDA ADJUSTMENTS Pro Forma EBITDA Adjustments

PRO FORMA REVENUE Dice Y/Y Growth

Pro Forma Revenue Y/Y Growth

PRO FORMA EBITDA Pro Forma EBITDA Y/Y Growth

Revenue Breakdown -- Pro Forma Dice eFC Other Total

21,958 46% 32.8%

2005A 79% 14% 8% 100%

2006A 76% 16% 8% 100%

3/07A 75% 18% 7% 100%

6/07A 72% 19% 8% 100%

9/07A 69% 22% 9% 100%

12/07A 69% 24% 7% 100%

2007A 71% 21% 8% 100%

3/08E 69% 23% 8% 100%

6/08E 69% 23% 8% 100%

9/08E 66% 25% 9% 100%

12/08E 68% 25% 7% 100%

2008E 68% 24% 8% 100%

Source: Company reports, Lehman Brothers estimates

April 07, 2008

141

Lehman Brothers

Internet Data Book

April 2008

Figure 165: AOL Quarterly Advertising Forecast, 2005–08E ($ in millions)

AOL Advertising $ millions 2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

AUDIENCE AND AD METRICS Average Monthly Domestic Unique Visitors % Growth Y/Y % Growth Q/Q

2005A -------

110.8 -----

111.0 3.7% 0.5%

114.0 0.9% 2.7%

113.0 0.9% -0.9%

109.0 -1.8% -3.5%

111.8 0.9% ---

109.9 -1.0% 0.5%

114.0 0.0% 3.7%

114.1 1.0% 0.1%

110.1 1.0% -3.5%

112.0 0.2% ---

Total Page Views (MM) % Growth Y/Y % Growth Q/Q

-------

197,374 -----

43,959 -16.5% -1.0%

52,080 0.8% 18.5%

47,602 -2.2% -8.6%

49,161 10.8% 3.3%

192,802 -2.3% ---

44,398.6 1.0% -9.7%

51,038.4 -2.0% 15.0%

47,126.0 -1.0% -7.7%

48,669.4 -1.0% 3.3%

191,232 -0.8% ---

Avg. Monthly Page Views Per Unique User % Growth Y/Y % Growth Q/Q

-------

148.4 -----

132.0 -19.5% -0.4%

152.3 -0.1% 15.4%

140.4 -3.1% -7.8%

150.3 13.5% 7.1%

143.8 -3.1% ---

134.7 2.0% -10.4%

149.2 -2.0% 10.8%

137.6 -2.0% -7.8%

147.4 -2.0% 7.1%

142.3 -1.1% ---

Domestic Advertising Revenue (Gross---as reported) % Growth Y/Y % Growth Q/Q % of Total AOL Gross Ad Revs

---------

$1,525.0 ----80.9%

$443.0 39.3% -2.9% 80.7%

$419.0 16.7% -5.4% 80.3%

$433.0 10.5% 3.3% 80.2%

$500.0 9.6% 15.5% 80.6%

$1,795.0 17.7% --80.4%

$434.1 -2.0% -13.2% 79.7%

$454.4 8.4% 4.7% 79.5%

$476.7 10.1% 4.9% 79.2%

$546.7 9.3% 14.7% 79.0%

$1,911.9 6.5% --79.4%

Domestic Advertising Revenue Less TAC (Net) % Growth Y/Y % Growth Q/Q % of Total AOL Net Ad Revs

---------

$1,235.0 ----77.4%

$345.0 25.5% -4.4% 76.5%

$329.0 11.5% -4.6% 76.2%

$330.0 8.6% 0.3% 75.5%

$375.0 3.9% 13.6% 75.8%

$1,379.0 11.7% --76.0%

$321.7 -6.8% -14.2% 74.4%

$344.0 4.6% 6.9% 74.6%

$352.2 6.7% 2.4% 73.8%

$396.0 5.6% 12.4% 73.2%

$1,413.9 2.5% --73.9%

Domestic Adv Revenue Less TAC Per Unique Visitor % Growth Y/Y % Growth Q/Q

-------

$11.13 -----

$3.11 20.9% -4.4%

$2.89 10.5% -7.1%

$2.92 7.6% 1.2%

$3.44 5.8% 17.8%

$12.35 11.0% ---

$2.93 -5.8% -14.9%

$3.02 4.6% 3.1%

$3.09 5.7% 2.3%

$3.60 4.6% 16.5%

$12.63 2.2% ---

Domestic Adv Revenue Less TAC Per 1,000 Page Views % Growth Y/Y % Growth Q/Q

-----

$6.26 -----

$7.85 50.2% -3.5%

$6.32 10.6% -19.5%

$6.93 11.0% 9.7%

$7.63 -6.2% 10.0%

$7.15 14.3% ---

$7.24 -7.7% -5.0%

$6.74 6.7% -7.0%

$7.47 7.8% 10.9%

$8.14 6.7% 8.9%

$7.39 3.4% ---

International Advertising Revenue % Growth Y/Y % Growth Q/Q % of Total AOL Gross Ad Revs % of Total AOL Net Ad Revs

-----------

$361.0 ----19.1% 22.5%

$106.0 43.2% -3.6% 19.3% 23.5%

$103.0 14.4% -2.8% 19.7% 23.8%

$107.0 23.0% 3.9% 19.8% 24.5%

$120.0 9.1% 12.1% 19.4% 24.2%

$436.0 20.8% --19.5% 24.0%

$110.6 4.3% -7.9% 20.3% 25.6%

$117.2 13.8% 6.0% 20.5% 25.4%

$125.2 17.0% 6.9% 20.8% 26.2%

$145.3 21.1% 16.1% 21.0% 26.8%

$498.2 14.3% --20.7% 26.1%

Total Advertising Revenue Less TAC (Net) % Growth Y/Y % Growth Q/Q

-------

$1,596.0 -----

$451.0 29.2% -4.2%

$432.0 12.2% -4.2%

$437.0 11.8% 1.2%

$495.0 5.1% 13.3%

$1,815.0 13.7% ---

$432.2 -4.2% -12.7%

$461.2 6.8% 6.7%

$477.4 9.3% 3.5%

$541.3 9.4% 13.4%

$1,912.1 5.4% ---

DISPLAY ADVERTISING

2006A

3/07A

6/07A

$627.0 9.6%

$819.0 30.6%

$232.0 31.8%

TOTAL DISPLAY ADVERTISING EBITDA % Growth Y/Y % Margin

$261.1 -19.8% 41.6%

$327.6 25.5% 40.0%

$104.4 48.3% 45.0%

$99.4 29.5% 45.0%

7,569 4.6%

1,820 -10.1% -9.2%

1,690 -10.1% -7.1%

PAID SEARCH Queries (MM) % Growth Y/Y % Growth Q/Q

7,236 6% ---

$220.9 15.1%

9/07A $213.9 5.9%

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

$252.2 1.3%

$919.0 12.2%

$194.9 -16.0%

$232.0 5.0%

$228.9 7.0%

$274.9 9.0%

$930.6 1.3%

$96.3 19.1% 45.0%

$113.5 13.9% 45.0%

$413.6 26.2% 45.0%

$87.7 -16.0% 45.0%

$104.4 5.0% 45.0%

$103.0 7.0% 45.0%

$123.7 9.0% 45.0%

$418.8 1.3% 45.0%

1,712 3.0% 1.3%

1,805 -9.9% 5.4%

7,027 -7.2%

1,683 -7.5% -6.7%

1,606 -5.0% -4.6%

1,678 -2.0% 4.5%

1,823 1.0% 8.6%

6,790 -3.4%

Paid Click-Through Rate

19.5%

20.3%

13.4%

13.8%

14.0%

15.6%

14.2%

14.8%

15.0%

15.0%

15.4%

15.1%

Paid Introductions (MM) % Growth Y/Y

1,409 -4.8%

1,537 9.0%

244 -44.1%

233 -40.3%

240 -23.9%

282 -28.6%

998 -35.0%

249 2.2%

241 3.3%

252 5.0%

281 -0.3%

1,022 2.4%

Price Per Click (PPC) % Growth Y/Y % Growth Q/Q

$0.37 38.9% ---

$0.42 14.2% ---

$0.74 112.5% 59.7%

$0.73 77.9% 1.0%

$0.74 51.0% 1.7%

$0.66 41.5% -10.8%

$0.72 68.9% ---

$0.77 3.0% 16.3%

$0.76 5.0% 1.0%

$0.78 6.0% 2.6%

$0.72 9.0% -8.3%

$0.76 5.8% ---

Gross Revenue AOL Generates for Google TAC Rate Google Pays to AOL

$522.4 86.5%

$650.7 90.8%

$181.5 92.0%

$169.6 92.0%

$177.3 92.0%

$185.7 92.0%

TOTAL AOL PAID SEARCH REVENUE % Growth Y/Y % Growth Q/Q

$452.0 34.5% ---

$591.0 30.8% ---

$167.0 25.6% -1.2%

$156.1 6.2% -6.5%

$163.1 14.9% 4.5%

TOTAL PAID SEARCH EBITDA % Growth Y/Y % Margin

$406.8 34.5% 90.0%

$541.1 33.0% 91.5%

$153.6 28.4% 92.0%

$143.6 6.2% 92.0%

$150.4 15.1% 92.2%

$0.06 26.9% ---

$0.08 25.0% ---

$0.09 39.6% 8.8%

$0.09 18.1% 0.6%

$0.10 11.5% 3.1%

$0.09 12.2% -0.6%

$0.09 19.7% ---

$0.10 13.8% 10.3%

$0.11 14.1% 0.9%

$0.11 13.6% 2.6%

$0.10 7.6% -5.9%

$0.10 12.2% ---

PARTNER SITES (ADVERTISING.COM) TOTAL GROSS PARTNER SITES REVENUE % Growth Y/Y % Growth Q/Q

$259.0 167.0%

$476.0 83.8%

$150.0 80.7% 1.4%

$145.0 31.8% -3.3%

$163.0 20.7% 12.4%

$197.0 30.0% 20.9%

$655.0 37.6%

$174.0 16.0% -11.7%

$170.4 17.5% -2.1%

$191.5 17.5% 12.4%

$231.5 17.5% 20.9%

$767.4 17.2%

Total Partner Sites TAC % TAC Growth Y/Y TAC% of Total Gross

$153.5 146% 59.3%

$290.0 89% 60.9%

$98.0 128% 65.3%

$90.0 41% 62.1%

$103.0 17% 63.2%

$125.0 32% 63.5%

$416.0 43% 63.5%

$112.4 14.7% 64.6%

$110.4 22.7% 64.8%

$124.5 20.9% 65.0%

$150.7 20.6% 65.1%

$498.0 19.7% 64.9%

Total Net Partner Sites Revenue % Growth Y/Y % Net Revenue Margin (Gross Margin)

$105.5 0% 40.7%

$186.0 76% 39.1%

$52.0 30% 34.7%

$55.0 20% 37.9%

$60.0 28% 36.8%

$72.0 36% 36.5%

$239.0 28% 36.5%

$61.6 18.5% 35.4%

$60.0 9.0% 35.2%

$67.0 11.7% 35.0%

$80.8 12.2% 34.9%

$269.4 12.7% 35.1%

TOTAL PARTNER SITES EBITDA % Growth Y/Y % Margin

$57.3 0% 22.1%

$104.4 82% 21.9%

$30.0 37% 20.0%

$29.0 18% 20.0%

$32.6 16% 20.0%

$39.4 33% 20.0%

$131.0 26% 20.0%

$34.8 16% 20.0%

$34.1 18% 20.0%

$38.3 18% 20.0%

$46.3 18% 20.0%

$153.5 17.2% 20.0%

TOTAL ADVERTISING SUMMARY ADVERTISING REVENUE Display Advertising % Growth Y/Y

$627.0 9.6%

Revenue Per Search (RPS) % Growth Y/Y % Growth Q/Q

2005A

2006A

3/07A

6/07A

9/07A

$191.0 92.0%

$183.9 92.0%

$197.3 92.0%

$201.8 92.0%

$170.8 1.1% 4.7%

$714.1 92.0% --$657.0 11.2% ---

$175.7 5.2% 2.9%

$169.2 8.4% -3.7%

$181.5 11.3% 7.3%

$185.6 8.7% 2.3%

$774.0 92.0% --$712.1 8.4% ---

$157.5 1.3% 92.2%

$605.1 11.8% 92.1%

$161.7 5.2% 92.0%

$155.7 8.4% 92.0%

$167.4 11.3% 92.2%

$171.1 8.7% 92.2%

$655.9 8.4% 92.1%

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

$819.0 30.6%

$232.0 31.8%

$220.9 15.1%

$213.9 5.9%

$252.2 1.3%

$919.0 12.2%

$194.9 -16.0%

$232.0 5.0%

$228.9 7.0%

$274.9 9.0%

$930.6 1.3% $712.1 8.4%

Paid Search % Growth Y/Y

$452.0 34.5%

$591.0 30.8%

$167.0 25.6%

$156.1 6.2%

$163.1 14.9%

$170.8 1.1%

$657.0 11.2%

$175.7 5.2%

$169.2 8.4%

$181.5 11.3%

$185.6 8.7%

Partner Sites % Growth Y/Y

$259.0 167.0%

$476.0 83.8%

$150.0 80.7%

$145.0 31.8%

$163.0 20.7%

$197.0 30.0%

$655.0 37.6%

$174.0 16.0%

$170.4 17.5%

$191.5 17.5%

$231.5 17.5%

$767.4 17.2%

$1,338.0 33.1% ---

$1,886.0 41.0% ---

$549.0 40.1% -3.0%

$522.0 16.3% -4.9%

$540.0 12.7% 3.4%

$620.0 9.5% 14.8%

$2,231.0 18.3% ---

$544.6 -0.8% -12.2%

$571.6 9.5% 4.9%

$601.9 11.5% 5.3%

$692.0 11.6% 15.0%

$2,410.1 8.0% ---

$261.1 -19.8% 41.6%

$327.6 25.5% 40.0%

$104.4 48.3% 45.0%

$99.4 29.5% 45.0%

$96.3 19.1% 45.0%

$113.5 13.9% 45.0%

$413.6 26.2% 45.0%

$87.7 -16.0% 45.0%

$104.4 5.0% 45.0%

$103.0 7.0% 45.0%

$123.7 9.0% 45.0%

$418.8 1.3% 45.0%

Paid Search % Growth Y/Y % Margin

$406.8 34.5% 90.0%

$541.1 33.0% 91.5%

$153.6 28.4% 92.0%

$143.6 6.2% 92.0%

$150.4 15.1% 92.2%

$157.5 1.3% 92.2%

$605.1 11.8% 92.1%

$161.7 5.2% 92.0%

$155.7 8.4% 92.0%

$167.4 11.3% 92.2%

$171.1 8.7% 92.2%

$655.9 8.4% 92.1%

Partner Sites % Growth Y/Y % Margin

$57.3 --22.1%

$104.4 82.1% 21.9%

$30.0 36.9% 20.0%

$29.0 17.7% 20.0%

$32.6 15.5% 20.0%

$39.4 33.1% 20.0%

$131.0 25.5% 20.0%

$34.8 16.0% 20.0%

$34.1 17.5% 20.0%

$38.3 17.5% 20.0%

$46.3 17.5% 20.0%

$153.5 17.2% 20.0%

$725.2 12.5% 54.2%

$973.0 34.2% 51.6%

$288.0 35.9% 52.5%

$272.0 14.9% 52.1%

$279.2 16.5% 51.7%

$310.4 9.0% 50.1%

$1,149.6 18.2% 51.5%

$284.2 -1.3% 52.2%

$294.1 8.1% 51.5%

$308.7 10.5% 51.3%

$341.1 9.9% 49.3%

$1,228.1 6.8% 51.0%

TOTAL ADVERTISING REVENUE % Growth Y/Y % Growth Q/Q ADVERTISING EBITDA Display Advertising % Growth Y/Y % Margin

TOTAL ADVERTISING EBITDA % Growth Y/Y % Margin

Source: Company reports, Lehman Brothers estimates

142

2005A

TOTAL DISPLAY ADVERTISING REVENUE % Growth Y/Y

April 07, 2008

Lehman Brothers

Internet Data Book

April 2008

Figure 166: AOL Annual Advertising Forecast, 2005–11E ($ in millions)

AOL Advertising $ millions 2007A

2008E

2009E

2010E

2011E

AUDIENCE AND AD METRICS Average Monthly Domestic Unique Visitors % Growth Y/Y % Growth Q/Q

2005A -------

111 -----

112 1% ---

112 0% ---

113 1.3% ---

115 1.2% ---

116 1.2% ---

Total Page Views (MM) % Growth Y/Y % Growth Q/Q

-------

197,374 -----

192,802 -2% ---

191,232 -1% ---

192,189 0.5% ---

194,110 1.0% ---

196,052 1.0% ---

Avg. Monthly Page Views Per Unique User % Growth Y/Y % Growth Q/Q

-------

148 -----

144 -3% ---

142 -1% ---

141 -0.8% ---

141 -0.2% ---

141 -0.2% ---

Domestic Advertising Revenue (Gross---as reported) % Growth Y/Y % Growth Q/Q % of Total AOL Gross Ad Revs

---------

$1,525.0 ----81%

$1,795.0 18% --80%

$1,911.9 7% --79%

$2,156.1 12.8% --79%

$2,358.9 9.4% --78%

$2,555.6 8.3% --77%

Domestic Advertising Revenue Less TAC (Net) % Growth Y/Y % Growth Q/Q % of Total AOL Net Ad Revs

---------

$1,235.0 -------

$1,379.0 12% --76.0%

$1,413.9 3% --73.9%

$1,570 11.0% --73.4%

$1,674 6.7% --71.6%

$1,770 5.7% --69.9%

Domestic Adv Revenue Less TAC Per Unique Visitor % Growth Y/Y % Growth Q/Q

-------

$11.1 -----

$12.4 11.0% ---

$12.6 2.2% ---

$13.83 9.5% ---

$14.58 5.4% ---

$15.23 4.5% ---

Domestic Adv Revenue Less TAC Per 1,000 Page Views % Growth Y/Y % Growth Q/Q

-------

$6.3 -----

$7.2 14.3% ---

$7.4 3.4% ---

$8.17 10.5% ---

$8.62 5.6% ---

$9.03 4.7% ---

International Advertising Revenue % Growth Y/Y % Growth Q/Q % of Total AOL Gross Ad Revs % of Total AOL Net Ad Revs

-----------

$361.0 ----19.1% 22.5%

$436.0 20.8% --19.5% 24.0%

$498.2 14.3% --20.7% 26.1%

$569.7 14.3% --20.9% 26.6%

$665.3 16.8% --22.0% 28.4%

$763.4 14.7% --23.0% 30.1%

Total Advertising Revenue Less TAC (Net) % Growth Y/Y % Growth Q/Q

-------

$1,596.0 0.0% ---

$1,815.0 13.7% ---

$1,912.1 5.4% ---

$2,139.2 11.9% ---

$2,339.4 9.4% ---

$2,533.6 8.3% ---

DISPLAY ADVERTISING

2005A

2006A

2006A

2007A

2008E

2009E

$819.0 30.6%

$919.0 12.2%

$930.6 1.3%

TOTAL DISPLAY ADVERTISING EBITDA % Growth Y/Y % Margin

$261.1 -19.8% 41.6%

$327.6 25.5% 40.0%

$413.6 26.2% 45.0%

$418.8 1.3% 45.0%

$471.1 12.5% 45.0%

$513.5 9.0% 45.0%

$554.6 8.0% 45.0%

PAID SEARCH Queries (MM) % Growth Y/Y % Growth Q/Q

2005A 7,236 6.0% ---

2006A 7,569 4.6% ---

2007A 7,027 -7.2% ---

2008E 6,790 -3.4% ---

2009E 6,892 1.5% ---

2010E 6,995 1.5% ---

2011E 7,135 2.0% ---

Paid Click-Through Rate

19.5%

20.3%

15.1%

15.5%

$1,141.2 9.0%

2011E

$627.0 9.6%

14.2%

$1,047.0 12.5%

2010E

TOTAL DISPLAY ADVERTISING REVENUE % Growth Y/Y

16.0%

$1,232.5 8.0%

16.3%

Paid Introductions (MM) % Growth Y/Y

1,409 -4.8%

1,537 9.0%

998 -35.0%

1,022 2.4%

1,068 4.5%

1,119 4.8%

1,163 3.9%

Price Per Click (PPC) % Growth Y/Y % Growth Q/Q

$0.37 38.9% ---

$0.42 14.2% ---

$0.72 68.9% ---

$0.76 5.8% ---

$0.80 6.0% ---

$0.83 4.0% ---

$0.86 3.0% ---

Gross Revenue AOL Generates for Google TAC Rate Google Pays to AOL

$522.4 86.5%

$650.7 90.8%

$714.1 92.0%

$774.0 92.0%

$857.2 92.0%

$934.1 92.0%

$999.8 93.0%

TOTAL AOL PAID SEARCH REVENUE % Growth Y/Y % Growth Q/Q

$452.0 34.5% ---

$591.0 30.8% ---

$657.0 11.2% ---

$712.1 8.4% ---

$788.7 10.7% ---

$859.4 9.0% ---

$929.8 8.2% ---

TOTAL PAID SEARCH EBITDA % Growth Y/Y % Margin

$406.8 34.5% 90.0%

$541.1 33.0% 91.5%

$605.1 11.8% 92.1%

$655.9 8.4% 92.1%

$730.3 11.3% 92.6%

$798.3 9.3% 92.9%

$866.5 8.5% 93.2%

$0.06 26.9% ---

$0.08 25.0% ---

$0.09 19.7% ---

$0.10 12.2% ---

$0.11 9.1% ---

$0.12 7.4% ---

$0.13 6.1% ---

PARTNER SITES (ADVERTISING.COM) TOTAL GROSS PARTNER SITES REVENUE % Growth Y/Y % Growth Q/Q

2005A $259.0 167.0% ---

2006A $476.0 83.8% ---

2007A $655.0 37.6% ---

2008E $767.4 17.2% ---

2009E $890.2 16.0% ---

2010E $1,023.7 15.0% ---

2011E $1,156.8 13.0% ---

Total Partner Sites TAC % TAC Growth Y/Y TAC as % of Gross Revenue

$153.5 146% 59.3%

$290.0 89% 60.9%

$416.0 43% 63.5%

$498.0 20% 64.9%

$586.6 18% 65.9%

$684.8 17% 66.9%

$785.4 15% 67.9%

Total Net Partner Sites Revenue % Growth Y/Y % Net Revenue Margin (Gross Margin)

$105.5 0% 40.7%

$186.0 76% 39.1%

$239.0 28% 36.5%

$269.4 13% 35.1%

$303.6 13% 34.1%

$338.9 12% 33.1%

$371.4 10% 32.1%

TOTAL PARTNER SITES EBITDA % Growth Y/Y % Margin

$57.3 0% 22.1%

$104.4 82% 21.9%

$131.0 26% 20.0%

$153.5 17% 20.0%

$177.1 15% 19.9%

$202.7 14% 19.8%

$227.9 12% 19.7%

TOTAL ADVERTISING SUMMARY ADVERTISING REVENUE Display Advertising % Growth Y/Y

2005A

2006A

2007E

2008E

2009E

2010E

2011E

$627.0 9.6%

$819.0 30.6%

$919.0 12.2%

$930.6 1.3%

$1,047.0 12.5%

$1,141.2 9.0%

$1,232.5 8.0%

Paid Search % Growth Y/Y

$452.0 34.5%

$591.0 30.8%

$657.0 11.2%

$712.1 8.4%

$788.7 10.7%

$859.4 9.0%

$929.8 8.2%

Partner Sites % Growth Y/Y

$259.0 167.0%

$476.0 83.8%

$655.0 37.6%

$767.4 17.2%

$890.2 16.0%

$1,023.7 15.0%

$1,156.8 13.0%

$1,338.0 33.1% ---

$1,886.0 41.0% ---

$2,231.0 18.3% ---

$2,410.1 8.0% ---

$2,725.8 13.1% ---

$3,024.2 10.9% ---

$3,319.0 9.7% ---

ADVERTISING EBITDA Display Advertising % Growth Y/Y % Margin

$261.1 -19.8% 41.6%

$327.6 25.5% 40.0%

$413.6 26.2% 45.0%

$418.8 1.3% 45.0%

$471.1 12.5% 45.0%

$513.5 9.0% 45.0%

$554.6 8.0% 45.0%

Paid Search % Growth Y/Y % Margin

$406.8 34.5% 90.0%

$541.1 33.0% 91.5%

$605.1 11.8% 92.1%

$655.9 8.4% 92.1%

$730.3 11.3% 92.6%

$798.3 9.3% 92.9%

$866.5 8.5% 93.2%

Partner Sites % Growth Y/Y % Margin

$57.3 0.0% 22.1%

$104.4 82.1% 21.9%

$131.0 25.5% 20.0%

$153.5 17.2% 20.0%

$177.1 15.4% 19.9%

$202.7 14.4% 19.8%

$227.9 12.4% 19.7%

$725.2 12.5% 54.2%

$973.0 34.2% 51.6%

$1,149.6 18.2% 51.5%

$1,228.1 6.8% 51.0%

$1,378.6 12.2% 50.6%

$1,514.6 9.9% 50.1%

$1,649.0 8.9% 49.7%

Revenue Per Search (RPS) % Growth Y/Y % Growth Q/Q

TOTAL ADVERTISING REVENUE % Growth Y/Y % Growth Q/Q

TOTAL ADVERTISING EBITDA % Growth Y/Y % Margin

Source: Company reports, Lehman Brothers estimates

April 07, 2008

143

Lehman Brothers

Internet Data Book

April 2008

Figure 167: AOL Quarterly Income Statement, 2005–08E ($ in millions)

Time Warner -- AOL 2005 A 12/31/2005

2006 A 12/31/2006

1Q A 3/31/2007

2Q A 6/30/2007

3Q A 9/30/2007

4Q A 12/31/2007

2007 A 12/31/2007

1Q A 3/31/2008

2Q A 6/30/2008

3Q A 9/30/2008

4Q E 12/31/2008

2008 E 12/31/2008

AOL Income Statement AOL Income Statement ($ Millions) 2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

SUBSCRIPTION SUBSCRIPTION REVENUE U.S. AOL Europe TOTAL SUBSCRIPTION REVENUE % Growth Y/Y

$5,080.0 1,675.0 $6,755.0 -12.4%

$4,152.0 1,632.0 $5,784.0 -14.4%

$783.7 89.3 $873.0 -43.2%

$691.2 --$691.2 -55.3%

$635.0 --$635.0 -56.4%

$589.0 --$589.0 -52.7%

$2,699.0 89.3 $2,788.3 -51.8%

$554.3 --$554.3 -36.5%

$511.9 --$511.9 -25.9%

$476.6 --$476.6 -24.9%

$444.8 --$444.8 -24.5%

$1,987.6 --$1,987.6 -28.7%

SUBSCRIPTION EBITDA U.S. AOL Europe TOTAL SUBSCRIPTION EBITDA % Growth Y/Y % Margin

$819.5 $245.5 $1,065.0 4.0% 15.8%

$624.1 $371.7 $995.8 -6.5% 17.2%

$245.0 25.5 $270.5 28.4% 31.0%

$209.4 --$209.4 -21.3% 30.3%

$140.8 --$140.8 -58.0% 22.2%

$160.9 --$160.9 -12.5% 27.3%

$756.1 $25.5 $781.5 -21.5% 28.0%

$183.8 --$183.8 -32.1% 33.2%

$152.4 --$152.4 -27.2% 29.8%

$124.7 --$124.7 -11.4% 26.2%

$122.2 --$122.2 -24.0% 27.5%

$583.2 --$583.2 -25.4% 29.3%

ADVERTISING ADVERTISING REVENUE Display Advertising Paid Search Partner Sites TOTAL ADVERTISING REVENUE % Growth Y/Y

$627.0 $452.0 $259.0 $1,338.0 33.1%

$819.0 591.0 476.0 $1,886.0 41.0%

$232.0 167.0 150.0 $549.0 40.1%

$220.9 156.1 145.0 $522.0 16.3%

$213.9 163.1 163.0 $540.0 12.7%

$252.2 170.8 197.0 $620.0 9.5%

$919.0 $657.0 $655.0 $2,231.0 18.3%

$194.9 175.7 174.0 $544.6 -0.8%

$232.0 169.2 170.4 $571.6 9.5%

$228.9 181.5 191.5 $601.9 11.5%

$274.9 185.6 231.5 $692.0 11.6%

$930.6 $712.1 $767.4 $2,410.1 8.0%

ADVERTISING EBITDA Display Advertising Paid Search Partner Sites TOTAL ADVERTISING EBITDA % Growth Y/Y % Margin

$261.1 406.8 57.3 $725.2 12.5% 54.2%

$327.6 541.1 104.4 $973.0 34.2% 51.6%

$104.4 153.6 30.0 $288.0 35.9% 52.5%

$99.4 143.6 29.0 $272.0 14.9% 52.1%

$96.3 150.4 32.6 $279.2 16.5% 51.7%

$113.5 157.5 39.4 $310.4 9.0% 50.1%

$413.6 605.1 131.0 $1,149.6 18.2% 51.5%

$87.7 161.7 34.8 $284.2 -1.3% 52.2%

$104.4 155.7 34.1 $294.1 8.1% 51.5%

$103.0 167.4 38.3 $308.7 10.5% 51.3%

$123.7 171.1 46.3 $341.1 9.9% 49.3%

$418.8 655.9 153.5 $1,228.1 6.8% 51.0%

OTHER TOTAL OTHER REVENUE % Growth Y/Y

2005A $109.0 -48.1%

2006A $116.0 6.4%

3/07A $36.0 33.3%

6/07A $40.0 25.0%

9/07A $44.0 25.0%

12/07A $42.0 55.6%

2007A $162.0 39.7%

3/08E $39.6 10.0%

6/08E $43.2 8.0%

9/08E $46.6 6.0%

12/08E $43.7 4.0%

2008E $173.1 6.9%

TOTAL OTHER EBITDA % Growth Y/Y % Margin

$24.8 -51.8% 22.7%

$23.2 -6.3% 20.0%

$6.5 20.0% 18.0%

$7.2 12.5% 18.0%

$7.9 32.0% 18.0%

$7.6 40.0% 18.0%

$29.2 25.7% 18.0%

$7.1 10.0% 18.0%

$7.8 8.0% 18.0%

$8.4 6.0% 18.0%

$7.9 4.0% 18.0%

$31.2 6.9% 18.0%

2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

AOL INCOME STATEMENT SUMMARY REVENUE Subscriptions Advertising Other TOTAL REVENUE % Growth Y/Y

2005A

2006A

3/07A

6/07A

9/07A

12/07A

2007A

3/08E

6/08E

9/08E

12/08E

2008E

$6,755.0 1,338.0 109.0 $8,202.0 -5.6%

$5,784.0 1,886.0 116.0 $7,786.0 -5.1%

$873.0 549.0 36.0 $1,458.0 -25.5%

$691.2 522.0 40.0 $1,253.2 -38.2%

$635.0 540.0 44.0 $1,219.0 -37.9%

$589.0 620.0 42.0 $1,251.0 -31.9%

$2,788.3 2,231.0 162.0 $5,181.3 -33.5%

$554.3 544.6 39.6 $1,138.5 -21.9%

$511.9 571.6 43.2 $1,126.7 -10.1%

$476.6 601.9 46.6 $1,125.2 -7.7%

$444.8 692.0 43.7 $1,180.4 -5.6%

$1,987.6 2,410.1 173.1 $4,570.8 -11.8%

EBITDA Subscriptions Advertising Other OPERATING EBITDA % Growth % Margin

$1,065.0 725.2 24.8 $1,815.0 7.6% 22.1%

$995.8 973.0 23.2 $1,992.1 9.8% 25.6%

$270.5 288.0 6.5 $565.0 32.0% 38.8%

$209.4 272.0 7.2 $488.6 -4.0% 39.0%

$140.8 279.2 7.9 $427.9 -26.3% 35.1%

$160.9 310.4 7.6 $478.8 1.0% 38.3%

$781.5 1,149.6 29.2 $1,960.4 -1.6% 37.8%

$183.8 284.2 7.1 $475.1 -15.9% 41.7%

$152.4 294.1 7.8 $454.3 -7.0% 40.3%

$124.7 308.7 8.4 $441.8 3.2% 39.3%

$122.2 341.1 7.9 $471.2 -1.6% 39.9%

$583.2 1,228.1 31.2 $1,842.4 -6.0% 40.3%

Merger & Restructuring Costs ADJUSTED EBITDA % Growth Y/Y % Margin

(10.0) $1,805.0 7.6% 22.0%

(222.0) $1,770.1 -1.9% 22.7%

(23.0) $542.0 26.9% 37.2%

(4.0) $484.6 -1.9% 38.7%

--$427.9 -22.8% 35.1%

(98.0) $380.8 29.1% 30.4%

(125.0) $1,835.4 3.7% 35.4%

--$475.1 -12.3% 41.7%

(40.0) $414.3 -14.5% 36.8%

--$441.8 3.2% 39.3%

(40.0) $431.2 13.2% 36.5%

(80.0) $1,762.4 -4.0% 38.6%

Gain on Disposition of Assets Impairment of Goodwill and PPE UNADJUSTED EBITDA % Growth Y/Y

$10.0 (24.0) $1,791.0 8.7%

$771.0 (13.0) $2,528.1 41.2%

$670.0 (1.0) $1,211.0 182.2%

$(1.0) --$483.6 -2.1%

$(2.0) (1.0) $424.9 -23.3%

$16.0 --$396.8 -62.2%

$683.0 (2.0) $2,516.4 -0.5%

----$475.1 -60.8%

----$414.3 -14.3%

----$441.8 4.0%

----$431.2 8.7%

----$1,762.4 -30.0%

Depreciation Amortization OPERATING INCOME % Growth Y/Y % Margin

(548.0) (167.0) $1,076.0 31.4% 13.1%

(501.0) (133.0) $1,894.1 76.0% 24.3%

(105.0) (22.0) $1,084.0 309.0% 74.3%

(104.0) (20.0) $359.6 9.3% 28.7%

(103.0) (27.0) $294.9 -24.4% 24.2%

(96.0) (27.0) $273.8 -69.9% 21.9%

(475.4) (97.5) $2,012.4 6.2% 38.8%

(95.0) (25.0) $355.1 -67.2% 31.2%

(90.0) (25.0) $299.3 -16.8% 26.6%

(90.0) (20.0) $331.8 12.5% 29.5%

(85.0) (20.0) $326.2 19.1% 27.6%

(475.4) (97.5) $1,312.4 -34.8% 28.7%

Source: Company reports, Lehman Brothers estimates

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Figure 168: AOL Annual Income Statement, 2005–11E ($ in millions)

Time Warner -- AOL 2005 A 12/31/05

2006 A 12/31/06

2007 E 12/31/07

2008 E 12/31/08

2009 E 12/31/09

2010 E 12/31/10

2011 E 12/31/11

AOL Income Statement AOL Income Statement ($ Millions) 2005A

2006A

2007A

2008E

2009E

2010E

2011E

SUBSCRIPTION SUBSCRIPTION REVENUE U.S. AOL Europe TOTAL SUBSCRIPTION REVENUE % Growth Y/Y

$5,080.0 1,675.0 $6,755.0 -12.4%

$4,152.0 1,632.0 $5,784.0 -14.4%

$2,699.0 89.3 $2,788.3 -51.8%

$1,987.6 --$1,987.6 -28.7%

$1,519.8 --$1,519.8 -23.5%

$1,268.9 --$1,268.9 -16.5%

$1,095.6 --$1,095.6 -13.7%

SUBSCRIPTION EBITDA U.S. AOL Europe TOTAL SUBSCRIPTION EBITDA % Growth Y/Y % Margin

$819.5 245.5 $1,065.0 4.0% 15.8%

$624.1 371.7 $995.8 -6.5% 17.2%

$756.1 25.5 $781.5 -21.5% 28.0%

$583.2 --$583.2 -25.4% 29.3%

$432.1 --$432.1 -25.9% 28.4%

$327.5 --$327.5 -24.2% 25.8%

$228.8 --$228.8 -30.1% 20.9%

2005A

2006A

2007E

2008E

2009E

2010E

2011E

$627.0 452.0 259.0 $1,338.0 33.1%

$819.0 591.0 476.0 $1,886.0 41.0%

$919.0 657.0 655.0 $2,231.0 18.3%

$930.6 712.1 767.4 $2,410.1 8.0%

$1,047.0 788.7 890.2 $2,725.8 13.1%

$1,141.2 859.4 1,023.7 $3,024.2 10.9%

$1,232.5 929.8 1,156.8 $3,319.0 9.7%

ADVERTISING EBITDA Display Advertising Paid Search Partner Sites TOTAL ADVERTISING EBITDA % Growth Y/Y % Margin

$261.1 406.8 57.3 $725.2 12.5% 54.2%

$327.6 541.1 104.4 $973.0 34.2% 51.6%

$413.6 605.1 131.0 $1,149.6 18.2% 51.5%

$418.8 655.9 153.5 $1,228.1 6.8% 51.0%

$471.1 730.3 177.1 $1,378.6 12.2% 50.6%

$513.5 798.3 202.7 $1,514.6 9.9% 50.1%

$554.6 866.5 227.9 $1,649.0 8.9% 49.7%

OTHER TOTAL OTHER REVENUE % Growth Y/Y

2005A $109.0 -48.1%

2006A $116.0 6.4%

2007E $162.0 39.7%

2008E $173.1 6.9%

2009E $181.8 5.0%

2010E $189.0 4.0%

2011E $194.7 3.0%

TOTAL OTHER EBITDA % Growth Y/Y % Margin

$24.8 -51.8% 22.7%

$23.2 -6.3% 20.0%

$29.2 25.7% 18.0%

$31.2 6.9% 18.0%

$32.7 5.0% 18.0%

$34.0 4.0% 18.0%

$35.0 3.0% 18.0%

AOL INCOME STATEMENT SUMMARY REVENUE Subscriptions Advertising Other TOTAL REVENUE % Growth Y/Y

2005A

2006A

2007E

2008E

2009E

2010E

2011E

$6,755.0 1,338.0 109.0 $8,202.0 -5.6%

$5,784.0 1,886.0 116.0 $7,786.0 -5.1%

$2,788.3 2,231.0 162.0 $5,181.3 -33.5%

$1,987.6 2,410.1 173.1 $4,570.8 -11.8%

$1,519.8 2,725.8 181.8 $4,427.3 -3.1%

$1,268.9 3,024.2 189.0 $4,482.2 1.2%

$1,095.6 3,319.0 194.7 $4,609.3 2.8%

EBITDA Subscriptions Advertising Other OPERATING EBITDA % Growth % Margin

$1,065.0 725.2 24.8 $1,815.0 7.6% 22.1%

$995.8 973.0 23.2 $1,992.1 9.8% 25.6%

$781.5 1,149.6 29.2 $1,960.4 -1.6% 37.8%

$583.2 1,228.1 31.2 $1,842.4 -6.0% 40.3%

$432.1 1,378.6 32.7 $1,843.4 0.1% 41.6%

$327.5 1,514.6 34.0 $1,876.0 1.8% 41.9%

$228.8 1,649.0 35.0 $1,912.9 2.0% 41.5%

Merger & Restructuring Costs ADJUSTED EBITDA % Growth Y/Y % Margin

(10.0) $1,805.0 10.3% 22.0%

(222.0) $1,770.1 -1.9% 22.7%

(125.0) $1,835.4 3.7% 35.4%

(80.0) $1,762.4 -4.0% 38.6%

(60.0) $1,783.4 1.2% 40.3%

(40.0) $1,836.0 3.0% 41.0%

(20.0) $1,892.9 3.1% 41.1%

Gain on Disposition of Assets Impairment of Goodwill and PPE UNADJUSTED EBITDA % Growth Y/Y

$10.0 (24.0) $1,791.0 8.7%

$771.0 (13.0) $2,528.1 41.2%

$683.0 (2.0) $2,516.4 -0.5%

----$1,762.4 -30.0%

----$1,783.4 1.2%

----$1,836.0 3.0%

----$1,892.9 3.1%

Depreciation Amortization OPERATING INCOME % Growth Y/Y % Margin

(548.0) (167.0) $1,076.0 31.4% 13.1%

(501.0) (133.0) $1,894.1 76.0% 24.3%

(475.4) (97.5) $1,943.4 2.6% 37.5%

(475.4) (97.5) $1,189.5 -38.8% 26.0%

(451.7) (82.9) $1,248.8 5.0% 28.2%

(429.1) (70.5) $1,336.5 7.0% 29.8%

(407.6) (59.9) $1,425.4 6.7% 30.9%

ADVERTISING ADVERTISING REVENUE Display Advertising Paid Search Partner Sites TOTAL ADVERTISING REVENUE % Growth Y/Y

Source: Company reports, Lehman Brothers estimates

April 07, 2008

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Important Disclosures: Other Material Conflicts Clear Channel Outdoor Holdings (CCO): Lehman Brothers Inc. is associated with specialist firm Van der Moolen who makes a market in Clear Channel Outdoor Holdings stock. At any given time, the associated specialist may have "long" or "short" inventory position in the stock; and the associated specialist may be on the opposite side of orders executed on the Floor of the Exchange in the stock. Walt Disney Co (DIS): Lehman Brothers Inc. is associated with specialist firm Van der Moolen who makes a market in Walt Disney Co. stock. At any given time, the associated specialist may have "long" or "short" inventory position in the stock; and the associated specialist may be on the opposite side of orders executed on the Floor of the Exchange in the stock. Yahoo! Inc (YHOO): Lehman Brothers is acting as financial advisor to Yahoo! Inc. in connection with its evaluation of alternatives. Sector Coverage Universe Below is the list of companies that constitute the sector coverage universe: Alloy, Inc (ALOY) Blue Nile (NILE) eBay, Inc (EBAY) Google Inc. (GOOG) Harris Interactive (HPOL) Netflix Inc. (NFLX) TechTarget Inc. (TTGT)

Amazon.com, Inc (AMZN) Dice Holdings Inc. (DHX) Expedia, Inc. (EXPE) Greenfield Online (SRVY) IAC/InterActiveCorp (IACI) Orbitz Worldwide Inc. (OWW) Yahoo! Inc (YHOO)

Mentioned Company

Ticker

Price (04-Apr-2008)

Alloy, Inc Amazon.com, Inc Blue Nile CBS Corp. Clear Channel Communications Clear Channel Outdoor Holdings Comcast Corp Costco Wholesale Corp. Dice Holdings Inc. eBay, Inc Expedia, Inc. Gannett Inc. Google Inc. Greenfield Online Harris Interactive IAC/InterActiveCorp Lamar Advertising Co. Liberty Global, Inc. Netflix Inc. New York Times News Corporation Orbitz Worldwide Inc. Target Corp TechTarget Inc. Time Warner Viacom Inc Wal-Mart Stores Walt Disney Co Yahoo! Inc

ALOY AMZN NILE CBS CCU CCO CMCSK COST DHX EBAY EXPE GCI GOOG SRVY HPOL IACI LAMR LBTYA NFLX NYT NWS OWW TGT TTGT TWX VIA WMT DIS YHOO

US$ 7.06 US$ 76.87 US$ 49.41 US$ 22.29 US$ 28.90 US$ 19.63 US$ 19.98 US$ 66.45 US$ 9.04 US$ 32.94 US$ 24.81 US$ 29.48 US$ 471.09 US$ 11.34 US$ 2.69 US$ 21.41 US$ 35.77 US$ 35.14 US$ 36.21 US$ 19.29 US$ 19.78 US$ 8.05 US$ 52.67 US$ 14.61 US$ 14.60 US$ 40.45 US$ 54.40 US$ 31.24 US$ 28.36

146

April 07, 2008

Stock / Sector Rating 2-Equal weight / 2-Neutral 2-Equal weight / 2-Neutral 2-Equal weight / 2-Neutral 2-Equal weight / 2-Neutral 2-Equal weight / 3-Negative 2-Equal weight / 3-Negative 2-Equal weight / 2-Neutral 2-Equal weight / 2-Neutral 2-Equal weight / 2-Neutral 2-Equal weight / 2-Neutral 2-Equal weight / 2-Neutral 3-Underweight / 3-Negative 1-Overweight / 2-Neutral 1-Overweight / 2-Neutral 1-Overweight / 2-Neutral 1-Overweight / 2-Neutral 2-Equal weight / 3-Negative 1-Overweight / 2-Neutral 2-Equal weight / 2-Neutral 3-Underweight / 3-Negative 1-Overweight / 2-Neutral 1-Overweight / 2-Neutral 1-Overweight / 2-Neutral 2-Equal weight / 2-Neutral 1-Overweight / 2-Neutral 2-Equal weight / 2-Neutral 1-Overweight / 2-Neutral 2-Equal weight / 2-Neutral RS-Rating Suspended / 2-Neutral

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EUS08-0139

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