Web 2.0 Weekly - Dec. 22, 2009

SOFTWARE & SERVICES 22 DECEMBER 2009
DAVID SHORE, CFA, MBA 416.860.6784
WEB 2.O WEEKLY david.shore@researchcapital.com
Damian Wojcichowsky, CFA (Associate), 416.860.7652

DECEMBER 2009 – THE HOTTEST MONTH FOR WEB 2.0 FINANCING IN 2009
2 0 0 9 EN D S O N A H IG H N O T E
Highest value, average deal size in 2009: Total transaction value in the Web 2.0 universe for December-to-date is
$383.4 million (compared with $132.4 million at this time last week). The number of financings stands at 22,
averaging $17.4 million each (vs. 13 financings at an average $10.2 million per deal at this time last week).

Good month even if Zynga didn’t happen: Excluding the $180 million Zynga round, the total for December would be
$203.4 million – still placing December in the top half for 2009 in terms of total value, and representing 56% Y/Y
growth for the month. Excluding Zynga results in a $9.7 million average deal size, up 49% Y/Y. In other words,
December is a strong month any way you cut it.

In comparison, total capital raised in November was $203.4 million, averaging $11.3 million (18 deals); October was
$171.5 million, averaging $6.1 million (28 deals); and September was $232.8 million, averaging $9.0 million (26
deals).

Financing Activity Last Twelve Months

450.0 20.0

17.4 18.0
400.0

16.0
350.0
14.2
14.0
300.0

11.3 12.0

250.0
(US$m)

(US$m)
10.0
9.0
200.0
7.6
8.0
7.1
6.5 6.5 6.6
150.0 6.2 6.1
5.6
6.0
4.8

100.0
4.0

50.0
2.0

0.0 0.0
Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

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

A few sectors emerging as focus areas: Gaming is now clearly the lead sector in terms of financing activity with 11
transactions in the past quarter. Video follows up in second place with eight financings, followed by Social Networks,
Advertising, and Analytics with seven each. The $400 million acquisition of Playfish skews the Virtual Worlds segment
to the highest total.

This report has been created by Anal ysts that are employed by Research Capital Corporation, a Canadian Investment Dealer.
For further disclosures, please see last page of this report.
www.researchcapital.com
Toronto 416.860.7600 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550

THE WEB 2.0 UNIVERSE
Eighty-nine public Web 2.0 companies: Our Web 2.0 universe contains 89 companies, with a combined market cap of
approximately $73 billion (Figure 1). The median market cap for the group is $41 million, with average trailing revenue of
$166 million (median $54 million). The companies are also generally profitable with a median EBITDA margin of 12.1%.
On a valuation basis, the overall average is 5.5x trailing revenue (median 1.7x) and 11.3x trailing EBITDA (median 7.9x).
Twenty of the companies have more than 500 employees.
C omparable C ompany Analys is > Web 2.0
Trading C urrent US D Market US D L TM Total US D L TM Total E B ITDA TE V/L TM TE V/L TM
C ompany Name L TM as of Tic ker E xc hange C urrenc y HQ P ric e C ap ($m) R ev ($m) E B ITDA ($m) % R evenue E B ITDA E mployees
Accelerize New Media, Inc. 9/30/2009 AC L Z OT C B B US D United S ta tes 0. 65 18.7 4.1 (1.5) -36.5% 5. 7x - 11
Actoz S oft C o. , L td. 9/30/2009 A052790 K OS E KR W S outh K orea 20,350 149.9 115.9 25.7 22.2% 1. 0x 4.3x NA
AQ Interactive, Inc. 9/30/2009 3838 TS E JPY J a pa n 44,650 27.1 74. 0 3.8 5.1% 0. 1x 1.2x NA
As knet AG 9/30/2009 XT R A: A5A XT R A E UR G erma ny 3 23.6 103.6 (2.4) NM 12.6x - 3
As s ocia ted Media Holdings Inc. 6/30/2007 AS MH OT C P K US D United S ta tes 0. 01 0. 4 0.1 (2.3) NM 12.6x - 3
B igs tring C orp. 9/30/2009 BSGC OT C B B US D United S ta tes 0. 02 1. 5 0.1 (1.0) NM 39.4x - 4
B etawave C orporation 9/30/2009 B W AV OT C B B US D United S ta tes 0. 11 3. 2 8.4 (14.3) NM 0. 1x - 48
B eyond C ommerce, Inc. 9/30/2009 B Y OC OT C B B US D United S ta tes 0. 03 1. 5 13. 5 (12.4) -91.9% 1. 0x - 86
B right T hings plc 3/31/2009 AIM:B G T AIM GBP United K ingdom 0. 01 4. 6 0.0 (2.7) NM - - NA
B roadW ebAs ia Inc. 9/30/2008 BWBA OT C P K US D United S ta tes 0. 09 7. 6 0.0 (4.6) NM - - 46
C DC C orp. 9/30/2009 C HIN.A Na s daqG S US D Hong K ong 2. 30 243.8 334.2 20.0 6.0% 0. 6x 10.7x 2,227
C hangyou.com Limited 9/30/2009 C Y OU Na s daqG S US D C hina 32. 72 1,799.6 255.3 157. 4 61.7% 5. 8x 9.4x 628
C hina G ateway C orpora tion 9/30/2008 CGWY OT C P K US D United S ta tes 0. 01 0. 2 6.7 (6.6) -98.9% 0. 0x - 37
C hines e G amer International 9/30/2009 G T S M:3083 GTS M TWD T aiwan 406 1,053.0 68. 3 39.6 58.0% 14.2x 24.5x NA
C L IC K E R Inc. 5/31/2009 C LK Z OT C B B US D United S ta tes 0. 00 0. 2 2.5 (1.2) -45.8% 0. 1x - 22
C ornerW orld C orporation 7/31/2009 CWR L OT C B B US D United S ta tes 0. 03 2. 9 6.8 NM NM 1. 9x - 16
C yberplex Inc. 9/30/2009 T S X :C X TS X C AD C anada 1 76.0 105.6 11.7 11.1% 0. 5x 4.8x NA
DADA S pA 6/30/2009 C M:DA CM E UR Ita ly 5. 97 141.7 241.9 31.8 13.1% 0. 8x 6.0x NA
DXN Holdings B hd 8/31/2009 DXN K LS E MY R Ma la ys ia 0. 55 35.9 77. 3 (84.0) NM 0. 6x - NA
Dibz Interna tiona l, Inc. NA DIB Z OT C P K US D United S ta tes 0. 01 0. 0 NA NM NM - - NA
Digita lP os t Intera ctive, Inc. 9/30/2009 DG L P OT C B B US D United S ta tes 0. 05 4. 6 1.2 (0.9) -73.8% 5. 7x - 7
Digita lT own, Inc. 8/31/2009 DG T W OT C B B US D United S ta tes 1. 40 38.3 0.0 (1.8) NM - - 3
Dolphin Digita l Media, Inc. 9/30/2009 DP DM OT C B B US D United S ta tes 0. 25 14.2 0.3 (4.6) NM - - NA
E olith C o. L td. 12/31/2008 A041060 K OS E KR W S outh K orea 555 68.6 15. 4 (3.6) -23.6% 4. 6x - NA
E xtens ions , Inc. 9/30/2009 E XT I OT C P K US D United S ta tes 0. 45 20.0 0.0 NM NM - - 2
F luid Mus ic C ana da , Inc. 9/30/2009 T S X :F MN TS X C AD United S ta tes 1. 74 100.9 5.6 (3.0) -54.0% 17.5x - NA
F rogs ter Intera ctive P ictures AG 6/30/2009 FR G XT R A E UR G erma ny 17. 49 65.6 9.6 (4.5) -47.0% 6. 7x - NA
G a mania Digital E ntertainment C o., Ltd. 9/30/2009 6180 GTS M TWD T aiwan 48. 50 229.5 151.2 24.9 16.5% 1. 4x 8.3x NA
G a meO n C o L td. 9/30/2009 3812 TS E JPY J a pa n 65,200 70.5 79. 3 18.6 23.5% - - NA
G eoS entric O yj 9/30/2009 G E O 1V HL S E E UR F inla nd 0. 05 65.8 4.7 (19.0) NM 14.8x - 118
G ia nt Intera ctive G roup, Inc. 9/30/2009 GA NY S E US D C hina 7 1,646.4 202.2 137. 9 68.2% - - 1,570
G igaMedia Ltd. 3/31/2009 G IG M Na s daqG S US D T aiwan 3. 54 193.0 183.6 NM NM 0. 6x - 751
G ra vity C o. , L td 9/30/2009 GR VY Na s daqG M US D S outh K orea 1. 46 40.6 49. 9 17.7 35.4% - - 469
G ree, Inc. 9/30/2009 T S E :3632 TS E JPY J a pa n 5,510 2,758.6 210.3 122. 2 58.1% 12.6x 21.7x NA
G ungHo O nline E ntertainment, Inc. 9/30/2009 3765 OS E JPY J a pa n 156,200 200.1 120.7 26.9 22.3% 1. 3x 6.0x NA
Ha nbitS oft, Inc. 9/30/2009 A047080 K OS E KR W S outh K orea 4,145 76.1 57. 6 (0.3) -0.6% 1. 1x - NA
IAC /InterActiveC orp. 9/30/2009 IAC I Na s daqG S US D United S ta tes 19. 72 2,602.5 1,359.6 82.4 6.1% 0. 7x 11.6x 3,200
is eemedia Inc. 9/30/2009 IE E T S XV C AD C anada 0. 19 9. 0 1.8 (4.1) NM 5. 1x - NA
J umbuck E ntertainment Limited 6/30/2009 AS X :J MB AS X AUD Aus tra lia 0. 32 13.4 16. 7 7.2 42.8% 0. 4x 1.0x 79
K AB Dis tribution Inc. 6/30/2009 T S X :K AB TS X C AD C anada 0 0. 6 67. 9 4.0 5.8% - - NA
K ings oft C o. L td. 9/30/2009 3888 S E HK HK D C hina 5 770.9 143.4 57.6 40.2% 4. 9x 12.3x 2,271
L ingo Media C orpora tion 9/30/2009 T S X V : LM T S XV C AD C anada 0. 90 10.3 1.3 (2.3) NM 7. 6x - NA
L iveW orld Inc. 9/30/2009 LV W D OT C P K US D United S ta tes 0. 02 0. 6 10. 4 0.4 4.1% - - NA
L ookS mart, L td. 9/30/2009 LO O K Na s daqG M US D United S ta tes 0. 96 16.4 54. 0 (4.5) -8.4% - - 90
Magnitude Informa tion S ys tems Inc. 9/30/2009 MAG Y OT C B B US D United S ta tes 0. 02 8. 9 0.1 (2.3) NM - - 14
Mixi, Inc. 9/30/2009 2121 TS E JPY J a pa n 801000. 00 1,380.3 139.6 46.1 33.0% 8. 9x 27.1x NA
Modern T imes G roup Mtg AB 9/30/2009 MT G B OM SEK S weden 334. 90 3,169.4 2,002.6 282. 9 14.1% 1. 9x 13.1x 2,969
MO K O .mobi L imited 6/30/2009 MK B AS X AUD Aus tra lia 0. 18 18.1 0.7 (2.4) NM 24.8x - NA
Myria d G roup AG 6/30/2009 MY R N SWX C HF S witzerland 4. 80 205.8 63. 0 3.4 5.4% 3. 2x - 405
NE O W IZ G a mes C orporation 12/31/2008 A095660 K OS E KR W S outh K orea 40800. 00 720.8 207.3 55.7 26.8% 3. 4x 12.8x NA
NetDragon W ebS oft, Inc. 9/30/2009 777 S E HK HK D C hina 4 271.4 91. 4 27.8 30.4% 1. 3x 4.2x 2,426
Netea s e.com Inc. 9/30/2009 NT E S Na s daqG S US D C hina 37. 27 4,823.7 482.9 291. 8 60.4% - - 3,109
NeuL ion Incorpora ted 9/30/2009 T S X :NLN TS X C AD C anada 0. 63 67.4 24. 9 (16.1) -64.5% 2. 2x - 237
NeXplore C orporation 6/30/2009 NXP C OT C P K US D United S ta tes 1 35.1 1.7 (13.3) NM 23.0x - NA
Ngi G roup Inc. 9/30/2009 2497 TS E JPY J a pa n 25780. 00 35.7 81. 7 3.2 3.9% - - NA
Northga te T echnologies Limited 9/30/2009 590057 BSE INR India 27. 70 20.1 46. 4 (49.8) NM 0. 4x - NA
O pen T ext C orp. 9/30/2009 OT E X Na s daqG S US D C anada 38. 48 2,169.5 814.5 211. 1 25.9% 2. 8x 10.6x 3,900
O penwa ve S ys tems Inc. 9/30/2009 OP W V Na s daqG S US D United S ta tes 2. 15 179.6 190.5 6.2 3.3% 0. 4x 12.0x 590
P erfect W orld C o., Ltd. 9/30/2009 PWRD Na s daqG S US D C hina 40. 39 2,009.7 286.1 157. 4 55.0% 0. 4x 0.7x 2,096
P NI Digita l Media Inc. 9/30/2009 T S XV :P N T S XV C AD C anada 1. 70 52.6 22. 5 3.8 17.0% 2. 2x 13.1x NA
Q uepas a C orp. 9/30/2009 QP S A OT C B B US D United S ta tes 2 28.0 0.2 (9.8) NM - - 74
O AO R B C Informa tion S ys tems 12/31/2007 R BCI R TS US D R us s ia 1. 60 222.0 157.4 20.6 13.1% 0. 0x 0.4x NA
S handa Intera ctive E ntertainment Ltd. 9/30/2009 S NDA Na s daqG S US D C hina 50. 96 3,427.3 694.3 317. 2 45.7% - - 3,124
S hutterfly, Inc. 9/30/2009 S FLY Na s daqG S US D United S ta tes 17. 51 449.6 223.1 27.0 12.1% 1. 5x 12.5x 514
S K C ommunications C o., L td. 12/31/2008 A066270 K OS E KR W S outh K orea 12850. 00 450.9 192.7 12.5 6.5% 2. 3x 36.0x NA
S NAP Intera ctive, Inc. 9/30/2009 S TVI OT C B B US D United S ta tes 0 2. 5 3.4 0.5 15.6% 0. 3x 1.8x 11
S NM G lobal Holdings 9/30/2008 S NMN OT C P K US D United S ta tes 0. 00 0. 0 2.0 (0.7) -34.8% 1. 1x - 33
S ocia l Media V entures Inc. 12/31/2008 S MV I OT C P K US D United S ta tes 0 0. 0 0.1 (0.1) -60.6% 4. 5x - NA
S ocia lwis e, Inc. 6/30/2009 S C LW OT C B B US D United S ta tes 0. 45 21.1 0.0 (5.6) NM - - NA
S ohu.com Inc. 9/30/2009 S OHU Na s daqG S US D C hina 54. 61 2,100.1 501.0 218. 4 43.6% 3. 1x 7.1x 3,197
S park Networks , Inc. 9/30/2009 LO V AME X US D United S ta tes 3 59.1 47. 5 10.0 21.0% 1. 2x 5.5x 183
S pectrumDNA, Inc. 9/30/2009 S P XA OT C B B US D United S ta tes 0 6. 8 0.1 (2.5) NM 48.7x - 7
T encent Holdings L td. 9/30/2009 700 S E HK HK D C hina 153 35,997.2 1,588.4 811. 3 51.1% 24.9x 48.7x 6,194
T he P a rent C ompa ny 8/2/2008 K IDS .Q OT C P K US D United S ta tes 0. 00 0. 1 112.0 (13.5) -12.0% 0. 2x - 347
T he9 Limited 12/31/2008 NC T Y Na s daqG S US D C hina 6. 41 161.0 250.6 85.5 34.1% - - 1,626
T heS treet.com, Inc. 3/31/2009 TSCM Na s daqG M US D United S ta tes 2. 39 73.1 67. 0 1.9 2.9% 0. 1x 4.4x 310
T ree. C om, Inc. 9/30/2009 TR E E Na s daqG M US D United S ta tes 8. 94 97.5 217.1 9.7 4.5% 0. 3x 7.4x 700
Unis erve C ommunications C orp. 8/31/2009 T S X V : US S T S XV C AD C anada 0. 05 1. 1 16. 1 0.1 0.9% 0. 4x 38.7x NA
United O nline Inc. 9/30/2009 UNT D Na s daqG S US D United S ta tes 7. 11 601.4 996.8 212. 9 21.4% 0. 9x 4.0x 1,469
UO MO Media , Inc 7/31/2009 UOMO OT C B B US D C anada 0 3. 5 0.8 (0.4) -54.2% 5. 0x - NA
V a lueC lick Inc. 9/30/2009 V C LK Na s daqG S US D United S ta tes 10 819.0 545.7 130. 8 24.0% 1. 2x 5.0x 1,189
V O IS , Inc. 6/30/2009 V OIS OT C B B US D United S ta tes 0 6. 8 0.0 (1.0) NM - - 4
W ebzen Inc. 9/30/2009 W ZE N Na s daqG M US D S outh K orea 3. 20 37.9 23. 0 2.5 11.0% - - 328
W izza rd S oftware C orpora tion 9/30/2009 W ZE AME X US D United S ta tes 0. 33 17.6 5.2 (3.9) -76.4% 3. 7x - 110
W orlds . com Inc. 9/30/2009 W DDD OT C B B US D United S ta tes 0. 09 4. 8 0.1 (0.6) NM - - 1
W ynds torm C orporation NA W Y ND OT C P K US D United S ta tes 0. 03 0. 5 NA NM NM - - NA
XING AG 9/30/2009 O 1B C XT R A E UR G erma ny 30. 89 238.5 62. 5 16.9 27.0% 2. 9x 10.8x 266
Y D O nline C orp. 12/31/2007 A052770 K OS E KR W S outh K orea 6860. 00 86.2 57. 4 12.4 21.6% 1. 6x 7.5x NA
Y nk K orea Inc. 12/31/2008 A023770 K OS E KR W S outh K orea 3290. 00 14.7 11. 9 1.3 10.5% - - NA
High 35,997.2 2,002.6 811.3 68.2% 48.7x 48.7x 6,194
L ow 0. 0 0.0 -84.0 -98.9% - - 1
Average 816.9 165.5 41.3 5.7% 5.5x 11.3x 906
Media n 40.6 54.0 2.2 12.1% 1. 7x 7.9x 252

Figure 1. Web 2.0 Universe Summary
Source. Capital IQ

CAPITAL MARKETS ACTIVITY (M&A AND FINANCING)
December – the year ends on a high note: Total transaction value in the Web 2.0 universe for December-to-date is
$383.4 million (compared with $132.4 million at this time last week). The number of financings stands at 22, averaging
$17.4 million each (vs. 13 financings at an average $10.2 million per deal at this time last week). In comparison, total
capital raised in November was $203.4 million, averaging $11.3 million (18 deals); October was $171.5 million, averaging
$6.1 million (28 deals); and September was $232.8 million, averaging $9.0 million (26 deals).

Financing Activity Last Twelve Months

450.0 20.0

17.4 18.0
400.0

16.0
350.0
14.2
14.0
300.0

11.3 12.0

250.0
(US$m)

(US$m)
10.0
9.0
200.0
7.6
8.0
7.1
6.5 6.5 6.6
150.0 6.2 6.1
5.6
6.0
4.8

100.0
4.0

50.0
2.0

0.0 0.0
Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09

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

Figure 2. Financings, Last Twelve Months
Source. Company reports

Deal round-up for December: The large deal highlights for the month include:

• Zynga – developer of social games for Facebook – raised $180 million in its third round of financing.

• Shanghai Dacheng Network – 3D MMO gaming developer – was acquired for $80 million by KongZhong.

• Youku – Chinese video site operator – raised $40 million in a fourth round financing.

• Friendster – the third largest social networking site, behind Facebook and MySpace – was acquired by MOL Global
for $39.5 million.

• Groupon – a social commerce site that allows members to participate in “one-time only” deep discounted deals –
raised $30 million in a second institutional financing.

• Zoosk – online social dating web site – raised $30 million in its fourth financing.

• Lala – streaming music site – was acquired by Apple for $17 million (or $3 million on an enterprise value basis).

• gWallet – developer of virtual currency technology for monetizing brands, publishing, and social media platforms –
raised $12.5 million in a first round financing.

All other deals in the month were in the amount of $10 million or less. For additional details on financings, see Figures 22
and 23 (at end of note).

Financing & M/A Summary - Last Three Months

200.0

180.0

160.0

140.0

120.0

Dec-09
(US$m)

100.0 Nov-09
Oct-09

80.0

60.0

40.0

20.0

0.0
Phoenix New Media
DailyMotion

Jive Software
Millennial Media

Reality Mobile
Motley Fool

Movik Networks
Yext

Box.net

Nival Network
AppNexus
PlayFish

Ooyala

Aviary

Fizzback

Linkedex
Evernote
Zynga

Gowalla
SonicMule

wooga

Bizo
Eventbrite

Overtone

Playfire

DailyBooth

SocialMedia
Shanghai Dacheng Network

Ecast Network

Gizmoz

5 Minutes
StockTwits

OneForty

DataSync

PBworks
RockYou
Ku6
Youku

Engine Yard
Friendster
Groupon

Lala

CubeTree
kaChing

SeekingAlpha
Pageonce

Vdopia

JanRain

ViVu

Blekko
Godengo

Sonico
Rekoo
Onehub

Hot Potato

IngBoo
Chango

Scoopler
Listia

VEVO
Sezmi

Gogii

Rocket Fuel
Playdom

Technorati

Jinni
Smaato

SimpleGeo
Zoosk

HubSpot

Spigit
ScanScout

AlikeList

Scout Labs

Credit Karma
Placecast

Altruik
Tonchidot

Article One Partners

Cloud Engines

Appolicious

StatusNet

Adfonic

Joost

Aurora Feint
Qunar.com

FeedRoom

Genius.com

Alice.com

Prosper.com
PopCap Games

Sometrics
Amie Street

Imeem
Watercooler
gWallet

Figure 3. Capital Market Activity, Last Three Months

A few sectors emerging as focus areas: Gaming is now clearly the lead sector in terms of financing activity with 11
transactions in the past quarter. Video follows up in second place with eight financings, followed by Social Networks,
Advertising, and Analytics with seven each (Figure 4). The $400 million acquisition of Playfish skews the Virtual Worlds
segment to the highest total.

Capital Market Activity by Sector - Last Three Months

425.0

375.0

325.0

275.0

225.0
(US$m)

175.0

125.0

75.0

25.0
405.3 371.9 160.3 85.3 57.0 54.0 44.9 43.8 39.8 37.5 30.0 28.7 24.7 21.1 18.0 15.0 13.1 12.5 11.5 10.0 10.0 6.4 3.9 2.2 1.2 0.7
Social Commerce
Gaming

Documents
Travel

Wiki
Media

Collaboration

Mobile

Microblog

Publishing

Enterprise
Music

Financial Services
Widget

Infrastructure

Search

Mobile Ad

Classified
Social Networks

Virtual Goods
Virtual World

Video

Advertising

Aggregation

Crowdsourced
Analytics

-25.0

Content
# companies
2 11 8 7 3 2 4 7 4 6 4 7 3 3 2 1 6 1 4 1 2 2 2 1 1 1

Figure 4. Capital Market Activity, by Sector, Last Three Months

CAPITAL MARKETS ACTIVITY (PRICE PERFORMANCE)
Web 2.0 index continues to outpace NASDAQ recovery: Our Web 2.0 index (market-cap weighted) essentially mirrored
the performance of the NASDAQ composite index from mid-2008 until Q1/09. Since then, the index has diverged in a much
stronger recovery relative to the NASDAQ index (Figure 5).

Web 2.0 Index Price Performance
250

200

150

100

50

0
12/22/2008

1/5/2009

1/19/2009

2/2/2009

2/16/2009

3/2/2009

3/16/2009

3/30/2009

4/13/2009

4/27/2009

5/11/2009

5/25/2009

6/8/2009

6/22/2009

7/6/2009

7/20/2009

8/3/2009

8/17/2009

8/31/2009

9/14/2009

9/28/2009

10/12/2009

10/26/2009

11/9/2009

11/23/2009

12/7/2009

12/21/2009
Index: Web 2.0 (Market Cap) ^COMP - Share Pricing

Figure 5. Web 2.0 Price Performance
Source. Capital IQ

More stocks declining, but average gains better average declines: Twenty-eight companies in our universe had
positive stock price performances over the past week (for stocks with prices greater than $1) (Figure 6), while 19
companies showed negative 1-week returns.

1 Week P rice P erformance
S K Communications Co., L td. 20.1%
S park Netw orks , Inc. 14.8%
Gree, Inc. 14.1%
A Q Interactive, Inc. 10.2%
Ngi G roup Inc. 9.4%
TheS treet.com, Inc. 7.7%
Webz en Inc. 6.7%
HanbitS of t, Inc. 6.0%
K ings oft Co. L td. 4.2%
Changy ou.com Limited 4.0%
G ravity Co., L td 2.8%
S ohu.com Inc. 2.6%
Fluid Mus ic Canada, Inc. 2.4%
IA C/InterA ctiveCorp. 2.2%
United Online Inc. 2.0%
Modern Times G roup Mtg A B 1.9%
Cy berplex Inc. 1.7%
Neteas e.com Inc. 0.7%
Open Tex t Corp. 0.6%
Tree.Com, Inc. 0.0%
DigitalTow n, Inc. 0.0%
S hutterf ly , Inc. -0.2%
Mix i, Inc. -0.7%
DA DA S pA -0.7%
My riad G roup A G -1.0%
Y D Online Corp. -1.6%
Eolith Co. L td. -1.8%
GameOn Co L td. -2.0%
NetDragon WebS of t, Inc. -2.0%
Giant Interactive G roup, Inc. -2.7%
V alueClick Inc. -2.7%
Gamania Digital Entertainment -2.8%
Frogs ter Interactive Pic tures A G -2.8%
S handa Interactive -3.1%
Northgate Technologies Limited -3.1%
A ctoz S of t Co., L td. -3.3%
G igaMedia L td. -3.5%
CDC Corp. -3.8%
Tencent Holdings L td. -3.9%
XING A G -4.7%
Openw ave S y s tems Inc. -4.9%
Chines e Gamer International -5.8%
Perf ect World Co., L td. -6.3%
Quepas a Corp. -6.4%
NEOWIZ Games Corporation -6.4%
Y nk K orea Inc. -7.8%
PNI Digital Media Inc. -8.1%
A s knet A G -9.1%
The9 Limited -10. 2%
-0.15 -0.1 -0.05 0 0.05 0.1 0.15 0.2 0. 25

Figure 6. 1-Week Price Performance
Source. Capital IQ

PUBLIC COMPANY INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS)

K ey Developments
C ompany Headline Notes
C hinaren, Inc.; S ohu.com Inc. S ohu. com Inc. and C hinaren, Inc. to Introduce S ohu. com Inc. a nd C hinaren, Inc. would introduce microblogging s ervice, a new kind of s ocial networking s ervice (S NS ).
(Nas daqG S : S OHU) Microblogging S ervice T he S ohu's microblogging webs ite, t. s ohu. com, is till under maintena nce and that of C hina R en opens for regis tration but is
under internal tes t, as indicated on its webs ite, t. china ren. com. Microblogging is a form of multimedia blogging tha t a llow
us ers to s end brief text updates or s ha re photos and a udio clips with a res tricted group chos en by the us er. Many C hines e
internet s ervice providers , including S ina (S INA. NAS DAQ ) and T ecent, have launched the microblogging product in the
country a nd NetE as e (NT E S . NAS DAQ) is a ls o mulling on introducing this s ervice. However, the profit pa ttern of this s ervice
is s till uncerta in in C hina. S ome indus try ins iders noted that the operation will face huge policy ris k s ince the a pproving
mechanis m for this product is s till incomplete in the country.

Unis erve C ommunic ations C orp. Unis erve C ommunications C orp. a nnounced it Unis erve C ommunications C orp. (T S XV : US S ) a nnounced a non-brokered priva te placement of 4, 000, 000 units a t C AD
(TS XV: US S ) expects to receive C AD 0. 20 million in funding. 0. 05 per unit for gros s proceeds of C AD 200, 000 on December 14, 2009. E ach unit cons is ts of one common s ha re a nd one
s ha re purcha s e warrant. E a ch warrant entitles the holder to purcha s e one common s ha re of the company a t C AD 0. 10 per
s ha re for a period of two years . T he compa ny will pa y no finder's fees in connection with the tra ns action.

Tree.C om, Inc . (Nas daqG M: TR E E ) T ree. C om, Inc. P rovides E arnings G uidance T ree. C om, Inc. provided earnings guida nce for the yea r 2010. T he company expects revenue for 2010 to total $227 million
for the Y ea r 2010; Announces to C ombine its to $327 million. T hat would be 3. 5% to 7% higher tha n the revenue it anticipa tes for this yea r.
V arious C all C enters into a S ingle C ombined
Loca tion T he compa ny s aid it will combine its various call centers into a s ingle combined loca tion. It declines to s a y where. It intends
to eliminate duplication in network and corporate s taff pos itions . In a ddition to s aving on s a laries , the compa ny expects to
genera te $3 million per yea r in facility a nd overhead s avings .
Myriad G roup AG (S WX: MYR N) S ony E rics s on s elects Myriad G roup AG ’s Myriad G roup AG announced that S ony E rics s on has s elected its J bed Advanced J a va virtual machine to power
J bed J ava s oftware for X P E R IA X 2 hands et applications on the new X P E R IA? X2 ha nds et. J bed, which is deployed in over 300 million mobile ha nds ets , has been
s ea mles s ly integrated with W indows Mobile on the XP E R IA? X 2, enabling J a va applications to run like na tive apps ,
ens uring an enriched mobile us er experience. T he integra tion of J bed gives network opera tors and the developer
community the option to create new applications a nd s ervices in either na tive W indows or J ava. W here J ava apps ha ve
already been developed, operators a re a ble to port thes e to the XP E R IA? X2 rather than ha ving to create a new W indows
Mobile application, delivering a dva ntages of both s peed to ma rket and cos t s a vings .

S ohu.com Inc . (Nas daqG S : S OHU) S AR F T ’s F ilm Unit F iles C opyright S uit agains t C hina's S tate Adminis tration of R a dio, F ilm and T elevis ion (S AR F T )'s film production unit has filed a laws uit a gains t
S ohu. com S ohu. com for the alleged una uthorized redis tribution of one of S AR F T 's copyrighted films . According to the B eijing Haidia n
Dis trict C ourt's officia l W eb s ite, S AR F T ha s dema nded tha t S ohu. com cea s e dis tribution of the film immediately a nd pay
da mages worth R MB 50, 000 ($7, 319) for both copyright infringement and profiting from rela ted a dvertis ing. T he court
hearing is s cheduled for Dec. 14.
Tree.C om, Inc . (Nas daqG M: TR E E ) T ree. C om, Inc. La unches T ree. C om, Inc. launched L endingT reeAutos . com, a dedica ted online portal to help cons umers make s mart decis ions a bout
Lendingtreea utos . C om to Help C ons umers buying their next car. T he new s ite covers the full s cope of car buying informa tion, tools and s ervices , providing one-s top
Make S mart Decis ions about B uying T heir acces s to new a nd us ed ca r s ea rches , vehicle his tory reports , monthly pa yment calcula tors , quotes from loca l dea lers , tips
Next C ar and advice, a uto ins urance and fina ncing, and more. Alrea dy a trus ted provider of auto loa ns to cons umers through
LendingT ree, T ree. com ta pped into a proven tea m of indus try experts to crea te the mos t comprehens ive channel for ca r
buying online.
P NI Digital Media Inc . (TS XV: P N) P NI Digita l Media Inc. Announces P NI Digital Media Inc. announced cons olidated ea rnings res ults for the fourth quarter a nd full year ended S eptember 30,
C ons olidated E arnings R es ults for the F ourth 2009. F or the quarter, the company reported net profit of C AD 642, 806 aga ins t net los s of C AD 2, 714, 584 in the s a me
Q uarter a nd F ull Y ear E nded S eptember 30, period of las t year. Adjus ted E B IT DA wa s C AD 2, 137, 393 a gains t adjus ted E B IT DA los s of C AD 206, 596 in the s a me
2009 period of las t year. R evenue was C AD 6, 811, 436. P rofit before other items was C AD 147, 228. P rofit before income ta x wa s
C AD 793, 805. Non-G AAP adjus ted E B IT DA per s hare wa s C AD 0. 06 compa red to los s of C AD 0. 01 in fourth quarter of
2008. G AAP earnings per s ha re was C AD 0. 02 compared to los s of C AD 0. 08 per s ha re in fourth quarter of fis cal 2008.
R ecorded revenue of C AD 6, 800, 000 compared to C AD 5, 300, 000 in fourth quarter of fis ca l 2008.

L ookS mart, L td. (Nas daqG M: L OOK ) L ookS ma rt, L td. Announces E xecutive T he B oa rd of Directors of L ookS mart, L td. a nnounced tha t Mr. W es t has s tepped down from his role as P res ident and C hief
C hanges E xecutive O fficer of the compa ny, a s well as res igned his s ea t on the compa ny's B oard of Directors , effective immediately.
J ea n-Y ves Dexmier, the company's E xecutive C hairman, is as s uming the role of C hief E xecutive O fficer, until a
replacement is named. Dr. Dexmier ha s s erved on LookS mart's B oard of Directors s ince April of 2007 and a s E xecutive
C ha irma n s ince O ctober of 2009. Dr. Dexmier brings more than thirty yea rs of executive leaders hip experience within the
technology indus try including, mos t recently, as C hief F ina ncia l Officer of Openwave, C hief E xecutive O fficer of Agentis
S oftware, C hief E xecutive O fficer and C hief F ina ncia l Officer of Informix S oftware, and C hief F inancial O fficer of O ctel
C orporation.

Figure 7a. Key Developments
Source. Capital IQ

K ey Developments
C ompany Headline Notes
The9 L imited (Nas daqG S : NC TY) T he9 Limited to R eleas e F IF A O nline 2: 2010 T he9 Limited will relea s e a new update for its authorized footba ll videoga me named E A S ports F IF A Online 2: 2010 in the
in the C hines e Mainland C hines e ma inland. T he new edition is the firs t update s ince T he9 began opera ting the game on November 14, 2007.

UOMO Media, Inc (OTC B B : UOMO) UOMO Media , Inc announced delayed 10-Q O n 12/15/2009, UO MO Media, Inc a nnounced tha t they will be una ble to file their next 10-Q by the deadline required by the
filing S E C.
NetDragon WebS oft, Inc. (S E HK : 777) NetDra gon W ebs oft, Inc. La unches O pen B eta NetDra gon W ebs oft Inc. announced that O pen B eta T es ting for the firs t Dis ney-themed MMOR P G , Dis ney F a nta s y O nline,
T es ting for Dis ney F antas y O nline crea ted in collaboration with Dis ney Interactive Media G roup, was launched on Dec. 11, 2009. In this 2. 5D turn-bas ed
ga me, players ca n relive clas s ic Dis ney animated worlds , complete tas ks adapted from Dis ney s tories , a nd intera ct with
ma ny fa mous cartoon cha racters . T he ga me s hould attract countles s fans due to its fully 3D ba ttle environment, divers ified
races and vocations , and inviting s ocia l communities .
Tree.C om, Inc . (Nas daqG M: TR E E ) T ree. C om, Inc. La yoff an Undis clos ed Number T ree. C om, Inc. laid off an undis clos ed number of employees as part of a cos t-cutting initia tive. T he company s aid tha t it will
of E mployees a s P a rt of a C os t-C utting reorganize proces s es , elimina te certain duplicative cos t s tructures , combine call center functions a nd reduce redunda nt
Initiative network and corpora te s ta ff roles . In addition, the company is reducing office s pace in C ha rlotte by moving into one
building.
C ornerWorld C orporation C ornerW orld C orporation announced dela yed O n 12/16/2009, C ornerW orld C orporation a nnounced tha t they will be unable to file their next 10-Q by the deadline required
(OTC B B : C W R L ) 10-Q filing by the S E C .
E veres t G aming L td.; G igaMedia L td. Manga s G aming agreed to a cquire 60% s take Ma nga s G aming a greed to acquire 60% s take in E veres t G aming from G iga Media Ltd. (Nas da qG S : G IG M) for $100 million
(Nas daqG S : G IG M); Mangas G aming in E veres t G aming from G iga Media Ltd. in ca s h on December 16, 2009. As part of the deal, Mangas G a ming will make an ea rnout payment depending on E veres t
S AS (Nas daqG S : G IG M) for $100 million. G aming's market va lue by 2012. G igaMedia will have a put option to s ell all the remaining 40% or part to Ma nga s beginning
in 2013. Under the terms of the dea l, All Mangas poker players will move to the E veres t P oker platform. Amelie Negrier,
Haris h P arames war, L aurent Azout, G uillaume Izabel, B enjamin C harbit, Artur S ienczews ki of Lazard Ltd. acted as financial
advis or to Mangas G a ming. B redin P ra t & As s ocies and C ravath, S waine & Moore LL P acted a s lega l a dvis ors to Mangas
G aming.

IB 3 Networks , Inc. (OTC B B : IB NW); IB 3 Networks , Inc. (OT C B B : IB NW ) cancelled IB 3 Networks , Inc. (O T C B B : IB NW ) s igned a letter of intent to acquire MG V C ommunications in s tock on December 17,
MG V C ommunications the a cquis ition of MG V C ommunications . 2008. F inancial terms of the deal were not dis clos ed.

IB 3 Networks , Inc. (O T C B B : IB NW ) cancelled the acquis ition of MG V C ommunica tions on December 17, 2009.
P erfect World C o., L td. P erfect W orld C o. , Ltd. Announces the P erfect W orld C o. , Ltd. announced the introduction of a new 3D fa ntas y MMO R P G , 'F ors aken W orld, ' which was developed
(Nas daqG S : P W R D) Introduction of New 3D fa nta s y MMO R P G under 'P roject E M’. T he ga me has blended the bes t of the wes tern and eas tern cultures with a n aim to bring a n entirely new
interactive entertainment experience to players . S ince April 2009, the company's new product developed under P E M has
arous ed the interes t in the online ga me indus try. T he game features exciting elements s uch as 'R ule of T ime, ' 'R ule of
S pace, ' 'Ma gic' a nd 'Divinity. ' T he players can try to a lter the fa te of 'G ra nd Mundo' with their res pective a ctions in the game.
F ors aken W orld a dopts a s ys tem of anna lis tic his tory, and allows players to cha nge core contents s uch as the E poch, the
orbiting of cons tellations and the birth of deities . T he game is expected to be launched in 2010.

Unis erve C ommunic ations C orp. Unis erve C ommunications C orp. , Annual Unis erve C ommunications C orp. , Annua l G enera l Meeting, Dec 17, 2009, a t 14: 00 US P acific T ime. Location: S uite 1500,
(TS XV: US S ) G eneral Meeting, Dec 17, 2009 1050 W es t G eorgia S treet, V ancouver, B ritis h C olumbia, C ana da. Agenda : T o receive and cons ider the audited financia l
s ta tements of the company for its fis ca l yea r ended May 31, 2009, the a uditor's report thereon and the related management
dis cus s ion a nd analys is ; to elect directors for the ens uing year; to a ppoint the auditor; to a pprove amendment and
continua tion of S hare Option P lan; to a pprove an ordinary res olution to a uthorize the board of directors to implement the
cons olidation of is s ued a nd outs ta nding common s ha res on a bas is of two pre-cons olidation common s hares for one pos t-
cons olidation common s hare, a nd if implemented the contemplated s hare cons olidation mus t be in a form a cceptable to the
regula tory a uthorities ; and to cons ider a ny permitted a mendment to or va riation of any ma tter identified in this notice and to
tra ns act s uch other bus ines s as may properly come before the meeting or a ny adjournment thereof.

OAO R B C Information S ys tems O AO R B C Informa tion S ys tems , Annual O AO R B C Information S ys tems , Annual G eneral Meeting, Dec 18, 2009 Agenda : T o approve the annua l report, the a nnual
(R TS : R B C I) G eneral Meeting, Dec 18, 2009 ba la nce s heet, including profit and los s s tatement of the compa ny, a nd profit and los s dis tribution for 2008; to cons ider
R evis ion C ommis s ion election; to approve a uditor of the company; and to elect the board of directors .
C DC C orp. (Nas daqG S : C HIN.A); C DC C DC C orp. and C DC S oftwa re C orpora tion C DC C orporation announced that S imon K wong C hi W ong wa s appointed as chief executive officer of the compa ny’s
S oftware C orporation Announce R es ignation of S imon K wong C hi s ubs idiary, C DC G ames C orporation replacing Mr. P eter Y ip, who continues as vice chairman of the board of directors of
(Nas daqG M: C DC S ) W ong C DC G ames . Mr. W ong continues to s erve a s a non-independent member of the boards of directors of each of C DC
C orporation a nd its s ubs idiary, C DC S oftware C orporation. In connection with the foregoing appointment, Mr. W ong has
res igned: from the Audit C ommittee and Nomina ting C ommittee of the board of directors of C DC C orp. ; and from the Audit
C ommittee a nd C ompens a tion C ommittee of the boa rd of directors of C DC S oftware C orporation.

Figure 7b. Key Developments – continued
Source. Capital IQ

VALUATION
Online Gaming companies lead market-cap charts: Thirteen companies in our Web 2.0 universe top US$1 billion in
market capitalization (Figure 8). Fifty-seven of the 89 companies have market caps under US$100 million, with 37 under
US$25 million. Online gaming companies dominate the top of the list, led by Tencent Holdings (SEHK:700) with a market
cap of approximately US$36.0 billion.

Market C ap (US D m)
Tencent Holdings Ltd. 35997.2
Neteas e.com Inc. 4823.7
S handa Interactive Entertainment Ltd. 3427.3
Modern Times G roup Mtg A B 3169.4
G ree, Inc. 2758.6
IA C/InterA ctiveCorp. 2602.5
Open Tex t Corp. 2169.5
S ohu.com Inc. 2100.1
Perf ect World Co., Ltd. 2009.7
Changy ou.com Limited 1799.6
G iant Interactive G roup, Inc. 1646.4
Mix i, Inc. 1380.3
Chines e G amer International 1053.0
V alueClick Inc. 819.0
K ings of t Co. Ltd. 770.9
NEOWIZ G ames Corporation 720.8
United Online Inc. 601.4
S K Communications Co., Ltd. 450.9
S hutterf ly , Inc. 449.6
NetDragon WebS of t, Inc. 271.4
CDC Corp. 243.8
XING A G 238.5
G amania Digital Entertainment Co., Ltd. 229.5
OA O R B C Inf ormation S y s tems 222.0
My riad G roup A G 205.8
G ungHo Online Entertainment, Inc. 200.1
G igaMedia Ltd. 193.0
Openw ave S y s tems Inc. 179.6
The9 Limited 161.0
A ctoz S oft Co., Ltd. 149.9
DA DA S pA 141.7
Fluid Mus ic Canada, Inc. 100.9
Tree.Com, Inc. 97.5
Y D Online Corp. 86.2
HanbitS of t, Inc. 76.1
Cy berplex Inc. 76.0
TheS treet.com, Inc. 73.1
G ameOn Co Ltd. 70.5
Eolith Co. Ltd. 68.6
NeuLion Incorporated 67.4
G eoS entric Oy j 65.8
Frogs ter Interactive Pictures A G 65.6
S park Netw orks , Inc. 59.1
PNI Digital Media Inc. 52.6
Gravity Co., Ltd 40.6
DigitalTow n, Inc. 38.3
Webz en Inc. 37.9
DXN Holdings B hd 35.9
Ngi G roup Inc. 35.7
NeXplore Corporation 35.1
Quepas a Corp. 28.0
A Q Interactive, Inc. 27.1
A s knet A G 23.6
S ocialw is e, Inc. 21.1
Northgate Technologies Limited 20.1
Ex tens ions , Inc. 20.0
A cceleriz e New Media, Inc. 18.7
MOK O.mobi Limited 18.1
Wiz z ard S of tw are Corporation 17.6
LookS mart, Ltd. 16.4
Y nk K orea Inc. 14.7
Dolphin Digital Media, Inc. 14.2
J umbuck Entertainment Limited 13.4
Lingo Media Corporation 10.3
is eemedia Inc. 9.0
Magnitude Inf ormation S y s tems Inc. 8.9
B roadWebA s ia Inc. 7.6
S pectrumDNA , Inc. 6.8
V OIS , Inc. 6.8
Worlds .com Inc. 4.8
B right Things plc 4.6
DigitalPos t Interactive, Inc. 4.6
UOMO Media, Inc 3.5
B etaw ave Corporation 3.2
CornerWorld Corporation 2.9
S NA P Interactive, Inc. 2.5
B ey ond Commerce, Inc. 1.5
B igs tring Corp. 1.5
Unis erve Communications Corp. 1.1
K A B Dis tribution Inc. 0.6
LiveWorld Inc. 0.6
Wy nds torm Corporation 0.5
A s s ociated Media Holdings Inc. 0.4
CLICK ER Inc. 0.2
China G atew ay Corporation 0.2
The Parent Company 0.1
Dibz International, Inc. 0.0
S NM G lobal Holdings 0.0
S ocial Media V entures Inc. 0.0
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000

Figure 8. Market Cap Rankin
Source. Capital IQ

Web 2.0 Weekly - Dec. 22, 2009

Web 2.0 Weekly - Dec. 22, 2009

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Web 2.0 Weekly - Dec. 22, 2009