ab                                                                                                     Global Equity Rese...
Global Tech Daily 6 December 2010UBS Research HighlightsSalesforce.com                                             Rating:...
Global Tech Daily 6 December 2010Corning                                                   Rating: Buy (CBE)              ...
Global Tech Daily 6 December 2010National Semiconduct                                      Rating: Neutral                ...
Global Tech Daily 6 December 2010Semiconductor Equipment Industry Update                   Semiconductors                 ...
Global Tech Daily 6 December 2010Murata Mfg.                                                  Rating: Buy                 ...
Global Tech Daily 6 December 2010Data Points    Advanced Semiconductor Engineering (2311.TT, Buy): reported November    co...
Table 2: UBS Global Technology Universe Summary                                                                           ...
Global Tech Daily 6 December 2010Table 3: Technology Events CalendarStart          EndDate           Date          Company...
Global Tech Daily 6 December 2010Table 4: UBS Global Technology TeamAmericas & GlobalNikos Theodosopoulos        Global Te...
Global Tech Daily 6 December 2010    Statement of RiskTechnology sector investing involves a high degree of risk. Rapid te...
Global Tech Daily 6 December 2010Required DisclosuresThis report has been prepared by UBS Securities LLC, an affiliate of ...
Global Tech Daily 6 December 2010KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appre...
Global Tech Daily 6 December 20106a.     This company/entity is, or within the past 12 months has been, a client of UBS Se...
Global Tech Daily 6 December 2010Global DisclaimerThis report has been prepared by UBS Securities LLC, an affiliate of UBS...
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  1. 1. ab Global Equity Research Global UBS Investment Research Technology Global Tech Daily Sector Comment Salesforce.com, Adobe, Google, Corning, 6 December 2010 Catcher, TI, National Semi, & Others www.ubs.com/investmentresearch Salesforce.com: raising est’s and target on accelerating cloud momentum With CRM’s user conference this week, Brent Thill expects announcements on products, customers, & partnerships. He notes transaction volume on CRM’s James F. Hillier network shows accelerating momentum, reflecting strong product adoption. Brent Analyst raises est’s & target, though he does caution with regard to Jan. stock seasonality. james.hillier@ubs.com +1-212-713 3415 Adobe: reseller survey shows some stabilization but lack of excitement Brent Thill’s survey of 50 Adobe resellers was unexciting, consistent w/ un- demanding 4Q guidance (where he est’s $990M/$0.52, in line with cons.), low teens PE and his Neutral rating. His survey did not detect signs of a rebound in education or in Japan, and he sees no major product catalyst until CS6 in fall 2011. Google: solid cost per click (CPC); retain Buy / Corning: remain positive On GOOG, Pitz & Fitz’s analysis across 100K+ commercial keywords suggests GOOG image ads remain prevalent while they note strong CPC increases in November. On GLW, Nikos Theodosopoulos sees strong demand for Gorilla glass and increasing 4Q utilization rates among Taiwan panel makers as positive. Catcher: reiterate Buy and raise target; early stage of solid turnaround Nov. sales data shows Catcher benefitted from solid demand for HTC handsets and MacBook Air casing shipments. Jonah Cheng est’s Catcher will improve EBIT mgn 200bps by 2012, helping to boost ROE to 15% by 2012 from 12% currently. He raises est’s & price target and maintains a Buy rating given its solid turnaround. Table 1: Technology Data Points and Events Today Company Ticker Event Fidelity National Information Svcs FIS Investor Day MediaTek 2454.TT Monthly Sales ModusLink Global Solutions MLNK 1Q Results Novatek Microelectronics 3034.TT Monthly Sales Photronics PLAB 4Q Results Polycom PLCM Analyst Meeting Silitech Technology 3311.TT Monthly Sales Suntech Power STP Analyst Day Source: Company Reports, FactSet, and UBS This report has been prepared by UBS Securities LLC ANALYST CERTIFICATION AND REQUIRED DISCLOSURES BEGIN ON PAGE 11. UBS 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. Investors should consider this report as only a single factor in making their investment decision.
  2. 2. Global Tech Daily 6 December 2010UBS Research HighlightsSalesforce.com Rating: Buy Target: US$165.00 Price: US$142.81 RIC: CRM.N Prior: Unchanged Prior: US$140.00 Mkt Cap: US$18.7bn BBG: CRM US Software Analyst: Brent Thill Tel: +1-415-352 4694Dreamforce Next Week; Stock Seasonality; Usage Accelerates; Raising Ests & PT Annual user conference kicks off this week: 25,000+ expected As CRM’s revs grew from <$100M in CY03 to reach an estimated $2Bn next year, Dreamforce has become the Cloud/SaaS industry’s largest event and is only behind ORCL and SAP in software sector. This week, we expect major announcements around products (across all of SFA, Service, and Platform + Chatter, Jigsaw), customers (outsized deployments), and partners/ecosystem (expanding the TAM). Transaction volume up (detailed charts inside) Transaction volume on CRM’s network has shown persistent acceleration since late CY09 and appears to have hit an inflection point in the last five weeks, passing y/y growth of 60% and 70%. This reflects strong adoption of CRM’s products including the recent launch of Chatter, and is consistent with accelerating bookings growth. Raising estimates to reflect accelerating Cloud momentum FY12E rev to $2.036Bn (+23% y/y) from $2.003Bn (+21%), slightly above guide $1.97- $2.0Bn; EPS to $1.60 from $1.57; FCF/share to $2.80 from $2.73. Valuation: raising PT to $165; caution on January stock seasonality Our $165 price target (was $140) assumes 50x (was 46x) FCF/sh of $3.31 (was $3.05) in five-eight quarters, or 2x multiple (unchanged) on three-year CAGR of 25% (was 23%). CRM trades at CY11E multiple of 51x FCF/share and 9.0x EV/S. CRM stock posted double-digit gains every year since 2004 IPO except in 2008 market downturn; we expect more muted gains in CY11, though January is a difficult month it must first get through. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of US$142.81 on 03 Dec 2010 19:38 ESTAdobe Systems Rating: Neutral Target: US$30.00 Price: US$29.14 RIC: ADBE.O Prior: Unchanged Prior: US$30.00 Mkt Cap: US$15.1bn BBG: ADBE US Software Analyst: Brent Thill Tel: +1-415-352 4694VAR Survey: No Check Engine Light, But No Turbos Spooling Either Some stabilization, though FQ1 guide a question mark Results of our proprietary global survey of 50 resellers were unexciting, with areas of concern stabilizing though lacking positive momentum. This seems consistent with undemanding Q4 guidance (flat to slightly down vs. historical up seasonality), low teens P/E valuation, and our Neutral rating. We did not detect any signs of rebound in education or Japan, though our sample is limited. There appeared to be no boost from Acrobat X’s launch. We see no major product catalyst until CS6, which we expect out in fall ’11, with stock unlikely to anticipate until C2Q11. Survey highlights: no excitement in what should be seasonally strong FQ4 PROs: VARs beat sequential growth quota on avg. by healthy 1.1% spread; macro concerns fading; stabilizing end-customer demand; healthy FQ1 expectations; no negative impact from Apple. CONs: flat monthly linearity; less interest in pricey CS5 Master Collection; no notable product strength in CS 5 or Acrobat X. FQ4-Nov. earnings preview: expect in-line to UBS, in upper-end of guide We est. revs $990M (+31% y/y, flat q/q) vs. guid. $950-1,000M, Street $988M; PF EPS $0.52 vs. guid. $0.48-0.54, St. $0.52; PF op mgn 37.7% vs. guid. 37-38%. We expect little contribution from Day acquis. (closed late Oct.; ~$50M annual revs). Valuation Stock trades today at 13.7x our CY11 EPS estimate. Our $30 PT = 13x P/E (~40% discount to 20-yr 22x median) on our PF EPS estimate 5-8 qtrs out. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of US$29.14 on 03 Dec 2010 19:38 ESTGoogle Inc. Rating: Buy Target: US$720.00 Price: US$573.00 RIC: GOOG.O Prior: Unchanged Prior: Unchanged Mkt Cap: US$138bn BBG: GOOG US Internet Services Analyst: Brian Pitz Tel: +1-212-713 9310Reiterate Buy; Positive Trends Continue… Solid CPC Growth; Proprietary Checks Show Image Ads Still Prevalent Search Engine Marketer, Efficient Frontier, recently noted strong CPC increases in November: Finance (+10% Y/Y); Retail (+6%); Automotive (+24%) and Travel (+37%). Also, per our proprietary processes, Product Listing Ads remain prevalent – across our database of 100K+ commercial keywords, 10% had a product image advertisement (see charts 1& 2 inside). Overall coverage trends (i.e. a query with any sponsored advertisement) remained positive with commercial queries at 97%+. Drill Down on Product Listing Ads by Vertical Drilling down a bit on specific verticals: categories with the highest penetration of Product Listing Ads were: Home & Garden (~21%); Clothing & Shoes (~17%); Animals (~12%); Food & Restaurants (~11%); and Sports & Recreation (~10%). Penetration across these top 5 categories alone was 17% (weighted average), with these 5 categories accounting for roughly 36% of the 100,000+ database keywords. Our thoughts on NY real estate purchase and impending eBookstore The Wall Street Journal reported that Google has tentatively agreed to purchase 111 8th Ave (New York) for $1.9B. The asset is one of the primary internet gateways in NY and resides directly on top of the 8th Ave fiber line, thereby reducing latency to a minimum. In addition, Google is set to launch its e-book store (per WSJ), Google Editions. The company is likely to differentiate Google Editions by offering open format books that can be read across multiple devices. Valuation: Our $720 PT is based on our DCF (12% WACC, 3.5% LTGR) Our PT implies 18x ’11E EPS (ex $104/shr in cash + mkt securities). Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of US$573.00 on 03 Dec 2010 19:38 EST UBS 2
  3. 3. Global Tech Daily 6 December 2010Corning Rating: Buy (CBE) Target: US$25.00 Price: US$18.74 RIC: GLW.N Prior: Unchanged Prior: Unchanged Mkt Cap: US$29.6bn BBG: GLW US Communications Technology Analyst: Nikos Theodosopoulos Tel: +1-212-713 3286Remaining Positive Post Mgmt Meetings LCD Datapoints Remain Constructive Industry trade journals suggest Taiwan panel makers are increasing utilization rates in 4Q10 after seeing some “rush” orders in the IT area; they expect continued strength in China in Dec, plus a slight increase in US TV demand in 1H of Nov. (vs. declines in several prior months), boding well for GLW LCD in our view. GLW continues to see LCD supply-chain inventory fall from 17 wks at end of 3Q. Gorilla Glass Continues To Be Strong Demand for Gorilla remains strong, and GLW cannot keep up with demand. GLW continues to plan capacity shifts from LCD in Japan to Gorilla in early 2011 and is running LCD at close to full utilization to build some inventory of LCD glass in before this transition. GLW began shipping its first TV product in 4Q; currently almost all Gorilla revenue comes from handheld/tablet. Tax Rate Guidance Unchanged, But Could Be Conservative GLW’s guidance of 20% tax rate in 2011 (up from <5% in 2010) assumes expiration of both US R&D tax credit and tax “look through” on foreign JV dividends. Congress might consider extending one/both of these, but difficult to predict. This could reduce tax rate by ~5% in our analysis, but remains uncertain. Valuation: Maintain Buy and $25 price target Our price target is based on 13x our FY11 EPS estimate of $1.90; and also using DCF, with WACC at 10%; LT Rev growth of 7%; and LT EBIT margin of 20%. We expect Corning to provide a formal update on 4Q10 trends when they present at an investor conference this week. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of US$18.74 on 03 Dec 2010 19:38 HKTCatcher Technology Rating: Buy Target: NT$110.00 Price: NT$95.00 RIC: 2474.TW Prior: Unchanged Prior: NT$92.00 Mkt Cap: NT$63.2bn BBG: 2474 TT Electric Components & Equipment Associate Analyst: Alice Chen Tel: +8862-8722 7343Still in an early stage of a solid turnaround Balanced growth from smartphone and notebook PC applications Catcher reported November consolidated sales of NT$2.5bn, up 13.9%MoM and 75.6%YoY. The cumulative October and November consolidated sales of NT$4.74bn have reached 75.1% of our previous Q410 sales estimate. We believe Catcher not only benefited from the solid demand for HTC handsets, but also gained strong momentum in the MacBook Air casing shipments. Operating margin and ROE are both set to improve We forecast Catcher to improve its operating margin from 21.6% in 2010 to 23.6% in 2012 due to operating leverage. We believe upside risks exist if Catcher improves its unibody yield rate even faster. We believe improving profitability and falling capex will help Catcher to raise its ROE from 12.1% in 2010 to 15.0% in 2012E. Overall, we raise our 2010E/11E/12E EPS from NT$5.94/8.03/9.33 to NT$6.23/8.91/10.29 factoring the positive changes. The by-product of strong touch panel demand We believe after the introduction of touch panel user interface, metal casing has become a functional rather than aesthetic component given it can facilitate thin border design and enable better viewing angle. Plastic can not provide the strength needed to hold the structure in a thin border design. Valuation: Reiterate Buy and raise price target to NT$110 We reiterate Buy on Catcher as we believe it is still in an early stage of a solid turnaround. We raise our price target from NT$92 to NT$110. Our PT is derived from using UBS’ proprietary DCF-based VCAM tool using WACC of 7.7%. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of NT$95.00 on 04 Dec 2010 21:33 HKTTexas Instruments Rating: Neutral Target: US$29.00 Price: US$32.82 RIC: TXN.N Prior: Unchanged Prior: Unchanged Mkt Cap: US$40.1bn BBG: TXN US Semiconductors Analyst: Uche Orji Tel: +1 212 713 4015Mid quarter preview: Expect TXN to tighten outlook around mid-point; Maintain Neutral Expect TXN to tighten the range but retain mid point of guidance. At its mid quarter update, we expect TXN to tighten its Q/Q growth guidance around the current range of -2.6% to -10% & keep midpoint unchanged at -6.3%. So we expect TXN to reiterate 4Q Rev/EPS of $3.5bn/63c. Going into 4Q, TXN was cautious about growth in consumer & computing as well as industrial, however, despite recent improvement in computing, we remain Neutral as we expect continuing decline in book:bill, & softening in industrial to limit upside Wireless and Embedded to be positive. Industrial relatively weaker We expect TXN to remain bullish on its wireless infrastructure business as well as connectivity. We expect OMAP & baseband to remain seasonally weak. With reductions in lead-time, as capacity continues to come online in analog, we expect industrial bookings to continue to slow even as underlying revenue growth remains stable. Consequently we expect further modest deterioration in book to bill. Channel inventory continues to normalize; Margins to remain unchanged We believe that channel inventory will remain stable having normalized in the last quarter. Although TXN is unlikely to provide margin details at this stage, we believe gross and operating margins will remain unchanged at 54.1% and 31.1%. Valuation: Maintain Neutral Our $29 PT is based on a DCF-driven sum-of-the-parts valuation. We remain Neutral as we expect the growth to slow going forward as book:bill declines. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of US$32.82 on 03 Dec 2010 19:38 HKT UBS 3
  4. 4. Global Tech Daily 6 December 2010National Semiconduct Rating: Neutral Target: US$13.00 Price: US$14.77 RIC: NSM.N Prior: Unchanged Prior: Unchanged Mkt Cap: US$3.51bn BBG: NSM US Semiconductors Analyst: Uche Orji Tel: +1 212 713 4015F2Q preview: Expect modestly better results; Maintain Neutral Expect modest upside to results We expect NSM to report F2Q Rev/EPS $403m/31c (cons $400m/32c). For F3Q, we expect guidance of $393m/30c (cons 382m/29c). Based on comments from peers about near term improvement in demand, especially in wireless, there could some near term upside, however we remain concerned about NSMs competitive position & vulnerability of book: bill due to declining lead time. Maintain Neutral. Expect lower utilization and margins We are modelling gross margin of 69%, down 190bps Q/Q due to mix and lower utilization, as inventory in the channel & on balance sheet is now in-line with demand, and at the same time, lead times have shrunk. Given no near term demand catalyst, we expect that utilization and margins will continue to be at current level until we see ramp in NSM’s new end-markets and products. Longer term growth and margin concerns Though the company aims to drive growth by targeting high volume markets such as LED lighting & the broader handset market, we note that the competition in these markets is likely to be intense. At the same time, margins could come under pressure due to mix and longer term pricing dynamics in NSM’s new markets. Valuation: Maintain Neutral Our $13 PT is based on DCF (WACC 8.7% g 2%) & equates to NTM PE of ~10x. Conf call: (888) 434-6355 at 4:30 PM ET on December 9th. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of US$14.77 on 03 Dec 2010 19:38 ESTEuropean Technology Technology Analyst: Michael Briest Tel: +44-20-7568 8367Alpha Preferences Most Preferred: Adding SAP and Logica, removing Misys We add SAP to our Most Preferred list: Management has managed Q4 expectations carefully and consensus is relatively low. Oracle Q2s (16 December), are expected to show a continuing software capex recovery and with the TomorrowNow litigation event now in the past (perhaps even offering some upside if SAP can negotiate/appeal the amount of damages lower), we believe sentiment to SAP can improve. We add Logica given poor sentiment to IT Services and an attractive valuation, and likely support from Accenture Q1s (16 December) where bookings should be solid. Misys is trading near the upper-end of the tender range so upside appears more limited now in the short-term and we remove it. Least Preferred: Adding Sage We add Sage to our Least Preferred list. With low growth expectations set and investments to hold back margins this year, the shares - at the same forward PE multiple as SAP despite significantly lower EPS growth - look expensive to us. Most Preferred: ARM, Logica, SAP and Telecity ARM and Telecity remain on our Most Preferred list. Misys is removed. We add Logica and SAP. Least Preferred: Aveva, Gemalto, Sage and Tieto Aveva, Gemalto and Tieto are joined by Sage on our Least Preferred list. Source: The content presented above reflects a front page summary of UBS Research content, UBS commentary as at 6 December 2010US Internet and Interactive Entertainment Internet Services Analyst: Brian Pitz Tel: +1-212-713 9310Continue Solid eCommerce Momentum 12% Y/Y eCommerce Growth for First 33 Days, per comScore comScore reported $17B (+12% Y/Y) in eCommerce spending for the first 33 days of the holiday season (Nov 1-Dec 3). The most recent week saw four days eclipse $800MM, led by Cyber Monday, which set a record at $1.03B. Tues, Nov 30 reached $911MM (3rd heaviest day on record), while Wed ($868MM) and Thur ($850MM) also reached high levels. Promotions Pulled Some Demand Forward; Green Mon Remains a Focus For comScores segment, growth rates did slow to single digit levels to the latter part of last week following several weeks at 13%+ Y/Y. As weve mentioned before, we believe this softening is attributable to heavy discounting / promotional activity during the earlier part of the season which pulled some consumer demand forward, though we note similar effects last year too -- a 5-6% pull back from the initial Holiday push as the consumer regrouped. We expect the biggest online shopping day to be Green Monday (12/13) or Tuesday (12/14), as free shipping offers expire and last minute shoppers lean on the online channel for the late season push. Larger eTailers Continue to Gain Share The shift towards larger retailers continues, as they have the financial resources -- and scale -- to offer competitive pricing, along with the best service and selection. Per comScore, the top 25 eTailers have grown 20%+ Y/Y, while growth among small / mid-sized retailers has been flat. The top 25 retailers gained 420bps of market share to 67.8% Y/Y. Source: The content presented above reflects a front page summary of UBS Research content, UBS commentary as at 6 December 2010 UBS 4
  5. 5. Global Tech Daily 6 December 2010Semiconductor Equipment Industry Update Semiconductors Analyst: Stephen Chin Tel: +1-212-713 4111Orders from foundry customers continuing TSMC placed 9 semicap equipment orders totalling $263M last week Our checks found TSMC placed 9 new equipment orders last week which marked TSMC’s 2nd highest weekly semicap order spend in $’s for the year. TSMC’s semicap orders included $77M with Applied Materials, $28M with Novellus and $17M with Varian Semiconductor. Our own analysis shows TSMC has now placed $948M of total semicap orders so far in 4Q10, which would be up 17% q/q compared to TSMC’s 3Q10 total orders of $1.2B if we assume this weekly pace remains the same. Our own analysis also shows Applied Materials’ semicap orders from TSMC have seen the most momentum in calendar 4Q10 and are up +29% q/q while Lam’s semicap orders from TSMC are down -47% q/q so far this quarter. UMC placed a $18M order with Lam Research last week Our analysis shows UMC has now ordered only $102M of semicap equipment in 4Q10 versus $496M in 3Q10. We estimate UMC’s 4Q10 semicap orders will be down -70% q/q if we assume the weekly pace stays the same for the remaining 4 weeks of the quarter. We note UMC’s semicap equipment orders totalled $1.4B so far in 2010, compared to its capex guidance of $1.8B for this year. Total Taiwanese semicap orders in 4Q10 tracking down -34% q/q so far Our own analysis shows the 9 big Taiwanese semiconductor companies have only ordered $1.2B of semicap equipment so far in these 9 weeks of 4Q10. Our analysis shows semicap orders from the Taiwanese foundry customers in 4Q10 are $1.1B (down -9% q/q) and Taiwanese DRAM semicap orders in 4Q10 are only $67M (down -88% q/q). Source: The content presented above reflects a front page summary of UBS Research content, UBS commentary as at 6 December 2010UBS SemiBytes Semiconductors Analyst: Uche Orji Tel: +1 212 713 4015Withering Risk Aversion or Santa Arrives Early? Ahead: TXN Update, NSM Results Week Ahead: TXN 4Q update (7-Dec), NSM results (9-Dec); previews pg 5 November was the first month since May-08 the SOX decisively ended above 375, having been on a steady uptrend since Aug, which we believe has been the result of QE2 and rising confidence in 2011 corporate profits (UBS raised its S&P 500 earnings estimate to $93 from $91 on 1-Dec). Moreover, semiconductor companies presenting at recent conferences have indicated 4Q is tracking in line with prior guidance, while TSMC’s CEO stated 1Q11 sales may be better than seasonality as demand remains buoyant. Despite growing optimism, we maintain that investors focus on secular growers. We expect TI to narrow its down 3-10% q/q 4Q sales guidance with the midpoint unchanged, and we expect National to report in line sales/EPS ($403m/$0.31) and guide -2.5% q/q sales in its seasonally weak Feb qtr. Charts: ALTR sales outperformance vs GM; TXN sales vs share price We believe ALTR gains vs custom chips have been a key gross margin driver. Historical trends for TXN’s sales vs its share price suggest limited upside. Review: ALTR 4Q business update/2011 guidance As Altera guided 2011 R&D +26% y/y to drive further share gains vs custom chips (ASICs) and standard products (ASSPs), a $30bn addressable market, we believe its 70% gross margin could be sustainable given: 1) recent historical trends (Chart 1) demonstrating how features enabling Altera to capture more system content from ASICs/ASSPs are also driving margin accretion, 2) R&D focus on ease of design (limiting potential encroachment from multicore processors) and expansion of its intellectual property portfolio, most notably embedded ARM cores. Source: The content presented above reflects a front page summary of UBS Research content, UBS commentary as at 6 December 2010US Internet and Interactive Entertainment Internet Services Analyst: Brian Pitz Tel: +1-212-713 9310Pitz & Fitz’s Internet / IE Weekly EU launches Antitrust Probe against Google The European Commission (EU) has launched an antitrust investigation against Google following allegations of unfair competition. It will investigate whether Google lowered the ranking of unpaid and paid-search results of competing services, and lowered the Quality Score for sponsored links of competing vertical search services. Quality Score is one of the factors determining the price paid to Google by advertisers. Additionally, the Commission will look into allegations that Google imposed exclusivity obligations on advertising partners. It will also investigate claims that Google placed restrictions on the portability of online advertising campaign data to competing online advertising platforms. Cyber Monday spending crosses $1B per comScore According to comScore, the holiday season e-commerce spending for the first 29 days of the November-December 2010 holiday season was up 13% Y/Y, to $13.55B. Cyber Monday sales were up +16% Y/Y, to $1.028B driven by an increase in average spending per buyer (+12% Y/Y). This was first billion dollar sales day for ecommerce. Average spending per transaction grew 10% Y/Y to $60.5, total number of transactions increased +6% Y/Y to 17.1MM, while the average number of buyers increased 4% Y/Y to 9MM. Move and Kinetic show strong demand Sony announced that PS3 Move has sold 4.1MM units since its release in the US, Europe and Asia and Japan. Microsoft in a separate announcement announced that Kinetic has sold 2.5MM units in the first 25 days of its launch. It expects to sell 5MM units during the entire holiday season. Source: The content presented above reflects a front page summary of UBS Research content, UBS commentary as at 6 December 2010 UBS 5
  6. 6. Global Tech Daily 6 December 2010Murata Mfg. Rating: Buy Target: ¥5,700 Price: ¥5,340 RIC: 6981.T Prior: Unchanged Prior: ¥5,700 Mkt Cap: ¥1,146bn BBG: 6981 JP Electric Components & Equipment Analyst: Fumihide Goto Tel: +81-3-5208 6265Company briefing: not enough to raise expectations further Strong business climate, mgmt policy within assumed limits Murata Mfg held its annual briefing on the afternoon of 3 Dec (during trading hours), led by president Tsuneo Murata. Medium term, good business conditions are expected on: 1) growth in wireless equipment volumes and more advanced functionality (higher parts input), mainly in Smartphones; 2) renewed growth in user technical demands, which may allow the firm to strengthen its position; 3) cost improvements as overseas production is beefed up and demand is uncovered in emerging markets. Possible profit improvement was reconfirmed. But we sensed no change or acceleration in mgmt that might raise the company’s sector standing. Orders soar mom in Nov, but in line with Sept excluding front-loading Oct orders fell about 20% mom due to the Chinese national holiday and inventory adjustment impact. Nov saw a sharp rise, but excluding front loading by big clients it was in line with Sept. Conditions are somewhat better than mgmt assumed, and in line with our expectation. Nov might be the short-term peak for monthly orders. Expectations already up to some extent; relative strength to pause for now 1) Smartphone hopes have fairly quickly been priced in, and the stock is trading at 17X FY11E (Table 2). 2) FYQ3 is expected to bring a 20~30% qoq profit decline (reduced utilization profit, higher depreciation, strong yen inventory adjustments). 3) Seasonal inventory adjustments are possible in mobile phones in CQ1 (concern over a bigger winner-loser gap) (Charts 1, 2). 4) If Q4 results confirm solid PC demand and healthy inventories, the market’s interest in Smartphones may change. Valuation: PT of ¥5,700 Our PT is based on a FY11E PER of 18X. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of ¥5,340 on 03 Dec 2010 18:53 JSTNCsoft Rating: Buy Target: Won307,000 Price: Won239,500 RIC: 036570.KS Prior: Unchanged Prior: Unchanged Mkt Cap: Won5,219bn BBG: 036570 KS Internet Services Analyst: Ji Chung Tel: +82-2-3702 8807Buying opportunity Talks about delay in Blade & Soul groundless NCsoft’s share price has corrected 17% from its recent peak due to market concerns about a delay in the launch of Blade & Soul (B&S). However, according to our checks with the company, there has not been any change in the timeline for the launch and concerns about a delay are groundless. Given positive feedback received during G-Star, we believe B&S development is heading towards the final stage. We continue to expect B&S to be launched some time in H211. Potential government regulation on online games: impact to be minimal Government ministries recently agreed to institute a new regulation, a ‘night-time shut-down system’, which restricts those below 16 years old from playing online games between midnight and 6am. Although the regulation could result in negative sentiment on online game companies, we believe the actual impact on NCsoft will be minimal as its c90% of its MMORPG users are above 18-20 years old. What are the other catalysts? We still believe there are numerous catalysts that could drive up the share price in the next several months including: 1) commencement of closed beta testing (CBT) on B&S; 2) the announcement of a B&S Chinese publisher; and 3) strong earnings momentum from the existing game line-up with the implementation of item sales. Valuation: reaffirm Buy rating We believe the recent correction provides a buying opportunity given: 1) the numerous catalysts ahead; and 2) solid earnings momentum (a 26% CAGR over the next three years). We derive our Won307,000 price target from a DCF-based methodology and explicitly forecast long-term valuation drivers using UBS’s VCAM tool. Source: The content presented above reflects a front page summary of UBS Research content, UBS estimates based on a share price of Won239,500 on 03 Dec 2010 23:38 HKTSemiconductor Sector Update Technology Analyst: Kenji Yasui Tel: +81-3-5208 6211Memory prices turn down: NAND temporary, DRAM ongoing NAND: Oct bit shipments -12% mom, bit ASP -19% mainly on price falls Spot prices for 32Gb products, around 67% of bit shipments, fell 18% mom, or roughly the same as for the overall sector. These spot prices have turned up from an average of $4.96 in Nov to $5.46 on 3 Dec and the worst-case scenario we see is a 22% decline qoq if prices stay at current levels through year-end. ASP down on weaker card demand, gaps between embedded customers Demand is currently slowing for memory cards and appears to still be firm for embedded memory for mobile devices. With no growth in the number of cards shipped and stable prices long term, demand is decreasing. For mobile device memory, conditions are conducive to temporary gaps due to competition for market share between finished set makers. Gaps between weak and strong companies can be seen in inventory levels (Charts 5 and 6). DRAM: Oct bit shipments -1% mom, bit ASP -11%, down for fifth month Cost cuts are necessary to maintain profits, but the majority of cost reductions in the sector look to have been by Samsung (Charts 7 and 8). The bit weighting for 2Gb products requiring immersion production has risen from 11% in Apr-Jun to 25% in Jul-Sep and 37% in Oct. Companies are starting volume output and we believe the pace of improvement in yields underlies differences in cost reductions. Profits top priority for PC makers, may become more aggressive in spring PC makers are currently constraining inventories and emphasizing gross profits (Chart 10). The may become more aggressive in the spring, when PC unit shipments could rise to increase market share on lower PC prices and elasticity effects (Chart 9). DRAM installed could increase on stronger competitiveness. Source: The content presented above reflects a front page summary of UBS Research content, UBS commentary as at 3 December 2010 UBS 6
  7. 7. Global Tech Daily 6 December 2010Data Points Advanced Semiconductor Engineering (2311.TT, Buy): reported November consolidated sales of NT$16.82B, down 0.5% m/m but up 94% y/y. (Company reports) AOL (AOL, Neutral): Reuters reported that AOL is exploring a breakup of the company that may lead to a merger with Yahoo (YHOO, Neutral). (Reuters) BroadSoft (BSFT, NR): has filed for 5M share secondary through Goldman and Jefferies. (Company reports) Ericsson (ERICB.SS, Neutral): announced the resignation of its Chairman Michael Treschow, effective 2011 or 2012. (Company reports) Google (GOOG, Buy): announced the acquisition of Seattle-based Widevine, a provider of video delivery security and digital rights management tools; no terms were disclosed; separately All Things Digital reported that GOOG’s $6B acquisition bid for Groupon has fallen apart. (Company reports, All Things Digital) Inotera (3474.TT, Sell): reported November sales of NT$2.7B, down 7% m/m and 38% y/y. (Company reports) Powerchip (5346.TT, Sell): reported November sales of NT$3.88B, down 34% m/m and 28% y/y. (Company reports) Tech: the Nikkei that Nippon Telegraph among other companies like National Institute of Information & Communications Technology, NEC Corp, Mitsubishi Electric (6503.JP, Neutral), Hitachi (6501.JP, Neutral), KDDI R&D Laboratories, and Fujitsu (6702.JP, Buy) are likely to develop an ultra-fast internet technology that will allow optical fibers to transmit 4-10 different signals at once vs. the current one signal only. (Nikkei) TFT-LCD: DisplaySearch reported 1H-Dec panel prices for 18.5-inch monitors were flat at $54, 19-inch monitors were flat at $61 with 14-inch notebooks was flat at $42 and 15.6-inch notebooks was flat at $43; prices for 32-inch monitors were down $3 to $154, 40/42-inch monitors were down $3 to $252 and 40/42-inch LED monitors were down $3 to $342. (DisplaySearch)Note: data following (Company name in parenthesis includes (ticker, UBS rating); NR = not rated. Sources for Data Points include thefollowing: UBS, Commercial Times, Dow Jones, Digitimes.com, Economic Daily, Financial Times, New York Times, StreetAccount,StreetEvents, thestreet.com, and other sources. UBS 7
  8. 8. Table 2: UBS Global Technology Universe Summary Global Tech Daily 6 December 2010 Technology Summary Price Performance Valuation Growth Margin Mkt Cap % off % from Abs. Perf.(%) EV / Sales EV / EBITDA P/E Sales EPS EBIT $m Y High Y Low 1w 1m 3m YTD 12m 10E 11E 10E 11E 10E 11E 10E 11E 10E 11E 08 09 10E 11E Regions Americas 2,404,677 9% 34% 2 -1 16 9 12 2.1 1.9 8.6 7.9 15.0 13.6 16% 10% 37% 10% 14.8% 17.1% 19.8% 20.2% Asia, ex. Japan 676,529 9% 40% 4 2 16 14 22 1.0 0.9 7.3 7.2 15.4 15.8 33% 14% 72% -3% 6.2% 6.8% 8.3% 7.4% EMEA 271,016 15% 28% 6 -2 11 4 6 1.2 1.2 8.1 7.0 16.7 13.5 6% 7% 62% 23% 11.3% 8.4% 11.1% 12.3% Japan 428,911 4% 29% 3 4 11 18 20 0.7 0.7 6.6 5.6 22.3 16.8 10% 9% 238% 32% 4.3% 3.8% 6.1% 7.0% Sub-Sectors Communications Equipment 399,426 20% 23% 3 -7 6 -2 -1 0.9 0.9 7.1 6.3 15.8 13.9 7% 8% 32% 14% 8.2% 7.6% 9.2% 9.7% Components 261,358 7% 35% 3 3 16 11 18 0.7 0.6 6.7 6.0 16.9 14.8 32% 15% 88% 14% 4.7% 3.9% 5.7% 5.7% Internet 450,995 8% 46% 0 -3 19 14 18 3.9 3.2 12.5 10.5 23.2 19.6 24% 22% 24% 18% 25.7% 25.9% 25.7% 25.2% Hardware 877,533 7% 39% 2 0 15 17 23 1.1 1.0 8.3 7.4 14.5 12.8 15% 11% 40% 13% 8.7% 9.4% 10.2% 10.6% Services 294,003 8% 29% 4 -1 13 13 16 1.7 1.5 10.0 9.0 18.9 16.8 6% 10% 13% 13% 12.1% 12.2% 12.8% 13.2% Semi Equipment 101,183 7% 33% 4 3 21 3 7 1.5 1.4 8.1 6.6 16.4 12.9 42% 10% - 27% 8.2% 0.7% 14.2% 16.4% Semiconductors 670,384 5% 37% 5 6 22 14 19 1.5 1.4 6.1 6.2 12.8 13.2 24% 6% 155% -3% 6.2% 8.5% 16.1% 15.2% Software 691,453 10% 28% 5 1 11 6 10 3.4 3.1 9.1 8.2 16.0 14.2 8% 10% 13% 13% 30.1% 32.2% 33.3% 34.0% Solar 34,798 30% 37% 7 -10 2 -18 -15 1.5 1.3 7.6 6.3 16.7 13.2 42% 19% 1260% 27% 19.0% 5.7% 12.3% 12.8% Global Technology 3,781,133 9% 34% 3 0 15 10 14 1.4 1.3 8.0 7.3 15.7 14.2 17% 10% 51% 11% 9.9% 10.7% 12.9% 13.1% Weighted average of companies under coverage where data available. All figures in US$ m. Source: UBS estimates on 05 Dec 2010. EPS based on earnings with constant shares #. Major Indices % off % from Abs. Perf.(%) Close Y High Y Low 1w 1m 3m YTD 12m NASDAQ Composite 2,591 0% 26% 3 2 16 14 19 S & P 500 1,225 0% 21% 3 2 11 10 11 FTSEurofirst 300 1,104 1% 4% 3 1 4 6 9 Philadelphia Semiconductor Index (SOX) 412 0% 35% 4 9 25 15 26 Top Tech Performers 1 Day % Zoran 9% Sohu.Com 7% STMicroelectronics 7% Simplo Technology Co. Ltd. 7% MediaTek Inc. 7% Bottom Tech Performers 1 Day % Digitech Systems -13% Mitel Networks -11% Nortel Networks Corp. -7% GN Great Nordic -4% Netflix -4% Source: UBSUBS 8
  9. 9. Global Tech Daily 6 December 2010Table 3: Technology Events CalendarStart EndDate Date Company Ticker Event7-Dec 7-Dec Chunghwa Picture Tubes 2475.TT Monthly Sales7-Dec 7-Dec General Electric GE Investor Meeting - GE Capital7-Dec 7-Dec SUMCO 3436.JP 3Q Results7-Dec 7-Dec Sunplus Technology 2401.TT Monthly Sales8-Dec 8-Dec SAIC SAI 3Q Results8-Dec 8-Dec UMC 2303.TT Monthly Sales9-Dec 9-Dec National Semiconductor NSM 2Q Results9-Dec 9-Dec Nuance Communications NUAN Analyst Day9-Dec 9-Dec Akamai Technologies AKAM Analyst Day10-Dec 10-Dec Black Box Network BBOX Analyst Meeting10-Dec 10-Dec Ericsson ERIC Analyst Briefing10-Dec 10-Dec TSMC 2330.TT Monthly Sales10-Dec 10-Dec Various Storage 101 Call with UBS IT14-Dec 14-Dec BMC Software BMC Investor Day14-Dec 14-Dec Broadcom BRCM Analyst Day14-Dec 14-Dec Teradyne TER Investor Luncheon14-Dec 14-Dec General Electric GE Investor Meeting15-Dec 15-Dec Avnet AVT Analyst Day16-Dec 16-Dec Accenture ACN 1Q Results16-Dec 16-Dec Oracle ORCL 2Q Results16-Dec 16-Dec Research in Motion RIMM 3Q Results20-Dec 20-Dec Adobe Systems ADBE 4Q Results20-Dec 20-Dec Paychex PAYX 2Q Results21-Dec 21-Dec Accenture ACN 1Q Results22-Dec 22-Dec Progress Software PRGS 4Q Results6-Jan 6-Jan Silitech Technology 3311.TT Monthly Sales7-Jan 7-Jan Chunghwa Picture Tubes 2475.TT Monthly Sales7-Jan 7-Jan Sunplus Technology 2401.TT Monthly Sales7-Jan 7-Jan UMC 2303.TT Monthly Sales13-Jan 13-Jan Intel INTC 4Q Results13-Jan 13-Jan Infosys Tech INFO.IN 3Q Results17-Jan 21-Jan Various UBS Greater China Conference 201118-Jan 18-Jan Cree CREE 2Q Results18-Jan 18-Jan IBM IBM 4Q Results19-Jan 19-Jan Amdocs DOX 1Q Results19-Jan 19-Jan ASML Holdings ASML 4Q Results19-Jan 19-Jan austriamicrosystems AMS.SW 4Q Results19-Jan 19-Jan F5 Networks FFIV 1Q Results19-Jan 19-Jan Xilinx XLNX 3Q Results20-Jan 20-Jan Disco 6146.JP 3Q Results20-Jan 20-Jan Flextronics FLEX 3Q Results21-Jan 21-Jan General Electric GE 4Q Results25-Jan 25-Jan EMC EMC 4Q Results25-Jan 25-Jan Ericsson ERICB.SS 4Q Results25-Jan 25-Jan Hutchinson Tech HTCH 1Q Results25-Jan 25-Jan Tellabs TLAB 4Q Results26-Jan 26-Jan Automatic Data Processing ADP 2Q Results26-Jan 26-Jan Cohu COHU 4Q Results26-Jan 26-Jan Qualcomm QCOM 1Q Results26-Jan 26-Jan SAP AG SAP.GR 4Q Results27-Jan 27-Jan AU Optronics 2409.TT 4Q Results27-Jan 27-Jan Microsoft MSFT 2Q Results27-Jan 27-Jan Nokia NOK1V.FH 4Q Results27-Jan 27-Jan Software AG SOW.GR 4Q Results31-Jan 31-Jan ARM Holdings ARM 4Q Results31-Jan 31-Jan TDK 6762.JP 3Q Results31-Jan 31-Jan Tokyo Electron 8035.JP 3Q ResultsSource: UBS, (Company reports, and FactSet) UBS 9
  10. 10. Global Tech Daily 6 December 2010Table 4: UBS Global Technology TeamAmericas & GlobalNikos Theodosopoulos Global Tech Strategist; Communications Tech New York nikos.theodosopoulos@ubs.com +1 212 713 3286Jack Monti Communications Tech New York jack.monti@ubs.com +1 212 713 4795Maynard Um IT Hardware & Communications Tech New York maynard.um@ubs.com +1 212 713 3372Arun Sharma IT Hardware (Disk Drives) New York arun.sharma@ubs.com +1 212 713 1033Brian Fitzgerald Internet & Interactive Entertainment New York brian.fitzgerald@ubs.com +1 212 713 2851Brian Pitz Internet & Interactive Entertainment New York brian.pitz@ubs.com +1 212 713 9310Jason Kupferberg IT Services New York jason.kupferberg@ubs.com +1 212 713 3559Stephen Chin Semiconductor Capital Equipment; Solar New York stephen.chin@ubs.com +1 212 713 4111Uche Orji Semiconductors New York uche.orji@ubs.com +1 212 713 4015Parag Agarwal Semiconductors New York parag.agarwal@ubs.com +1 212 713 2563James Hillier Technology (Global Coordinator) New York james.hillier@ubs.com +1 212 713 3415Amitabh Passi Electronics Supply Chain San Francisco amitabh.passi@ubs.com +1 415 352 5537Steven Chin Semiconductors San Francisco steven.chin@ubs.com +1 415 352 5675Steven Eliscu Semiconductors San Francisco steven.eliscu@ubs.com +1 415 352 5674Brent Thill Software San Francisco brent.thill@ubs.com +1 415 352 4694Asia & Pacific RimWenlin Li Internet (China) Hong Kong wenlin.li@ubs.com +852 2971 6404Gary Ngan Internet (China) Hong Kong gary.ngan@ubs.com +852 2971 8317Lu Yeung Solar (China) Hong Kong lu.yeung@ubs.com +852 6081 0223Yu Zhang Technology (China) Shanghai yu.zhang@ubs.com +8621 3866 8447Diviya Nagarajan IT Services Mumbai diviya.nagarajan@ubs.com +91 22 6155 6072Sean Kim Hardware Seoul sean.kim@ubs.com +82 2 3702 8802Nicolas Gaudois Technology Seoul nicolas.gaudois@ubs.com +82 2 3702 8801Arthur Hsieh Electronics Hardware Taipei arthur.hsieh@ubs.com +8862 8722 7348Jonah Cheng Semiconductors (Foundry, Fabless) Taipei jonah.cheng@ubs.com +8862 8722 7340Samson Hung Semiconductors (IC Design & Substrate) Taipei Samson.Hung@ubs.com +8862 8722 7355Fumihide Goto Components Tokyo fumihide.goto@ubs.com +81 3 5208 6265Yuki Nakayasu IT Services & Interactive Entertainment Tokyo yuki.nakayasu@ubs.com +81 3 5208 7151Mika Nishimura Components (Semi Package) Tokyo mika.nishimura@ubs.com +81 3 5208 6267Takaaki Muramatsu Glass, Components, Solar Tokyo takaaki.muramatsu@ubs.com +81 3 5208 6262Sumito Takeda Internet Tokyo sumito.takeda@ubs.com +81 3 5208 6247Shinsuke Iwasa Consumer Electronics Tokyo shinsuke.iwasa@ubs.com +81 3 5208 7340Yoshitsugu Yamamoto Semiconductor Capital Equipment Tokyo yoshitsugu.yamamoto@ubs.com +81 3 5208 6268Hitoshi Shin Technology (Japan) Tokyo hitoshi.shin@ubs.com +81 3 5208 6225EuropeDavid Kerstens Technology (Benelux Small/Mid Cap) Amsterdam david.kerstens@ubs.com +31 20 551 0164Marcus Baeumer Technology (Germany Small/Mid Cap) Frankfurt marcus.baeumer@ubs.com +49 69 1369 8244Patrick Hummel Solar Frankfurt patrick.hummel@ubs.com +49 69 1369 8295Gareth Jenkins Communications Tech, Semis, & Semi Equip. London gareth.jenkins@ubs.com +44 20 7567 3950Michael Briest Software & IT Services London michael.briest@ubs.com +44 20 7568 8367Chris Grundberg Software & IT Services London chris.grundberg@ubs.com +44 20 7567 5355Anuj Krishan Technology (Hardware) London anuj.krishan@ubs.com +44 20 7568 7105Roni Biron Technology (Israel) Tel Aviv roni.biron@ubs.com +972 99 600 118Darren Shaw Technology (Israel) Tel Aviv darren.shaw@ubs.com +972 99 600 113Fabian Wenner Solar Zurich fabian.wenner@ubs.com +41 44 239 1683Source: UBS UBS 10
  11. 11. Global Tech Daily 6 December 2010 Statement of RiskTechnology sector investing involves a high degree of risk. Rapid technologicalchanges, increasing competition, and exposure to macroeconomic cycles areamong the many risks faced by investors in technology stocks. Moreover, it isextremely difficult to project the financial results of tech companies since theiroperating models are highly volatile and unpredictable. Finally, valuing techstocks can prove challenging as neither traditional nor non-traditional valuationmeasures have provided much insight into how these stocks trade. Analyst CertificationEach research analyst primarily responsible for the content of this researchreport, in whole or in part, certifies that with respect to each security or issuerthat the analyst covered in this report: (1) all of the views expressed accuratelyreflect his or her personal views about those securities or issuers; and (2) no partof his or her compensation was, is, or will be, directly or indirectly, related tothe specific recommendations or views expressed by that research analyst in theresearch report. UBS 11
  12. 12. Global Tech Daily 6 December 2010Required DisclosuresThis report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches andaffiliates are referred to herein as UBS.For information on the ways in which UBS manages conflicts and maintains independence of its research product;historical performance information; and certain additional disclosures concerning UBS research recommendations,please visit www.ubs.com/disclosures. The figures contained in performance charts refer to the past; past performance isnot a reliable indicator of future results. Additional information will be made available upon request.UBS Securities Co. Limited is licensed to conduct securities investment consultancy businesses by the China SecuritiesRegulatory Commission.UBS Investment Research: Global Equity Rating Allocations 1 2 UBS 12-Month Rating Rating Category Coverage IB Services Buy Buy 51% 37% Neutral Hold/Neutral 40% 33% Sell Sell 9% 22% 3 4 UBS Short-Term Rating Rating Category Coverage IB Services Buy Buy less than 1% 20% Sell Sell less than 1% 0%1:Percentage of companies under coverage globally within the 12-month rating category.2:Percentage of companies within the 12-month rating category for which investment banking (IB) services were provided withinthe past 12 months.3:Percentage of companies under coverage globally within the Short-Term rating category.4:Percentage of companies within the Short-Term rating category for which investment banking (IB) services were providedwithin the past 12 months.Source: UBS. Rating allocations are as of 30 September 2010.UBS Investment Research: Global Equity Rating Definitions UBS 12-Month Rating Definition Buy FSR is > 6% above the MRA. Neutral FSR is between -6% and 6% of the MRA. Sell FSR is > 6% below the MRA. UBS Short-Term Rating Definition Buy: Stock price expected to rise within three months from the time the rating was assigned Buy because of a specific catalyst or event. Sell: Stock price expected to fall within three months from the time the rating was assigned Sell because of a specific catalyst or event. UBS 12
  13. 13. Global Tech Daily 6 December 2010KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not aforecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stocks price target and/or rating aresubject to possible change in the near term, usually in response to an event that may affect the investment case or valuation. Short-Term Ratings reflect the expected near-term (up to three months) performance of the stock and do not reflect anychange in the fundamental view or investment case.Equity Price Targets have an investment horizon of 12 months.EXCEPTIONS AND SPECIAL CASESUK and European Investment Fund ratings and definitions are: Buy: Positive on factors such as structure, management,performance record, discount; Neutral: Neutral on factors such as structure, management, performance record, discount; Sell:Negative on factors such as structure, management, performance record, discount.Core Banding Exceptions (CBE): Exceptions to the standard +/-6% bands may be granted by the Investment ReviewCommittee (IRC). Factors considered by the IRC include the stocks volatility and the credit spread of the respective companysdebt. As a result, stocks deemed to be very high or low risk may be subject to higher or lower bands as they relate to the rating.When such exceptions apply, they will be identified in the Company Disclosures table in the relevant research piece.Research analysts contributing to this report who are employed by any non-US affiliate of UBS Securities LLC are notregistered/qualified as research analysts with the NASD and NYSE and therefore are not subject to the restrictions contained inthe NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by aresearch analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any,follows.UBS Securities LLC: James F. Hillier.Company Disclosures Company Name Reuters 12-mo rating Short-term rating Price Price date 4, 6b, 7, 13, 16 Adobe Systems Inc. ADBE.O Neutral N/A US$29.14 03 Dec 2010 14, 16 ARM Holdings Plc ARM.L Neutral N/A 403p 03 Dec 2010 Aveva Group AVV.L Sell N/A 1,566p 03 Dec 2010 Catcher Technology 2474.TW Buy N/A NT$95.00 03 Dec 2010 13, 16, 20 Corning Inc. GLW.N Buy (CBE) N/A US$18.74 03 Dec 2010 16 Gemalto GTO.PA Sell N/A €30.89 03 Dec 2010 6a, 6b, 7, 16 Google Inc. GOOG.O Buy N/A US$573.00 03 Dec 2010 Logica LOG.L Buy N/A 120p 03 Dec 2010 Murata Mfg. 6981.T Buy N/A ¥5,340 03 Dec 2010 16 National Semiconductor Corp. NSM.N Neutral N/A US$14.77 03 Dec 2010 NCsoft 036570.KS Buy N/A Won239,500 03 Dec 2010 16 Sage Group SGE.L Sell N/A 280p 03 Dec 2010 16 Salesforce.com CRM.N Buy N/A US$142.81 03 Dec 2010 5, 15, 16 SAP AG SAPG.DE Buy N/A €36.67 03 Dec 2010 Telecity Group TCY.L Buy N/A 467p 03 Dec 2010 8, 16 Texas Instruments Inc. TXN.N Neutral N/A US$32.82 03 Dec 2010 5, 24 Tieto TIE1V.HE Neutral N/A €14.21 03 Dec 2010Source: UBS. All prices as of local market close.Ratings in this table are the most current published ratings prior to this report. They may be more recent than the stock pricingdate4. Within the past 12 months, UBS AG, its affiliates or subsidiaries has received compensation for investment banking services from this company/entity.5. UBS AG, its affiliates or subsidiaries expect to receive or intend to seek compensation for investment banking services from this company/entity within the next three months. UBS 13
  14. 14. Global Tech Daily 6 December 20106a. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking securities-related services are being, or have been, provided.6b. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services are being, or have been, provided.7. Within the past 12 months, UBS Securities LLC has received compensation for products and services other than investment banking services from this company/entity.8. The equity analyst covering this company, a member of his or her team, or one of their household members has a long common stock position in this company.13. UBS AG, its affiliates or subsidiaries beneficially owned 1% or more of a class of this company`s common equity securities as of last month`s end (or the prior month`s end if this report is dated less than 10 days after the most recent month`s end).14. UBS Limited acts as broker to this company.15. UBS AG, its affiliates or subsidiaries has issued a warrant the value of which is based on one or more of the financial instruments of this company.16. UBS Securities LLC makes a market in the securities and/or ADRs of this company.20. Because UBS believes this security presents significantly higher-than-normal risk, its rating is deemed Buy if the FSR exceeds the MRA by 10% (compared with 6% under the normal rating system).24. UBS AG, its affiliates or subsidiaries beneficially held more than 5% of the total issued share capital of this company; or for UK and Irish companies, a line of stock of this company; as of the date shown in this disclosure table.This report may contain a discussion and analysis of both equity and fixed income securities of the same issuer. The opinions orrecommendations with respect to an equity security may be different from those for a fixed income security due to a number offactors including, but not limited to, the type of security involved and its characteristics, the nature of the market for that security,the analytical methodology employed for that type of security, the assumptions utilized under the particular methodology and theUBS rating system applicable to that type of security.Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report.For a complete set of disclosure statements associated with the companies discussed in this report, including information onvaluation and risk, please contact UBS Securities LLC, 1285 Avenue of Americas, New York, NY 10019, USA, Attention:Publishing Administration.Additional Prices: Accenture plc, US$44.22 (03 Dec 2010); Altera Corporation, US$37.71 (03 Dec 2010); AOL Inc, US$25.18(03 Dec 2010); Apple Inc., US$317.44 (03 Dec 2010); Applied Materials Inc., US$13.06 (03 Dec 2010); ASE, NT$31.95 (03 Dec2010); comScore, Inc., US$23.04 (03 Dec 2010); Ericsson, SKr74.65 (03 Dec 2010); Fujitsu, ¥541 (03 Dec 2010); Hitachi, ¥410(03 Dec 2010); HTC Corporation, NT$883.00 (03 Dec 2010); Inotera Memories, NT$14.40 (03 Dec 2010); LAM Research Corp.,US$49.22 (03 Dec 2010); Microsoft Corp., US$27.02 (03 Dec 2010); Misys, 298p (03 Dec 2010); Mitsubishi Electric, ¥859 (03Dec 2010); Powerchip Technology, NT$5.95 (03 Dec 2010); Samsung Electronics, Won894,000 (03 Dec 2010); Sony, ¥3,020(03 Dec 2010); Taiwan Semiconductor Manufacturing, NT$68.30 (03 Dec 2010); UMC, NT$16.40 (03 Dec 2010); VarianSemiconductor Equipment Assoc., US$35.00 (03 Dec 2010); Yahoo Inc., US$16.35 (03 Dec 2010); Source: UBS. All prices asof local market close. UBS 14
  15. 15. Global Tech Daily 6 December 2010Global DisclaimerThis report has been prepared by UBS Securities LLC, an affiliate of UBS AG. UBS AG, its subsidiaries, branches and affiliates are referred to herein as UBS. In certain countries, UBS AG isreferred to as UBS SA.This report is for distribution only under such circumstances as may be permitted by applicable law. Nothing in this report constitutes a representation that any investment strategy orrecommendation contained herein is suitable or appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for informationpurposes, it does not constitute an advertisement and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments in any jurisdiction. 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