• Share
  • Email
  • Embed
  • Like
  • Save
  • Private Content
UBS Ad:Tech 2009
 

UBS Ad:Tech 2009

on

  • 1,641 views

 

Statistics

Views

Total Views
1,641
Views on SlideShare
1,626
Embed Views
15

Actions

Likes
2
Downloads
49
Comments
0

3 Embeds 15

http://www.linkedin.com 8
https://www.linkedin.com 6
http://www.slideshare.net 1

Accessibility

Categories

Upload Details

Uploaded via as Adobe PDF

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

    UBS Ad:Tech 2009 UBS Ad:Tech 2009 Presentation Transcript

    • ad:tech 2009 Feed Your Brain – An Update on the Digital Economy November 2009 Brian J. Pitz Analyst +1 212 713 9310 Brian.Pitz@ubs.com This report has been prepared by UBS Securities LLC. Brian P. Fitzgerald Analyst Certification and Required Disclosures Begin on Page 46 Analyst +1 212 713 2851 UBS does and seeks to do business with companies covered in its research reports. As a result, investors should be Brian.Fitzgerald@ubs.com 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. Kaizad Gotla Associate Analyst +1 212 713 2603 Kaizad.Gotla@ubs.com
    • Table of Contents 1. General Global Internet User Snapshot Pg 2 2. Broadband / PC Penetration Driving Internet Growth Pg 6 3. Online Advertising Update Pg 15 4. Mobile Update Pg 23 5. A Quick Update on eCommerce & Online Advertising Pg 33 6. Appendix Pg 40 1
    • General Global Internet User Snapshot 2
    • Internet User Growth – Plenty of Global Runway Remaining… ♦ We expect Internet penetration (desktop and mobile) to remain a growth driver for the industry Worldwide Internet Adoption (% of Total Population) 70% 62% 60% 59% 54% 56% 50% 46% 42% 40% 36% 30% 31% 24% 22% 20% 17% 18% 17% 14% 15% 12% 12% 10% 11% 7% 8% 10% 7% 9% 3% 5% 3% 4% 5% 2% 2% 0% 0% 1% 1% 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 Developed World Developing World Total Source: UBS, International Telecommunication Union 3
    • Internet User Growth – Plenty of Global Runway Remaining… ♦ Internet Population Penetration across the Globe… Source: UBS, Wikipedia 4
    • Global Internet Users Global Internet User Growth Forecasts: 2005-2010E 05-10E 2005 2006 2007 2008 2009 2010E CAGR Total Internet Users (MM) 1,039 1,148 1,266 1,432 1,669 1,835 12% North America 241 244 248 252 256 260 2% Europe 271 304 334 367 402 439 10% Asia/Pacific (including China, Japan 381 423 471 554 671 750 14% Rest of World 97 110 126 144 164 188 14% Latin America 50 67 86 115 176 198 32% 2005 2006E 2007E 2008E 2009E 2010E Total Internet Users Growth (Y/Y) 15% 11% 10% 13% 17% 10% North America 8% 2% 2% 2% 2% 2% Europe 15% 12% 10% 10% 9% 9% Asia/Pacific (including China, Japan 24% 11% 11% 17% 50% 12% Rest of World 12% 14% 14% 14% 14% 14% Latin America 6% 35% 28% 33% 54% 12% 2005 2006E 2007E 2008E 2009E 2010E Population (MM) 7,569 7,655 7,746 7,837 7,929 8,022 North America 321 324 327 330 333 336 Europe 585 586 586 587 587 588 Asia/Pacific (including China, Japan 4,381 4,422 4,467 4,511 4,556 4,601 Rest of World 1,841 1,877 1,913 1,950 1,988 2,027 Latin America 440 447 453 459 465 472 2005 2006E 2007E 2008E 2009E 2010E Internet User Penetration 14% 15% 16% 18% 21% 23% North America 75% 76% 76% 77% 77% 78% Europe 46% 52% 57% 63% 68% 75% Asia/Pacific (including China, Japan 9% 10% 11% 12% 18% 16% Rest of World 5% 6% 7% 7% 8% 9% Latin America 11% 15% 19% 25% 38% 42% 2005 2006E 2007E 2008E 2009E 2010E Share of Global Internet Users North America 23% 21% 20% 18% 15% 14% Europe 26% 26% 26% 26% 24% 24% Asia/Pacific (including China, Japan 37% 37% 37% 39% 40% 41% Rest of World 9% 10% 10% 10% 10% 10% Latin America 5% 6% 7% 8% 11% 11% Sources: UBS Investment Research; wikipedia; CNNIC; CIA Factbook; Computer Industry Almanac 5
    • Broadband / PC Penetration Driving Global Internet Growth 6
    • U2: 10 Million Streams across 188 Countries… 7
    • Search Becoming Even More Central to the User… ♦ Within the sea of information, users will need help finding information that’s important to them Source: Cisco 8
    • GDP Per Capita ⇡≈ Broadband / PC Adoption ⇡ Increasing GDP per capita leads to higher broadband penetration rates, which we view as a key indicator of PC adoption (both drivers of Internet growth). We note significant correlation between GDP per capita and Broadband Penetration rates in our sample, with an R2 of nearly 64%. While the R2 increases to 76% when South Korea is excluded. 100.0% 90.0% South Korea Hong Kong 80.0% 2 R = 0.6372 Broadband Penetration Taiwan 70.0% Singapore Australia Canada 60.0% Japan Western Europe United States 50.0% New Zealand 40.0% 30.0% Chile Argentina 20.0% China Malaysia Mexico Venezuela Peru Eastern Europe 10.0% Brazil Thailand India Philipines 0.0% $0 $5,000 $10,000 $15,000 $20,000 $25,000 $30,000 $35,000 $40,000 $45,000 GDP Per Capita Source: UBS estimates, IMF, U.S. Census Bureau, IDC 9
    • Broadband – An Indicator of PC-based Internet Growth We view broadband penetration as a more useful indicator of PC Shipments (and therefore broadband / PC-based Internet growth) in emerging markets, given penetration is still low and it’s all about Internet access. Our sample of countries indicates a correlation between broadband penetration and PC shipments per capita, with an R2 of nearly 60%, and rising to 72% when South Korea is excluded. 25.0% R2 = 0.5974 United States 20.0% Singapore Australia PC Shipments Per Capita Canada New Zealand 15.0% Western Europe Hong Kong Taiwan Japan 10.0% Chile South Korea Malaysia Eastern Europe Brazil 5.0% Argentina Venezuela Mexico Thailand China Philipines Peru India 0.0% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% 90.0% 100.0% Broadband Penetration Source: UBS estimates, IMF, U.S. Census Bureau, IDC 10
    • Broadband Penetration Driving Secular Growth 500,000 450,000 56,772 400,000 39,264 47,862 95,399 Broadband reaching 350,000 300,000 30,703 78,781 87,432 70% of households 250,000 23,309 68,421 FTTH within more mature 58,371 200,000 150,000 10,117 15,755 46,310 323,513 Cable markets (its been that 293,734 100,000 4,178 36,804 181,591 227,056 261,685 DSL way in Korea for 5+ 29,318 138,090 50,000 61,293 97,455 years…) 0 2003 2004 2005 2006 2007 2008 2009 2010 80.0% 69.9% 68.8% …while emerging 70.0% 2007 2010 markets driving 60.0% 53.9% 56.1% global growth of 50.0% broadband and 40.0% 32.4% 26.9% increased Internet 30.0% 24.6% 16.7% usage 20.0% 15.1% 13.8% 10.0% 0.0% Asia Pacific Europe N. America L. America EMEA Source: UBS estimates and company documents 11
    • Consumers Continue Shifting Time to the Internet… We all know by now that media consumption on the Internet is taking share from offline, particularly newspapers and magazines… …and we believe this trend will continue, if not accelerate, as waves of younger tech-savvy generations displace older generations… Average Time Spent with Media by US Consumers (hours per person per day) 2002 2003 2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E 07-'12 CAGR Television 4.17 4.22 4.25 4.37 4.42 4.42 4.39 4.38 4.38 4.38 4.37 -0.2% Broadcast & Satellite Radio 2.26 2.29 2.25 2.21 2.17 2.14 2.12 2.08 2.06 2.01 2.00 -1.4% Consumer Internet 0.39 0.42 0.45 0.47 0.50 0.52 0.54 0.56 0.59 0.61 0.64 4.5% Recorded Music 0.56 0.53 0.55 0.54 0.51 0.48 0.47 0.48 0.50 0.53 0.55 2.5% Daily Newspapers 0.52 0.53 0.53 0.51 0.49 0.47 0.45 0.44 0.42 0.42 0.41 -2.6% Out of Home 0.33 0.34 0.34 0.35 0.36 0.37 0.37 0.37 0.37 0.38 0.38 0.7% Consumer Magazines 0.33 0.33 0.34 0.34 0.34 0.34 0.35 0.34 0.34 0.33 0.33 -0.6% Consumer Books 0.29 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.30 0.29 -0.6% Video Games 0.19 0.21 0.22 0.20 0.21 0.23 0.28 0.31 0.34 0.36 0.38 10.0% Home Video 0.15 0.16 0.18 0.17 0.17 0.17 0.16 0.16 0.16 0.16 0.16 -0.7% Mobile 0.01 0.01 0.02 0.02 0.03 0.04 0.05 0.07 0.08 0.09 0.10 19.1% Yellow Pages 0.03 0.03 0.03 0.03 0.03 0.04 0.04 0.03 0.03 0.03 0.03 -4.2% Box Office 0.04 0.04 0.04 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.0% In-Flight Entertainment 0.00 0.01 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.0% Total 9.3 9.4 9.5 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.7 0.3% Source: Veronis Suhler Stevenson, October 2008 12
    • Our Time Online: Social Connects / Entertainment & Leisure Increasing… Share of Online Time (Global) ~ 2009 All Other 36% Communications 21% Work, Business & Education 6% Social Connections 14% Entertainment & Leisure 17% Shopping & Travel 6% Definitions Social Connections: Social Netw orking Sites, Blogs, Discussion/Chat, Community Sites Shopping & Travel: Retail, Travel, Auctions, Automotive & Real Estate Entertainm ent & Leisure: Entertainment, including Multimedia & Streaming, Online Games and Gaming, Sports, Hobbies & Lifestyle Work, Business & Education: New s & Information, Business & Finance, Education, Career Services & Development, Government comScore Oct '09 13
    • Some Facebook Stats from Oct 2009 – Web 2.0 1) Over 1 MILLION developers on the platform; 2) 250+ applications have over 1 MILLION users each; 3) 45MM status updates daily from 30MM users; 4) Users spend 8 Billion minutes daily on the site; 5) 2 Billion pieces of content shared on the service (with 5 Billion API calls on a typical day); 6) 2 Billion photos uploaded a month (20 Billion in total); 7) During peaks – 1.2 MILLION photos a second are served; 8) 1.2 MILLION users for every engineer; 9) In a little over a year, growth from 100MM to 300MM daily active users 10) The fastest growing group is over 35 years old in the U.S. Source: Company reports 14
    • Online Advertising Update 15
    • 11% Growth in US Online Ad Spend as Advertisers Follow Traffic • Disconnect between ad dollars spent online and time spent online • Online ads are still just 9% of total advertising • Advertising dollars should follow audience (20-25% of media time spent online) • US Online ads should grow at an 11% compound rate from 2009 through 2011 • 1% ad budget shift online equals $2 billion more going to Internet US Online Advertising $30,000 12% $25,000 10% $20,000 8% $15,000 6% $10,000 4% $5,000 2% $0 0% 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E Ad Spend ($ MM) % of Total Adv ertising Source: UBS, IAB/PwC 16
    • Global Internet Advertising +13% ’09-11 CAGR vs. 5% for Industry Global Advertising Expenditure 100% Internet Outdoor 80% Cinema Newspapers 60% Magazine Radio 40% Television 20% 0% 1997 1999 2001 2003 2005 2007 2009E 2011E Source: UBS Investment Research 17
    • UBS Global Advertising Model Global Advertising Expenditure (USD Millions) CAGR (%) 2001 2002 2003 2004 2005 2006 2007 2008 2009E 2010E 2011E '01-'11E 09-'11E Global Market Share of Advertisement Expenditure Television 37.9% 39.0% 39.3% 40.3% 39.5% 39.4% 39.0% 39.1% 39.3% 39.6% 39.5% Radio 8.6% 8.9% 8.7% 8.4% 8.2% 7.9% 7.6% 7.4% 7.2% 7.1% 6.9% Magazine 12.7% 12.2% 11.9% 11.4% 11.4% 11.0% 10.8% 10.6% 10.1% 9.9% 9.6% Newspapers 32.2% 31.5% 31.0% 29.8% 28.7% 27.6% 26.2% 24.7% 23.5% 22.7% 22.0% Cinema 0.4% 0.4% 0.4% 0.4% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% 0.5% Outdoor 5.5% 5.5% 5.4% 5.4% 5.8% 5.9% 6.1% 6.2% 6.2% 6.2% 6.2% Internet 2.7% 2.5% 3.3% 4.2% 5.9% 7.8% 9.8% 11.5% 13.2% 14.0% 15.2% Total market 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% Advertising Expenditure Television 134,273 137,877 143,637 159,252 166,498 177,234 184,216 183,046 166,163 173,916 185,439 3.3% 5.6% Radio 30,530 31,452 31,896 33,179 34,453 35,475 35,948 34,727 30,339 31,107 32,418 0.6% 3.4% Magazine 44,853 43,056 43,517 45,161 47,951 49,622 51,080 49,376 42,831 43,446 45,155 0.1% 2.7% Newspapers 114,029 111,148 113,178 117,886 121,170 124,083 123,704 115,664 99,302 99,632 103,378 -1.0% 2.0% Cinema 1,447 1,447 1,542 1,760 1,929 2,026 2,247 2,339 2,217 2,334 2,507 5.7% 6.3% Outdoor 19,493 19,379 19,880 21,173 24,634 26,466 28,615 28,859 26,362 27,157 29,187 4.1% 5.2% Internet 9,444 8,948 11,964 16,586 25,027 34,999 46,362 53,980 55,693 61,624 71,328 22.4% 13.2% Total market 354,068 353,306 365,615 394,996 421,662 449,904 472,172 467,991 422,907 439,215 469,411 2.9% 5.4% Advertising Growth Television -5.1% 2.7% 4.2% 10.9% 4.5% 6.4% 3.9% -0.6% -9.2% 4.7% 6.6% Radio -5.8% 3.0% 1.4% 4.0% 3.8% 3.0% 1.3% -3.4% -12.6% 2.5% 4.2% Magazine -6.4% -4.0% 1.1% 3.8% 6.2% 3.5% 2.9% -3.3% -13.3% 1.4% 3.9% Newspapers -6.1% -2.5% 1.8% 4.2% 2.8% 2.4% -0.3% -6.5% -14.1% 0.3% 3.8% Cinema 2.5% 0.0% 6.6% 14.1% 9.6% 5.0% 11.0% 4.1% -5.2% 5.3% 7.4% Outdoor 0.3% -0.6% 2.6% 6.5% 16.3% 7.4% 8.1% 0.9% -8.7% 3.0% 7.5% Internet -8.2% -5.3% 33.7% 38.6% 50.9% 39.8% 32.5% 16.4% 3.2% 10.6% 15.7% All Media -5.5% -0.2% 3.5% 8.0% 6.8% 6.7% 4.9% -0.9% -9.6% 3.9% 6.9% 18
    • Online Advertising by Vertical… Pharma & Other, 7% Healthcare, 4% Retail, 22% Entertainment, 4% CPG, 6% Media, 5% Leisure Travel, 6% Financial Services, 13% Telecom, 9% Computing, 12% Automotive, 12% Source: UBS Investment Research 19
    • US Online Ad Model: The Details (US$ in Millions) Q108A Q208A Q308A Q408A Q109A Q209A Q309E Q409E 2007 2008 2009E 2010E 2011E 09-11 CAGR Search 2,537 2,528 2,627 2,806 2,570 2,553 2,787 3,084 8,695 10,498 10,994 12,337 14,104 growth Y/Y 23.2% 24.1% 25.1% 12.4% 1.3% 1.0% 6.1% 9.9% 28.8% 20.7% 4.7% 12.2% 14.3% 13.3% % of Total Spend 44.0% 44.0% 45.0% 46.0% 47.0% 47.0% 47.5% 48.0% 41.0% 44.8% 47.4% 49.0% 49.8% Classified (& auctions) 807 804 817 793 601 598 616 643 3,393 3,222 2,458 2,392 2,407 growth Y/Y -3.1% -7.1% -5.1% -4.7% -25.5% -25.7% -24.6% -19.0% 11.3% -5.0% -23.7% -2.7% 0.6% -1.0% % of Total Spend 14.0% 14.0% 14.0% 13.0% 11.0% 11.0% 10.5% 10.0% 16.0% 13.7% 10.6% 9.5% 8.5% Sponsorship 115 115 117 61 109 109 117 129 636 408 464 504 595 growth Y/Y -21.5% -24.8% -26.1% -65.8% -5.2% -5.4% 0.5% 110.7% 22.6% -35.9% 13.7% 8.6% 18.1% 13.2% % of Total Spend 2.0% 2.0% 2.0% 1.0% 2.0% 2.0% 2.0% 2.0% 3.0% 1.7% 2.0% 2.0% 2.1% Banner 1,211 1,206 1,197 1,251 1,105 1,168 1,232 1,336 4,714 4,864 4,841 5,262 5,947 growth Y/Y 23.8% 7.7% 8.2% -17.1% -8.8% -3.2% 3.0% 6.9% 26.9% 3.2% -0.5% 8.7% 13.0% 10.8% % of Total Spend 21.0% 21.0% 20.5% 20.5% 20.2% 21.5% 21.0% 20.8% 22.2% 20.7% 20.9% 20.9% 21.0% Rich Media 404 402 409 427 383 380 411 450 1,696 1,641 1,624 1,813 2,096 growth Y/Y 17.8% 12.8% -11.4% -20.2% -5.2% -5.4% 0.5% 5.3% 43.5% -3.2% -1.1% 11.7% 15.6% 13.6% % of Total Spend 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 7.0% 8.0% 7.0% 7.0% 7.2% 7.4% Video 173 172 175 171 219 217 235 257 424 691 928 1,133 1,359 growth Y/Y 253.5% 238.3% -14.7% 43.6% 26.5% 26.1% 34.0% 50.5% 63.0% 34.2% 22.1% 20.0% 21.1% % of Total Spend 3.0% 3.0% 3.0% 2.8% 4.0% 4.0% 4.0% 4.0% 2.0% 2.9% 4.0% 4.5% 4.8% Email 115 115 117 122 82 76 106 116 424 469 379 403 453 growth Y/Y 17.7% 12.8% 10.9% 2.6% -28.9% -33.8% -9.5% -5.2% 25.6% 10.6% -19.1% 6.2% 12.5% 9.3% % of Total Spend 2.0% 2.0% 2.0% 2.0% 1.5% 1.4% 1.8% 1.8% 2.0% 2.0% 1.6% 1.6% 1.6% Referrals/Lead Generation 404 402 409 427 399 331 364 411 1,484 1,641 1,506 1,334 1,359 growth Y/Y 3.2% -1.3% 51.5% 2.6% -1.1% -17.6% -11.0% -3.7% 11.9% 10.6% -8.3% -11.4% 1.9% -5.0% % of Total Spend 7.0% 7.0% 7.0% 7.0% 7.3% 6.1% 6.2% 6.4% 7.0% 7.0% 6.5% 5.3% 4.8% Total Online Spend ($MM) 5,765 5,745 5,838 6,100 5,468 5,432 5,868 6,425 21,206 23,448 23,193 25,177 28,321 growth Y/Y 17.7% 12.8% 10.8% 2.6% -5.2% -5.4% 0.5% 5.3% 25.6% 10.6% -1.1% 8.6% 12.5% 10.5% Source: UBS Investment Research 20
    • Search, Rich Media, Video ⇡ / Classifieds, Sponsorships ⇣ U.S. Online Advertising Composition $B Email 100% Sponsorship Referrals/Lead Generation Video Rich Media 80% Classified (& auctions) Banner 60% 40% Search 20% 0% 2007 2008 2009E 2010E 2011E Source: UBS Investment Research; IAB 21
    • Premium CPMs Going to Vertical Inventory… Source: Adify Q2 / 2009; Over 200 premium vertical ad networks are growing on the Adify Network Builder Platform. Since Adify serves advertising directly to the 12,000 sites in those networks, Adify can track and analyze CPM trends across verticals. The data in this report reflects all campaigns that have been served by Adify’s IAB ad measurement audited and certified technology since October 1, 2008. The data is analyzed quarterly as part of the Adify Vertical Gauge (AVG) report. 22
    • Mobile Internet Update 23
    • The End of the “Walled Garden”… — Over 2B downloads from the 85,000 apps in Apple’s store to 50MM+ iPhone/iPod Touch customers; 125K developers in the iPhone program — Carriers/device makers developing their own platforms — Subscribers purchase service based on available apps (voice just one on the list), carriers risk disintermediation Downloads from the Apple App Store 2B on 9/28/09!!! 2000 1750 1500 Dow nloads (M) 1250 1000 750 500 250 0 10/11/08 11/11/08 12/11/08 7/11/08 8/11/08 9/11/08 1/11/09 2/11/09 3/11/09 4/11/09 5/11/09 6/11/09 7/11/09 8/11/09 9/11/09 Source: UBS estimates and company documents 24
    • Phones vs. PCs… ♦ Among various demographics, mobile phone penetration is equal to or greater than Internet penetration ♦ Certainly, in emerging markets, the first experience with the Internet will be over the mobile phone… 87% 18-24 year olds 83% ("Gen Y") Internet Penetration 65% 65% 25-44 year olds ("Gen X") 45-54 year olds ("Young Boomers") 85% Mobile 84% 55-64 year olds Phone 84% ("Old Boomers") Penetration 79% Source: InsightExpress Digital Consumer Portrait, Jun 2009 25
    • Text Nation… 83% Texting 65% 52% 33% 19% 23% Internet 12% 4% 20% Weekly Usage of Mobile 21% Video 8% 18-24 year olds 3% 14% 25-44 year olds 14% Applications 5% 45-54 year olds 4% 55-64 year olds 7% 10% Games 1% 1% Source: InsightExpress Digital Consumer Portrait, Jun 2009 26
    • Mobile Internet Growth (with 4.1B TXT messages / day) Source: CTIA’s Semi-Annual Wireless Industry Survey 2009 27
    • Consumerization of Digital Media Content ♦ We believe the next major milestone in the evolution of the mobile communications industry will be based on the extension of mobility to consumers’ digital media. ♦ This has been occurring, which has allowed more mobile device manufacturers the opportunity to drive higher levels of differentiation in their devices. ♦ Differentiation has largely been in terms of form factor, aesthetics, applications, and man-machine interfaces, which both impact the device’s ease of use and perceived utility. ♦ RIM & Apple have raised the bar in the industry and driven differentiation, but competition is increasing ♦ Operators are also getting into the content game and may compete against handset vendors Source: UBS estimates 28
    • Global Handset Market – Phases of Differentiation ♦ Given the maturity of the mobile device market, the current debate is whether the market has commoditized. ♦ Devices predominantly addressing industry secular growth (now primarily emerging markets) have become increasingly commoditized, with price now the key differentiator. ♦ We believe the replacement segment of the market experiences periods of different levels of differentiation, and, in turn, varying degrees of 1990 1995 2000 2007 2010 commoditization. ♦ Differentiation comes in three areas: 1) Industrial design 2) Technology 3) User experience (ease of use) ♦ New applications such as music, imaging, and navigation have helped to increase some differentiation in the market. 29
    • Two Areas of Handset Growth Despite decelerating handset unit growth and weakness in 2009, two segments are still expected to see growth: 400.0 3G handsets 350.0 CAGR of 62% ♦ 3G: expected CAGR of 62% driven 300.0 by upgrade sales in developed 250.0 200.0 markets. Qualcomm will benefit 150.0 from WCDMA chipset sales and 100.0 royalty income. 50.0 0.0 2005 2006 2007 2008 2009E 200.0 180.0 Converged devices ♦ Converged Devices: expected 160.0 CAGR of 36% CAGR of 36% driven by mobile 140.0 120.0 applications. This is a great 100.0 opportunity for RIMM given the 80.0 60.0 company’s unique operating model 40.0 and strong brand in the converged 20.0 0.0 devices market. 2005 2006 2007 2008E 2009E Sources: Company data, UBS estimates 30
    • Will Action / Acquisition (CPA) become the New Metrics vs. Reach, Impressions or Clicks (CPM/CPC)??? Time Horizon for Shifting from Impression-Based to Impact-Based Adverting 1 Year, 5% 93% say the Never, 7% shift will happen in the next 3 to Shift Already Started, 13% 5 years 3 Years, 48% 5 Years, 33% Source: Velti / IBM advertising industry executive interviews and panel discussions 31
    • Mobile Banner Advertising – Mobile vs. Non-Mobile Categories Source: comScore Ad Metrix Mobile; Data: 3 month average ending June 2009 (US) 32
    • A Quick Update on eCommerce… 33
    • eCommerce still an under-penetrated retail channel ♦ We expect eCommerce penetration of total retail to continue, reaching 4-5% by 2011-2013. We conservatively expect this number to reach at least 15%+ over time ♦ As a comparison, catalog retail is currently roughly 4% of US retail, though the online channel has lower barriers to entry and offers a virtually unlimited selection and on-demand access F2008 F2009 Q1 08A Q2 08A Q3 08A Q4 08A Q1 09A Q2 09A Q3 09E Q4 09E F2007A F2008A F2009E F2010E Total US Retail Sales $1,012,727 $1,015,423 $998,689 $925,889 $909,867 $906,016 $985,706 $960,147 $3,997,706 $3,952,728 $3,761,736 $3,863,303 % Y/Y Growth 2.5% 2.3% 0.1% -9.1% -10.2% -10.8% -1.3% 3.7% 3.1% -1.1% -4.8% 2.7% Total US Retail eCommerce Sales $33,543 $33,889 $33,494 $31,482 $31,708 $32,404 $34,931 $34,471 $126,224 $132,408 $133,515 $145,212 % Y/Y Growth 12.9% 8.7% 4.7% -5.6% -5.5% -4.4% 4.3% 9.5% 18.4% 4.9% 0.8% 8.8% eCommerce Penetration - % of Retail 3.3% 3.3% 3.4% 3.4% 3.5% 3.6% 3.5% 3.6% 3.2% 3.3% 3.5% 3.8% Y/Y Penetration Increases 0.31% 0.20% 0.15% 0.13% 0.17% 0.24% 0.19% 0.19% 0.41% 0.19% 0.20% 0.21% Source: UBS; US Department of Commerce; Does not include auctions, travel, financial services, or event ticket sales -- http://www.census.gov/mrts/www/ecomm.html; eCommerce sales are goods and services where an order is placed by the buyer or price and terms of sale are negotiated over an Internet, extranet, EDI network, e-mail, or other online system. Payment may or may not be made online 34
    • eCommerce still an under-penetrated retail channel ♦ Several categories are still in their nascent stages online 30.9 30.1 $30.0 $25.0 2008 - $141 Billion (ex Travel) 22.5 2009E - $156 Billion (ex Travel) $20.0 2010E $177 Billion (ex Travel) 14.6 $15.0 10.3 $10.0 7.5 7.6 6.9 7.1 5.6 5.9 6 $5.0 4 4.2 3.2 2.3 2.7 2.1 2.2 1.2 $0.0 ts lry ts ts s s ts Pets Parts r ure eo ames onics ear erals re e ent ment Othe Book ctible verag Ticke Ticke & Gif uc al Ca Jewe & Vid m Furnit Footw Prod eriph prove Equip Electr eo G Auto Colle & Be ards son nt Movie Music Office r Eve &P ries & & Vid Im / Per & umer ers, C Art & Food oods ome SW) Othe o OTC Toys Cons ccess Flow s&H ting G (HW/ rel, A ance puter Spor Appa Appli Com Source: UBS, Shop.org – State of Retail Online 2009 35
    • 50% of Retailers Have Started ’09 Holiday Online Marketing Question: When Do You Plan to Start Your ONLINE Holiday Marketing & Promotion Campaigns? Week of Nov 23 or Later Oct 5 or Earlier Week of Nov 16 3% 10% 10% Week of Nov 9 Week of Oct 12 8% 15% Week of Oct 19 Week of Nov 2 16% 28% Week of Oct 26 10% Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009 36
    • 50%+ of Retailers Will Spend 11-30% of 2009 Budget on Holidays Question: What % of Your Total 2009 ONLINE Marketing Budget is Dedicated Specifically to the Holidays? 50%+ of Total 2009 1-5% of Total 2009 Online Marketing Online Marketing 41-50% of Total 2009 Budget, 5% Budget, 5% Online Marketing 6-10% of Total 2009 Budget, 11% Online Marketing Budget, 12% 31-40% of Total 2009 Online Marketing Budget, 11% 11-20% of Total 2009 Online 21-30% of Total Marketing Budget, 2009 Online 30% Marketing Budget, 26% Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009 37
    • Merchants Focusing on Leading Social Channels Question: Since last Holiday season, have you added or improved any of the following marketing and / or promotions that you feel will drive improved holiday sales this year?. Site Ev ent / Action-triggered Email Dy namic Customized / Personalized Email Tw itter Facebook Page 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Added New in 2009 Improved / Enhanced in 2009 Offered, but No Substantial Change in 2009 Do Not Offer / Use Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009 38
    • Social, SEO and Email are Areas of Marketing Focus for the 2009 Holiday Season Question: For the 2009 Holiday season, please indicate for each of the following ONLINE marketing options whether you plan to increase, decrease or keep at the same level that you have used to date (Jan to Oct) in 2009. Social Shopping websites Blogs / RSS Feeds Word of Mouth / Viral Affiliate & Loyalty SEM (paid) Email SEO (organic) Twitter Facebook, MySpace 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Increase Keep the Same Decrease Won't Use Source: UBS, Shop.org – Pre-Holiday Consumer & Retailer Results – eHoliday 2009 39
    • Appendix 40
    • Mobile Handset Industry Summary ♦ Digital media content is becoming more pervasive in society — Significant growth expected in new forms of digital media content — Music, digital TV (Personal Video Recorders and Video on Demand), radio, pictures, games ♦ Mobile communications will evolve to support access to consumer digital content — After 20 years of supporting voice, mobile networks now evolving to support broadband applications, WCDMA the first step in the process with HSDPA seen as the key enabler . . . — Vendor consolidation occurring through “natural selection”, not M&A — Continued growth in emerging markets as teledensity improves ♦ Mobile device market in a transition phase, waiting for new applications to take hold — New entrants raising the bar in the industry (RIM, Apple, etc.) — Higher differentiation is returning to the replacement market with the balance of power shifting to handset vendors. However, this cycle will likely fade in the coming year or two 41
    • Key Mobile Handset Industry Trends ♦ Focus on Data to Drive ARPU. With decreasing price per minute, roaming fees, etc, operators focus on data to help offset declines in voice ARPU. ♦ Higher Subsidies for Handsets that Drive ARPU. Apple changed the game for smartphone pricing. RIM is already competitively priced. Other vendors must prove they can drive ARPU to get similar subsidies to be competitive or risk either market share losses or margin contraction. ♦ At the Expense of Older Handsets. We believe operators are less aggressively pushing older handsets to focus on newer, differentiated products. 42
    • Handsets a More Intimate / Compelling Forum? Mobile Scores for Branding Metrics Limited Advertising Real Estate / Lack of Clutter is a Benefit 20 16.5 16 Mobile Norms Online Norms 10.7 10.5 12 9.1 8.6 8 4.9 4 2.7 2.2 2.7 2 0 Unaided Aided Awareness Ad Awareness Brand Favorability Purchase Intent Awareness Source: Source: InsightExpress: InsightNorms; Respondent: Mobile N = 47,658; Online N = 51,3973 43
    • Contact Information – “Pitz & Fitz” Brian J. Pitz Analyst: Internet & Interactive Entertainment +1-212-713 9310 (w) +1-917-696 9977 (m) brian.pitz@ubs.com Brian J. Pitz is an Executive Director and a senior analyst in the Communications Group of UBS Investment Research, where he covers the Internet and Interactive Entertainment. Previously, he was a Principal and senior research analyst covering the Internet at Banc of America Securities LLC. Prior to that, Brian was a Vice President at Morgan Stanley co-covering the Internet & PC Applications Software, while lead covering Interactive Entertainment. Early in his career at Morgan Stanley, Brian was part of the number one ranked Broadcasting research team in Institutional Investor’s All-America rankings in 1998, 1999, 2000 and 2001. Later, he was a co-leader of the top ranked Internet research team in Institutional Investor and Greenwich in 2004 and 2005. Brian commenced his professional career in the Business Consulting practice of Arthur Andersen LLP in New York. Brian received a Bachelor of Science degree in Accountancy from Villanova University. Brian P. Fitzgerald Analyst: Internet & Interactive Entertainment +1-212-713 2851 (w) +1-917-749 1103 (m) brian.fitzgerald@ubs.com Brian P. Fitzgerald is a Director and an analyst in the Communications Group at UBS Investment Research, where he covers the Internet and Interactive Entertainment. Previously, he was a Vice President and research analyst covering the Internet at Banc of America Securities LLC. Prior to that, Brian was a Vice President at Morgan Stanley co-covering the Internet & PC Applications Software and Interactive Entertainment sectors since 2000. There, he was a member of the top ranked Internet research team in the annual Institutional Investor poll and Greenwich Survey. Before his move into equity research, Brian was a manager in the Client Technology group of Morgan Stanley's Information Technology division. Before starting his corporate career, he was a helicopter pilot and officer in the US Army. Fitzgerald received a Bachelor of Science degree in Mathematical Economics and Computer Science from the United States Military Academy at West Point and an MBA with a concentration in Finance from New York University's Stern School of Business. UBS Securities LLC 1285 Avenue of the Americas New York, NY 10019 Tel: +1-212-713-2000 www.ubs.com 44 UBS Securities LLC is a subsidiary of UBS AG.
    • Coverage ♦ Internet — AMZN – Buy Rating, $140 12-Month Price Target — GSIC – Buy Rating, $26 12-Month Price Target — GOOG – Buy Rating, $635 12-Month Price Target — EBAY – Buy Rating, $30 12-Month Price Target — IACI – Buy Rating, $24 12-Month Price Target — YHOO – Neutral Rating, $18 12-Month Price Target — NFLX – Neutral Rating, $50 12-Month Price Target — VCLK – Neutral Rating, $11 12-Month Price Target ♦ Interactive Entertainment — ATVI – Buy Rating, $15 12-Month Price Target — ERTS – Buy Rating, $28 12-Month Price Target 45
    • Internet / Interactive Entertainment – Estimates ($MMs, except EPS) 1 2 Revenue EBITDA EPS FCF 09E Margin Ticker Rating Market Cap UBS Estimate Consensus UBS Estimate Consensus UBS Estimate Consensus Gross Operating Company 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E 2009E 2010E Interactive Entertainment Activision ATVI Buy $13,767 $4,576 $5,478 $4,560 $5,123 $1,132 $1,427 $1,382 $1,578 $0.64 $0.84 $0.64 $0.77 $1,584 $1,355 53.1% 23.2% Electronic Arts ERTS Buy 5,727 4,322 4,768 4,276 4,446 410 706 590 725 1.06 1.33 0.90 1.20 (871) 339 51.6 6.7 GameStop GME NR 3,949 - - 9,042 9,536 - - 866 960 - - 2.52 2.87 374 479 - - TakeTwo TTWO NR 875 - - 993 1,246 - - (38) 79 - - (0.84) 0.66 (50) 84 - - THQ Interactive THQI NR 337 - - 855 902 - - 30 47 - - 0.15 0.34 (11) 20 - - Advertising & Related Services Google GOOG Buy 172,441 17,466 20,541 17,376 20,293 10,974 13,232 10,884 12,626 22.74 27.08 22.77 26.31 7,565 8,768 85.1 54.0 Yahoo! YHOO Neutral 22,562 4,685 4,903 4,654 4,841 1,709 1,886 1,145 1,338 0.61 0.65 0.42 0.46 1,047 1,140 76.9 20.7 IAC / InterActiveCorp IACI Buy 2,680 1,362 1,437 1,348 1,419 168 215 158 191 0.31 0.79 0.50 0.72 304 143 66.4 7.6 WebMD WBMD NR 1,571 - - 429 485 - - 88 111 - - 0.61 0.81 40 48 - - ValueClick VCLK Neutral 1,633 541 569 529 534 138 155 126 126 0.63 0.56 0.74 0.64 154 94 66.7 23.9 comScore SCOR NR 450 - - 128 145 - - -- -- - - 0.12 0.27 -- -- - - Marchex MCHX NR 161 - - 89 89 - - 11 11 - - 0.09 0.10 -- -- - - eCommerce Amazon.com AMZN Buy 52,232 24,110 30,640 23,760 29,581 1,868 2,549 1,484 1,841 1.91 2.82 1.87 2.50 2,225 3,265 22.4 4.8 eBay EBAY Buy 30,646 8,650 9,141 8,644 9,044 3,069 3,361 3,015 3,244 1.53 1.73 1.54 1.62 2,452 2,847 72.6 29.7 Digital River DRIV NR 861 - - 395 357 - - 108 93 - - 1.81 1.49 54 54 - - Mercado Libre MELI NR 1,677 - - 171 234 - - 53 77 - - 0.66 0.91 25 38 - - GSI Commerce GSIC Buy 935 974 1,296 980 1,262 102 133 79 119 ($0.13) 0.17 (0.14) 0.21 54 85 60.0 2.8 Drugstore.com DSCM NR 268 - - 404 450 - - 5 15 - - (0.02) 0.01 -- -- - - Online Entertainment Netflix NFLX Neutral 3,221 1,673 2,090 1,672 2,048 237 283 224 262 1.90 2.12 1.89 2.23 158 233 34.4 7.2 Blockbuster BBI NR 159 - - 4,354 4,205 - - 274 276 - - (0.03) 0.10 113 135 - - (1) All figures represent "Operating EPS", defined to excludes SBC and 1x items as per Mgmt, except the following companies which are GAAP: VCLK, AMZN, GSIC, NFLX, YHOO (2) FCF for non-covered companies are FirstCall means (3) ERTS 2009E = Fiscal year ending 05/2010; 2010E = Fiscal Year ending 05/2011 Source: UBS, FirstCall, and FactSet 46
    • Internet / Interactive Entertainment – Valuation Firm Firm Value / 09-12E 09-12E 2010E 09-12E 2010E Price Upside to 1 Price YTD Value EBITDA EBITDA Price / Earnings EPS P/E to Price / FCF / share FCF FCF Target Target Company Ticker Rating 11/04/09 Performance ($MMs) 2009E 2010E CAGR 2009E 2010E CAGR Growth 2009E 2010E CAGR Yield (%) Interactive Entertainment Activision ATVI Buy $10.68 $15 45% 23% $10,921 10x 8x 17% 17x 13x 19.5% 0.6 9x 10x (7%) 9.7% Electronic Arts ERTS Buy $17.73 28 56 11% 3,928 10 6 33 17 13 15 0.9 -- 17 (163) 5.8% GameStop GME NR $23.74 - - 11% 4,247 5 4 - 9 8 -- -- 10 8 -- 12.3% TakeTwo TTWO NR $11.09 - - 45% 839 -- 11 - -- 17 -- -- -- 11 -- 9.5% THQ Interactive THQI NR $5.02 - - 19% 179 6 4 - 34 15 -- -- -- 17 -- 5.8% weighted average 19% 8 7 15 12 13 0.5 7 11 -36 9.5% mean 22% 8 6 19 13 17 0.8 10 13 -85 8.6% Advertising & Related Services Google GOOG Buy $540.33 635 17 75% 150,336 14 11 20 24 20 20 1.0 23 20 18 5.1% Yahoo! YHOO Neutral $15.69 18 12 29% 10,194 6 5 9 26 24 15 1.6 21 20 5 5.1% IAC / InterActiveCorp IACI Buy $18.98 24 29 21% 768 5 4 19 60 24 47 0.5 9 18 (10) 5.6% WebMD WBMD NR $35.60 - - 45% 1,654 19 15 - 58 44 -- -- 41 34 -- 2.9% ValueClick VCLK Neutral $9.84 13 28 42% 1,474 11 9 6 16 17 12 1.4 6 9 (14) 10.7% comScore SCOR NR $15.39 - - 19% 367 -- -- - 124 57 -- -- -- -- -- -- Marchex MCHX NR $4.52 - - -24% 132 12 12 - 53 43 -- -- -- -- -- -- weighted average 79% 15 12 27 22 18 0.9 26 21 15 4.8% mean 48% 15 12 47 31 24 1.1 26 23 0 5.4% eCommerce Amazon.com AMZN Buy $117.10 140 20 131% 48,347 26 19 29 61 41 38 1.1 23 16 30 6.3% eBay EBAY Buy $22.55 30 31 61% 24,372 8 7 9 15 13 11 1.2 12 10 9 9.5% Digital River DRIV NR $24.75 - - -10% 458 4 5 - 14 17 -- -- 18 18 -- 5.7% Mercado Libre MELI NR $38.36 - - 132% 1,645 31 21 - 59 42 -- -- 69 44 -- 2.3% GSI Commerce GSIC Buy $18.37 26 39 78% 975 10 7 17 -- 105 -- -- -- 19 21 5.3% Drugstore.com DSCM NR $2.70 - - 116% 234 45 16 - -- 540 -- -- -- -- -- -- weighted average 107% 20 15 45 35 27 1.1 20 15 22 7.1% mean 85% 23 15 44 105 25 1.1 30 21 20 5.8% Online Entertainment Netflix NFLX Neutral $54.16 50 -8 80% 3,103 13 11 21 28 26 17 1.5 20 14 14 7.0% Blockbuster BBI NR $0.88 - - -35% 994 4 4 - -- 9 -- -- weighted average 52% 11 9 22 21 13 1.2 15 11 10 5.3% mean 22% 8 7 28 17 17 1.5 20 14 14 7.0% (1) Firm Value equal to Equity Value plus straight and convertible debt, straight and convertible preferred stock, and minority interest less cash and cash equivalents, marketable securities, and equity in unconsolidated affiliates. Yahoo! Firm Value adju Valuation metrics of non-covered companies are based on FirstCall mean estimates (3) ERTS 2009E = Fiscal year ending 05/2010; 2010E = Fiscal Year ending 05/2011 Source: UBS, FirstCall and FactSet 47
    • Required Disclosures This 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. 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 is not a reliable indicator of future results. Additional information will be made available upon request. UBS Investment Research: Global Equity Rating Allocations 1 2 UBS 12-Month Rating Rating Category Coverage IB Services Buy Buy 44% 38% Neutral Hold/Neutral 39% 36% Sell Sell 17% 25% 3 4 UBS Short-Term Rating Rating Category Coverage IB Services Buy Buy less than 1% 33% Sell Sell less than 1% 33% 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 within the 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 provided within the past 12 months. Source: UBS. Rating allocations are as of 30 June 2009. 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. 48
    • Required Disclosures (Continued) KEY DEFINITIONS Forecast Stock Return (FSR) is defined as expected percentage price appreciation plus gross dividend yield over the next 12 months. Market Return Assumption (MRA) is defined as the one-year local market interest rate plus 5% (a proxy for, and not a forecast of, the equity risk premium). Under Review (UR) Stocks may be flagged as UR by the analyst, indicating that the stock's price target and/or rating are subject 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 any change in the fundamental view or investment case. EXCEPTIONS AND SPECIAL CASES UK 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 Review Committee (IRC). Factors considered by the IRC include the stock's volatility and the credit spread of the respective company's debt. 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 not registered/qualified as research analysts with NASD and NYSE and therefore are not subject to the restrictions contained in the NASD and NYSE rules on communications with a subject company, public appearances, and trading securities held by a research analyst account. The name of each affiliate and analyst employed by that affiliate contributing to this report, if any, follows. UBS Securities LLC: Brian Pitz; Brian Fitzgerald; Kaizad Gotla. Unless otherwise indicated, please refer to the Valuation and Risk sections within the body of this report. Analyst Certification Each research analyst primarily responsible for the content of this research report, in whole or in part, certifies that with respect to security or issuer that the analyst covered in this report: (1) all of the views expressed accurately reflect his or her personal views about those securities or issuers; and (2) no part of his or her compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed by that research analyst in the research report. 49
    • Company disclosures Company Name Reuters 12-mo rating Short-term rating Price Price date 4, 6a, 6c, 16 Activision Blizzard Inc. ATVI.O Buy N/A US$11.77 26 Aug 2009 4, 6a, 6b, 6c, 7, 16 Amazon.com Inc AMZN.O Buy N/A US$84.00 26 Aug 2009 5, 16, 20 eBay EBAY.O Neutral (CBE) N/A US$22.27 26 Aug 2009 16 Electronic Arts Inc. ERTS.O Buy N/A US$19.10 26 Aug 2009 5, 6b, 6c, 7, 16 Google Inc. GOOG.O Buy N/A US$468.00 26 Aug 2009 2, 4, 5, 16 GSI Commerce Inc GSIC.O Buy N/A US$18.03 26 Aug 2009 6c, 7, 16 IAC/InterActive Corp IACI.O Buy N/A US$19.02 26 Aug 2009 16, 20 Netflix Inc NFLX.O Neutral (CBE) N/A US$43.97 26 Aug 2009 5, 16 ValueClick, Inc. VCLK.O Neutral N/A US$10.76 26 Aug 2009 4, 5, 6a, 16, 20 Yahoo Inc. YHOO.O Neutral (CBE) N/A US$14.93 26 Aug 2009 Source: 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 pricing date 2. UBS AG, its affiliates or subsidiaries has acted as manager/co-manager in the underwriting or placement of securities of this company/entity or one of its affiliates within the past 12 months. 4. 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. 6a. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and investment banking 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- investment banking securities-related services are being, or have been, provided. 6c. 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. 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). 50
    • Additional disclosures For a complete set of disclosure statements associated with the companies discussed in this report, including information on valuation and risk, please contact: UBS Securities LLC 1285 Avenue of Americas New York, NY 10019, USA Attention: Publishing Administration 51
    • Global Disclaimer This 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 is referred 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 or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances or otherwise constitutes a personal recommendation. It is published solely for information purposes, 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. No representation or warranty, either express or implied, is provided in relation to the accuracy, completeness or reliability of the information contained herein, except with respect to information concerning UBS AG, its subsidiaries and affiliates, nor is it intended to be a complete statement or summary of the securities, markets or developments referred to in the report. UBS does not undertake that investors will obtain profits, nor will it share with investors any investment profits nor accept any liability for any investment losses. Investments involve risks and investors should exercise prudence in making their investment decisions. The report should not be regarded by recipients as a substitute for the exercise of their own judgement. Any opinions expressed in this report are subject to change without notice and may differ or be contrary to opinions expressed by other business areas or groups of UBS as a result of using different assumptions and criteria. Research will initiate, update and cease coverage solely at the discretion of UBS Investment Bank Research Management. The analysis contained herein is based on numerous assumptions. Different assumptions could result in materially different results. The analyst(s) responsible for the preparation of this report may interact with trading desk personnel, sales personnel and other constituencies for the purpose of gathering, synthesizing and interpreting market information. UBS is under no obligation to update or keep current the information contained herein. UBS relies on information barriers to control the flow of information contained in one or more areas within UBS, into other areas, units, groups or affiliates of UBS. The compensation of the analyst who prepared this report is determined exclusively by research management and senior management (not including investment banking). Analyst compensation is not based on investment banking revenues, however, compensation may relate to the revenues of UBS Investment Bank as a whole, of which investment banking, sales and trading are a part. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. Options, derivative products and futures are not suitable for all investors, and trading in these instruments is considered risky. Mortgage and asset-backed securities may involve a high degree of risk and may be highly volatile in response to fluctuations in interest rates and other market conditions. Past performance is not necessarily indicative of future results. Foreign currency rates of exchange may adversely affect the value, price or income of any security or related instrument mentioned in this report. For investment advice, trade execution or other enquiries, clients should contact their local sales representative. Neither UBS nor any of its affiliates, nor any of UBS' or any of its affiliates, directors, employees or agents accepts any liability for any loss or damage arising out of the use of all or any part of this report. For financial instruments admitted to trading on an EU regulated market: UBS AG, its affiliates or subsidiaries (excluding UBS Securities LLC and/or UBS Capital Markets LP) acts as a market maker or liquidity provider (in accordance with the interpretation of these terms in the UK) in the financial instruments of the issuer save that where the activity of liquidity provider is carried out in accordance with the definition given to it by the laws and regulations of any other EU jurisdictions, such information is separately disclosed in this research report. UBS and its affiliates and employees may have long or short positions, trade as principal and buy and sell in instruments or derivatives identified herein. Any prices stated in this report are for information purposes only and do not represent valuations for individual securities or other instruments. There is no representation that any transaction can or could have been effected at those prices and any prices do not necessarily reflect UBS's internal books and records or theoretical model-based valuations and may be based on certain assumptions. Different assumptions, by UBS or any other source, may yield substantially different results. 52
    • Global Disclaimer (cont'd) United Kingdom and the rest of Europe: Except as otherwise specified herein, this material is communicated by UBS Limited, a subsidiary of UBS AG, to persons who are eligible counterparties or professional clients and is only available to such persons. The information contained herein does not apply to, and should not be relied upon by, retail clients. UBS Limited is authorised and regulated by the Financial Services Authority (FSA). UBS research complies with all the FSA requirements and laws concerning disclosures and these are indicated on the research where applicable. France: Prepared by UBS Limited and distributed by UBS Limited and UBS Securities France SA. UBS Securities France S.A. is regulated by the Autorité des Marchés Financiers (AMF). Where an analyst of UBS Securities France S.A. has contributed to this report, the report is also deemed to have been prepared by UBS Securities France S.A. Germany: Prepared by UBS Limited and distributed by UBS Limited and UBS Deutschland AG. UBS Deutschland AG is regulated by the Bundesanstalt fur Finanzdienstleistungsaufsicht (BaFin). Spain: Prepared by UBS Limited and distributed by UBS Limited and UBS Securities España SV, SA. UBS Securities España SV, SA is regulated by the Comisión Nacional del Mercado de Valores (CNMV). Turkey: Prepared by UBS Menkul Degerler AS on behalf of and distributed by UBS Limited. Russia: Prepared and distributed by UBS Securities CJSC. Switzerland: Distributed by UBS AG to persons who are institutional investors only. Italy: Prepared by UBS Limited and distributed by UBS Limited and UBS Italia Sim S.p.A.. UBS Italia Sim S.p.A. is regulated by the Bank of Italy and by the Commissione Nazionale per le Società e la Borsa (CONSOB). Where an analyst of UBS Italia Sim S.p.A. has contributed to this report, the report is also deemed to have been prepared by UBS Italia Sim S.p.A.. South Africa: UBS South Africa (Pty) Limited (Registration No. 1995/011140/07) is a member of the JSE Limited, the South African Futures Exchange and the Bond Exchange of South Africa. UBS South Africa (Pty) Limited is an authorised Financial Services Provider. Details of its postal and physical address and a list of its directors are available on request or may be accessed at http:www.ubs.co.za. United States: Distributed to US persons by either UBS Securities LLC or by UBS Financial Services Inc., subsidiaries of UBS AG; or by a group, subsidiary or affiliate of UBS AG that is not registered as a US broker-dealer (a 'non-US affiliate'), to major US institutional investors only. UBS Securities LLC or UBS Financial Services Inc. accepts responsibility for the content of a report prepared by another non-US affiliate when distributed to US persons by UBS Securities LLC or UBS Financial Services Inc. All transactions by a US person in the securities mentioned in this report must be effected through UBS Securities LLC or UBS Financial Services Inc., and not through a non-US affiliate. Canada: Distributed by UBS Securities Canada Inc., a subsidiary of UBS AG and a member of the principal Canadian stock exchanges & CIPF. A statement of its financial condition and a list of its directors and senior officers will be provided upon request. Hong Kong: Distributed by UBS Securities Asia Limited. Singapore: Distributed by UBS Securities Pte. Ltd or UBS AG, Singapore Branch. Japan: Distributed by UBS Securities Japan Ltd to institutional investors only. Where this report has been prepared by UBS Securities Japan Ltd, UBS Securities Japan Ltd is the author, publisher and distributor of the report. Australia: Distributed by UBS AG (Holder of Australian Financial Services License No. 231087) and UBS Securities Australia Ltd (Holder of Australian Financial Services License No. 231098) only to 'Wholesale' clients as defined by s761G of the Corporations Act 2001. New Zealand: Distributed by UBS New Zealand Ltd. An investment adviser and investment broker disclosure statement is available on request and free of charge by writing to PO Box 45, Auckland, NZ. China: Distributed by UBS Securities Co. Limited. Dubai: The research prepared and distributed by UBS AG Dubai Branch, is intended for Professional Clients only and is not for further distribution within the United Arab Emirates. The disclosures contained in research reports produced by UBS Limited shall be governed by and construed in accordance with English law. UBS specifically prohibits the redistribution of this material in whole or in part without the written permission of UBS and UBS accepts no liability whatsoever for the actions of third parties in this respect. © UBS 2009. The key symbol and UBS are among the registered and unregistered trademarks of UBS. All rights reserved. 53