SOFTWARE & SERVICES                                                                                                       ...
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THE WEB 2.0 UNIVERSE
 Ninety-one public Web 2.0 companies: Our W eb 2.0 universe contains 91 companies, with a c...
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C A P I T A L M A R K E T S A C T I V I T Y (M & A A N D F I N A N C I N G )
Total capital raised in August (so f...
(US$m)




                                                                                       0.0
                    ...
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 Ad Netw ork remains the most active sector in dollars raised: Following recent trends, Ad Networks as a sector s...
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C A P I T A L M A R K E T S A C T I V I T Y (P R I C E P E R F O R M A N C E )
 Web 2.0 index continue to outpac...
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 A strong price performance week: Most companies in our universe had strong stock price performances over the pas...
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INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS)
K ey Developments
C ompany                        ...
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S oc ialwis e, Inc . (OTC B B : S C L W)     S ocia lwis e Inc. Appoints Mark Miller to the C ompany's         S ...
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
09 08 25 Web 2.0 Weekly
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Transcript of "09 08 25 Web 2.0 Weekly"

  1. 1. SOFTWARE & SERVICES 25 AUGUST 2009 WEB 2.O WEEKLY DAVID SHORE, CFA, MBA 416.860.6784 david.shore@researchcapital.com CONTENT DISTRIBUTIO N ACROSS PLATFO RMS BECOMING KEY MY S P AC E B U Y S L E AD IN G F AC E BO O K DE V EL O P E R; F AC E B OO K CR E AT E S T WIT T E R U P DAT E C A PA BIL I T Y MySpace finally confirmed last week the much-rumoured acquisition of leading Facebook developer iLike. Terms of the deal are believed to be $13.5 million upfront and $6.5 million in retention payouts over time. W ith this acquisition, th MySpace now owns the 14 largest (according to www.appdata.com) Facebook developer – based on the number of monthly active users. Facebook itself announced that Facebook Page owners would be able to automatically update their Twitter status with their Facebook updates. Twitter users have long been able to update their Facebook status with their Tweets. Clearly, the large social network players see the value in allowing their users to cross-pollinate content across the different platforms. A much better August than 2008: Total capital raised in August (so far) is $148.1 million on 17 transactions. The average for August, month-to-date so far, is $8.7 million. This is well ahead of the mere $82.3 million (eight deals, $10.3 million average) raised in August 2008. However, this is down sequentially from June and July, with one week to go in the month. Total capital raised in July on 34 transactions was $190.2 million, averaging $5.6 million, and June was $204.1 million (averaging $5.0 million). Financing Activity Last Twelve Months 400.0 18.0 16.2 16.0 350.0 14.6 14.0 300.0 12.0 250.0 10.3 9.7 10.0 (US$m) (US$m) 8.7 200.0 8.0 7.0 7.0 7.1 6.5 6.6 150.0 6.2 5.6 6.0 5.0 100.0 4.0 50.0 2.0 0.0 0.0 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 *May-09 includes $200m FB investment Total Average A strong price performance week: Most companies in our universe had strong stock price performances over the past week (for stocks with prices greater than $1) (Figure 6), with 37 companies showing positive returns on the week – reversing the prior weeks decline. Frogster (XTRA:FRG) led the group with a 19.6% return, while Ynk Korea (KOSE:A023770) had the worst return, dropping 14.6% in the week. This report has been created b y Anal ysts that are emplo yed b y Research Capital Corporation, a Canadian Investment Dealer. For further disclosures, please see last page of this report. w w w . r e s e a rc h c a p i t a l . c o m T o ro n t o 4 1 6 . 8 6 0 . 7 6 0 0 Montreal 514.399.1500 Vancouver 604.662.1800 Calgary 403.265.7400 Regina 306.566.7550
  2. 2. Page 2 THE WEB 2.0 UNIVERSE Ninety-one public Web 2.0 companies: Our W eb 2.0 universe contains 91 companies, with a combined market cap of ~$65 billion (Figure 1). The median market cap for the group is ~$65 million, with average trailing revenue of ~$160 million (median $57 million). The companies are also generally profitable, with a median EBITDA margin of 13.1%. On a valuation basis, the overall average is 5.0x trailing revenue (median 1.9x) and 11.9x trailing EBITDA (median 9.4x). Eighteen of the companies have more than 500 employees. C omparable C ompany Analys is > Web 2.0 Trading C urrent US D Market US D L TM Total US D L TM Total E B ITDA TE V/L TM TE V/L TM C ompany Name L TM as of Ticker E xc hange C urrency HQ P rice C ap ($m) R ev ($m) E B ITDA ($m) % R evenue E B ITDA E mployees Accelerize New Media , Inc. 6/30/2009 AC LZ OT C B B US D United S ta tes 0. 57 15. 8 4. 4 (3.7) -83. 3% 4. 7x - 11 Actoz S oft C o. , Ltd. 3/31/2009 A052790 K OS E KR W S outh K orea 19,150 133. 1 93. 1 20. 2 21. 7% 1. 1x 5. 1x NA AQ Interactive, Inc. 3/31/2009 3838 TS E JPY J a pan 50,400 29. 0 65. 4 4.1 6.3% - - NA As s ociated Media Holdings Inc. 6/30/2007 AS MH OT C P K US D United S ta tes 0. 01 0.6 0. 1 (2.3) NM 15.6x - 3 B igs tring C orp. 6/30/2009 BS GC OT C B B US D United S ta tes 0. 02 1.0 0. 1 (1.5) NM 32.5x - 4 B eta wave C orporation 6/30/2009 B W AV OT C B B US D United S ta tes 0. 08 2.3 9. 4 (12. 6) NM - - 45 B eyond C ommerce, Inc. 6/30/2009 B Y OC OT C B B US D United S ta tes 0. 18 8.3 11. 7 (12. 8) NM 1. 2x - 43 B right T hings plc 9/30/2008 AIM: B G T AIM GBP United K ingdom 0. 01 4.0 0. 3 (1.9) NM 14.6x - 9 B roa dW ebAs ia Inc. 9/30/2008 BWBA OT C P K US D United S ta tes 0. 23 19. 5 0. 0 (4.6) NM - - 46 C DC C orp. 6/30/2009 C HIN. A Na s daqG S US D Hong K ong 2. 63 278. 7 361.6 25. 1 6.9% 0. 8x 10. 9x 2, 227 C hangyou. com L imited 6/30/2009 C Y OU Na s daqG S US D C hina 38. 08 2,094. 4 241.2 147.2 61. 0% 7. 5x 12. 4x 628 C hina G a teway C orporation 9/30/2008 CGWY OT C P K US D United S ta tes 0. 02 0.3 6. 7 (6.6) -98. 9% 0. 0x - 37 C hines e G amer Interna tiona l 3/31/2009 G T S M: 3083 GTS M TWD T aiwa n 394 1,009. 5 56. 3 31. 6 56. 0% 16.7x 29. 9x NA C LIC K E R Inc. 5/31/2009 C LK Z OT C B B US D United S ta tes 0. 01 0.4 2. 5 (1.2) -45. 8% 0. 2x - 22 C ornerW orld C orpora tion 4/30/2009 CWR L OT C B B US D United S ta tes 0. 06 5.3 3. 9 NM NM 4. 0x - NA C yberplex Inc. 6/30/2009 T S X :C X TS X C AD C anada 2 97. 1 91. 0 9.8 10. 8% 0. 8x 7. 8x NA DADA S pA 6/30/2009 C M: DA CM E UR Italy 6. 38 148. 1 236.5 31. 1 13. 1% 0. 8x 6. 3x NA DXN Holdings B hd 5/31/2009 DX N K LS E MY R Ma la ys ia 0. 53 34. 8 76. 5 11. 0 14. 4% 0. 6x 4. 5x NA Dibz International, Inc. NA DIB Z OT C P K US D United S ta tes 0. 00 0.0 NA NM NM - - NA DigitalP os t Interactive, Inc. 6/30/2009 DG LP OT C B B US D United S ta tes 0. 06 4.6 1. 0 (1.4) NM 6. 7x - 7 DigitalT own, Inc. 5/31/2009 DG T W OT C B B US D United S ta tes 1. 40 38. 3 NM (2.5) NM - - 3 Dolphin Digital Media , Inc. 3/31/2009 DP DM OT C B B US D United S ta tes 0. 39 20. 9 0. 8 (3.7) NM 28.3x - NA E olith C o. Ltd. 12/31/2008 A041060 K OS E KR W S outh K orea 860 50. 2 14. 8 (3.5) -23. 6% 3. 5x - NA E xtens ions , Inc. 3/31/2009 E XT I OT C P K US D United S ta tes 0. 08 3.6 NM NM NM - - 2 F luid Mus ic C a nada , Inc. 6/30/2009 T S X :F MN TS X C AD United S ta tes 1. 32 64. 5 5. 3 (5.1) -95. 2% 10.6x - NA F rogs ter Interactive P ictures AG 12/31/2008 FRG XT R A E UR G ermany 16. 75 60. 6 3. 3 (6.3) NM 17.9x - NA G ama nia Digita l E ntertainment C o., Ltd. 6/30/2009 6180 GTS M TWD T aiwa n 50. 30 233. 0 139.1 24. 6 17. 7% 1. 5x 8. 5x NA G ameOn C o Ltd. 6/30/2009 3812 TS E JPY J a pan 104,700 107. 0 77. 5 19. 0 24. 5% 0. 5x 1. 9x NA G eoS entric O yj 3/31/2009 G E O 1V HL S E E UR F inland 0. 05 64. 3 6. 1 (15. 7) NM 9. 9x - 108 G iant Interactive G roup, Inc. 6/30/2009 GA NY S E US D C hina 8 1,754. 9 198.5 124.1 62. 5% - - 1, 570 G iga Media Ltd. 3/31/2009 G IG M Na s daqG S US D T aiwa n 4. 73 257. 9 183.6 NM NM 1. 0x - 751 G ravity C o., Ltd 3/31/2009 GR VY Na s daqG M US D S outh K orea 2. 39 66. 4 46. 1 12. 7 27. 5% - - 469 G ree, Inc. 6/30/2009 T S E : 3632 TS E JPY J a pan 8,540 2,021. 1 147.5 88. 6 60. 1% 12.9x 21. 5x NA G ungHo O nline E ntertainment, Inc. 3/31/2009 3765 OS E JPY J a pan 243,000 294. 3 109.0 19. 6 18. 0% 2. 4x 13. 6x NA HanbitS oft, Inc. 3/31/2009 A047080 K OS E KR W S outh K orea 3,795 67. 0 55. 6 (14. 9) -26. 8% 0. 9x - NA IAC /InterActiveC orp. 6/30/2009 IAC I Na s daqG S US D United S ta tes 19. 04 2,520. 9 1, 392. 3 52. 7 3.8% 0. 6x 14. 8x 3, 200 IAS E nergy, Inc. 1/31/2009 IAS A. E OT C B B US D C anada 0. 15 10. 5 0. 0 (0.8) NM - - NA is eemedia Inc. 3/31/2009 IE E T S XV C AD C anada 0. 05 2.4 1. 6 (5.1) NM 0. 9x - NA J umbuck E nterta inment P ty Ltd. 12/31/2008 AS X :J MB AS X AUD Aus tralia 0. 38 15. 4 15. 0 5.6 37. 2% 0. 7x 1. 8x 72 K AB Dis tribution Inc. 6/30/2009 T S X :K AB TS X C AD C anada 1 83. 4 68. 8 4.0 5.8% - - NA K ings oft C o. Ltd. 3/31/2009 3888 S E HK HK D C hina 9 1,214. 6 129.1 52. 0 40. 3% 9. 4x 23. 4x 2, 271 Lingo Media C orporation 3/31/2009 T S X V :LM T S XV C AD C anada 1. 12 13. 0 1. 0 (1.6) NM 12.4x - NA LiveW orld Inc. 6/30/2009 LVW D OT C P K US D United S ta tes 0. 05 1.5 10. 6 (0.1) -1.2% 0. 0x - NA LookS mart, Ltd. 6/30/2009 L OO K Na s daqG M US D United S ta tes 1. 28 21. 9 56. 8 (4.4) -7.8% - - 90 Magnitude Information S ys tems Inc. 3/31/2009 MAG Y OT C B B US D United S ta tes 0. 01 3.0 0. 1 (3.1) NM - - 14 Mixi, Inc. 6/30/2009 2121 TS E JPY J a pan 614000. 00 1,000. 3 129.3 43. 7 33. 8% 6. 9x 20. 3x NA Modern T imes G roup Mtg AB 6/30/2009 MT G B OM SEK S weden 310. 00 2,901. 8 1, 950. 0 299.6 15. 4% 1. 8x 11. 6x 2, 969 MO K O .mobi Limited 12/31/2008 MK B AS X AUD Aus tralia 0. 07 5.2 1. 2 (2.5) NM 3. 3x - NA Myriad G roup AG 12/31/2008 MY R N SWX C HF S witzerland 4. 50 90. 4 40. 0 0.8 1.9% 2. 5x - 405 NE O W IZ G ames C orpora tion 12/31/2008 A095660 K OS E KR W S outh K orea 29650. 00 503. 0 199.5 53. 6 26. 8% 2. 5x 9. 2x NA NetDragon W ebS oft, Inc. 3/31/2009 777 S E HK HK D C hina 7 452. 8 87. 0 34. 4 39. 5% 3. 8x 9. 5x 2, 426 Neteas e. com Inc. 6/30/2009 NT E S Na s daqG S US D C hina 42. 28 5,472. 2 472.2 297.3 63. 0% - - 3, 109 NeuLion Incorporated 6/30/2009 T S X :NLN TS X C AD C anada 1. 10 116. 9 21. 5 (13. 0) -60. 3% 5. 0x - 237 NeXplore C orporation 6/30/2008 NX P C OT C P K US D United S ta tes 1 33. 5 0. 7 (6.2) NM - - NA Ngi G roup Inc. 6/30/2009 2497 TS E JPY J a pan 32400. 00 42. 4 87. 9 6.5 7.4% - - NA Northgate T echnologies L imited 6/30/2009 590057 BSE INR India 39. 40 28. 3 81. 9 (40. 9) -50. 0% 0. 3x - NA O pen T ext C orp. 6/30/2009 OT E X Na s daqG S US D C anada 35. 95 2,018. 6 785.7 205.1 26. 1% 2. 6x 10. 0x NA O penwave S ys tems Inc. 6/30/2009 OP W V Na s daqG S US D United S ta tes 2. 86 238. 2 191.7 5.3 2.8% 0. 7x 24. 4x NA P erfect W orld C o. , Ltd. 6/30/2009 PWRD Na s daqG S US D C hina 39. 01 1,918. 6 255.6 142.1 55. 6% 0. 5x 1. 0x 2, 096 P NI Digital Media Inc. 6/30/2009 T S X V :P N T S XV C AD C anada 1. 67 53. 2 21. 3 2.3 11. 0% 2. 4x 21. 9x NA Q uepa s a C orp. 6/30/2009 QP S A OT C B B US D United S ta tes 2 19. 1 0. 2 (10. 6) NM - - 74 O AO R B C Information S ys tems 12/31/2007 R BCI R TS US D R us s ia 1. 05 145. 7 150.9 19. 7 13. 1% 0. 0x 0. 2x NA S handa Interactive E nterta inment Ltd. 3/31/2009 S NDA Na s daqG S US D C hina 48. 75 3,255. 0 570.3 261.0 45. 8% - - 3, 124 S hutterfly, Inc. 6/30/2009 S FLY Na s daqG S US D United S ta tes 15. 15 385. 7 218.6 27. 3 12. 5% 1. 5x 11. 8x 514 S K C ommunications C o., Ltd. 12/31/2008 A066270 K OS E KR W S outh K orea 9310. 00 314. 4 185.5 12. 1 6.5% 1. 7x 26. 1x NA S NAP Interactive, Inc. 6/30/2009 S TVI OT C B B US D United S ta tes 0 4.3 3. 5 0.9 27. 0% 0. 8x 2. 9x 11 S NM G loba l Holdings 9/30/2008 S NMN OT C P K US D United S ta tes 0. 00 0.0 2. 0 (0.7) -34. 8% 1. 1x - 33 S ocial Media V enures , Inc. 12/31/2008 S MV I OT C P K US D United S ta tes 0 0.0 0. 1 (0.1) -60. 6% 4. 5x - NA S ocialwis e, Inc. 6/30/2009 S C LW OT C B B US D United S ta tes 0. 60 26. 6 0. 0 (5.6) NM - - NA S ohu. com Inc. 6/30/2009 S O HU Na s daqG S US D C hina 64. 52 2,473. 3 485.1 209.6 43. 2% 4. 1x 9. 4x 3, 197 S park Networks , Inc. 6/30/2009 L OV AME X US D United S ta tes 2 44. 2 50. 5 10. 8 21. 3% 0. 8x 3. 9x 183 S pectrumDNA, Inc. 6/30/2009 S P XA OT C B B US D United S ta tes 0 11. 0 0. 1 (2.5) NM - - 7 T encent Holdings Ltd. 6/30/2009 700 S E HK HK D C hina 120 28, 087.7 1, 391. 1 685.6 49. 3% 22.1x 44. 9x 6, 194 T he P arent C ompany 8/2/2008 K IDS . Q OT C P K US D United S ta tes 0. 02 0.5 112.0 (13. 5) -12. 0% 0. 2x - 347 T he9 Limited 12/31/2008 NC T Y Na s daqG S US D C hina 8. 44 215. 3 250.5 85. 4 34. 1% - - 1, 626 T heS treet. com, Inc. 3/31/2009 TS CM Na s daqG M US D United S ta tes 2. 31 70. 7 67. 0 1.9 2.9% 0. 1x 3. 2x 310 T ota l S port O nline AS 3/31/2006 T OS O O T C NO NO K Norway 0. 03 0.1 2. 2 (1.1) -50. 6% 4. 6x - 16 T ree.C om, Inc. 6/30/2009 TR E E Na s daqG M US D United S ta tes 8. 61 93. 0 216.6 (0.7) -0.3% 0. 5x - 700 Unis erve C ommunica tions C orp. 2/28/2009 T S X V :US S T S XV C AD C anada 0. 05 1.0 24. 3 0.1 0.2% 0. 2x - NA United O nline Inc. 6/30/2009 UNT D Na s daqG S US D United S ta tes 7. 40 620. 4 949.8 203.2 21. 4% 0. 9x 4. 4x 1, 469 UOMO Media, Inc 1/31/2009 UO MO OT C B B US D C anada 0 12. 9 0. 6 (0.5) -78. 2% 20.8x - NA V alueC lick Inc. 6/30/2009 V C LK Na s daqG S US D United S ta tes 11 937. 8 563.6 99. 0 17. 6% 1. 4x 8. 1x 1, 189 V OIS , Inc. 3/31/2009 V O IS OT C B B US D United S ta tes 0 5.0 0. 0 (1.1) NM - - 4 W ebzen Inc. 6/30/2009 W ZE N Na s daqG M US D S outh K orea 2. 82 33. 4 22. 3 2.2 9.9% - - NA W izzard S oftwa re C orporation 6/30/2009 W ZE AME X US D United S ta tes 0. 45 22. 7 5. 3 (4.5) -84. 9% 4. 5x - 110 W orlds . com Inc. 3/31/2009 W DDD OT C B B US D United S ta tes 0. 11 5.7 0. 0 (0.8) NM - - 1 W oozyF ly, Inc. 6/30/2009 W ZY F OT C B B US D United S ta tes 0. 15 2.6 NM NM NM - - NA W ynds torm C orpora tion NA W Y ND OT C P K US D United S ta tes 0. 10 1.8 NA NM NM - - NA XING AG 6/30/2009 O 1B C XT R A E UR G ermany 27. 49 207. 5 57. 5 16. 6 28. 8% 2. 7x 9. 4x 174 Y eda ngO nline C orp. 12/31/2007 A052770 K OS E KR W S outh K orea 8,550 103. 3 55. 2 11. 9 21. 6% 2. 0x 9. 4x NA Y nk K orea Inc. 3/31/2009 A023770 K OS E KR W S outh K orea 4,075 17. 5 10. 6 (0.8) -7.6% - - NA High 28, 087.7 1,950. 0 685. 6 63. 0% 32.5x 44. 9x 6, 194 Low 0.0 0. 0 -40.9 -98. 9% 0. 0x 0. 2x 1 Average 720.6 160.4 38.1 5.0% 5.0x 11.9x 860 Median 65. 5 56.8 2. 3 13. 1% 1. 9x 9. 4x 376 Figure 1. Web 2.0 Universe Summary Source. Capital IQ
  3. 3. Page 3 C A P I T A L M A R K E T S A C T I V I T Y (M & A A N D F I N A N C I N G ) Total capital raised in August (so far) is $148.1 million: Online gaming company Turbine, Inc. raised $50 million in August – the largest transaction in August. Mint, a vertical community site (offering web-based solutions for financial management), was a distant second raising $14.1 million. Total capital raised in July on 34 transactions was $190.2 million, averaging $5.6 million, and June was $204.1 million (averaging $5.0 million). The average for August, month-to- date so far, is $8.7 million. Financing Activity Last Twelve Months 400.0 18.0 16.2 16.0 350.0 14.6 14.0 300.0 12.0 250.0 10.3 9.7 10.0 (US$m) (US$m) 8.7 200.0 8.0 7.0 7.0 7.1 6.5 6.6 150.0 6.2 5.6 6.0 5.0 100.0 4.0 50.0 2.0 0.0 0.0 Aug-08 Sep-08 Oct-08 Nov-08 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 May-09 Jun-09 Jul-09 Aug-09 *May-09 includes $200m FB investment Total Average Figure 2. Financings, Last Twelve Months Source. Company reports
  4. 4. (US$m) 0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0 90.0 People Media Super Rewards Turbine Friends Reunited Source. Company reports AdLink Internet Media Pandora Media iLike xoopit MediaMath Edo Interactive Sugar Inc. Kontera Ltd. Ning Tumri Mint Boku RichRelevance Figure 3. Capital Market Activity, Last Three Months QuickPlay Media Grab Networks Wimba Traffiq AdChina Causes Goojet SAS Bill.com Outspark ConnectEdu Acquia, Inc beeTV AdMeld Inc. SBNation InnoCentive blueKiwi Software SA Nokeena Metaversum iMemories Zoosk Boxee Bubble Motion Invodo Sense Networks Polyvore Gather Taomee Jambool MojoPages Animoto Quikr India Pvt. Ltd. GameGround StyleCaster Nexage OPEN Sports network RingRevenue TweetDeck OurStage Crowdcast Z2Live KODA YuMe Scoreloop eRepublik Busca ClickFuel ProtonMedia Newser LLC Akademos Inigral AdEx Media Roblox million. For additional details on financings, see Figures 23 and 24 (at end of note). Financing & M/A Summary - Last Three Months GROU.PS Yapta OneTXT iLoop Mobile my6sense I Love Rewards Comunitae Lat49 Aloqa Cliqset ChessCube Tributes.com CoTweet Cognitive Match Limited TodaCell Glubble Cellufun Picaboo LiquidPlanner AdWhirl Clikthrough People Capital BookFresh MashLogic iSyndica Masher Media Jaxtr Gigpark Jul-09 Jun-09 Aug-09 Page 4 for August to $148.1 million. In addition, Friends Reunited was acquired for $42 million and MySpace bought iLike for $20 raising $12.5 million. Of the total 17 transactions thus far, 12 were below $10 million each, bringing the total capital raised transaction so far in August. Mint was a distant second securing a $14.1 million round. Closely behind was RichRelevance Turbine, Inc. $50 million raise largest in August: On the capital raise front, Turbine, Inc. raised $50 million, the largest
  5. 5. Page 5 Ad Netw ork remains the most active sector in dollars raised: Following recent trends, Ad Networks as a sector saw the most activity in dollars raised ($126.4 million) and number of transactions (13), followed by the Social Network sector also with 13 transactions, raising $105.2 million (Figure 4). Capital Market Activity by Sector - Last Three Months 140.0 120.0 100.0 80.0 (US$m) 126.4 60.0 105.2 40.0 80.0 69.9 64.2 64.0 58.0 20.0 32.6 24.3 24.0 22.3 19.3 19.1 13.0 12.5 12.0 10.7 7.3 5.0 5.0 4.1 0.0 3.2 3.0 1.0 1.0 0.5 0.5 0.0 Comment/Reputation Mobile Payment Communities Online Dating Gaming Online Calendar Mobile Enterprise Media Microblog Online Lending Collaboration Online Learning Publishing Music Infrastructure Blog Search Classified Mobile Ad SMS/Voice Social Networks Virtual Goods Virtual World Video Crowdsourced Ad Network Analytics Vertical Content # companies 13 13 1 5 7 10 3 5 5 2 7 3 4 1 1 2 2 1 1 1 1 1 2 1 1 1 1 0 Figure 4. Capital Market Activity, by Sector, Last Three Months Source. Company reports
  6. 6. Page 6 C A P I T A L M A R K E T S A C T I V I T Y (P R I C E P E R F O R M A N C E ) Web 2.0 index continue to outpace NASDAQ recovery: Our W eb 2.0 index (market-cap weighted) essentially mirrored the performance of the NASDAQ composite index from mid-2008 until earlier this year. However, the index has recently had a much stronger recovery relative to the NASDAQ index (Figure 5). Web 2.0 Index Price Performance 140 120 100 80 60 40 20 0 8/25/2008 9/8/2008 9/22/2008 10/6/2008 10/20/2008 11/3/2008 11/17/2008 12/1/2008 12/15/2008 12/29/2008 1/12/2009 1/26/2009 2/9/2009 2/23/2009 3/9/2009 3/23/2009 4/6/2009 4/20/2009 5/4/2009 5/18/2009 6/1/2009 6/15/2009 6/29/2009 7/13/2009 7/27/2009 8/10/2009 8/24/2009 ^COMP - Share Pricing Index: Web 2.0 (Market Cap) Figure 5. Web 2.0 Price Performance Source. Capital IQ
  7. 7. Page 7 A strong price performance week: Most companies in our universe had strong stock price performances over the past week (for stocks with prices greater than $1) (Figure 6), with 37 companies showing positive returns on the week – reversing the prior weeks decline. Frogster (XTRA:FRG) led the group with a 19.6% return, while Ynk Korea (KOSE:A023770) had the worst return, dropping 14.6% in the week. 1 Week P rice P erformance Frogs ter Interactiv e Pictures A G 19.6% G ravity Co., Ltd 18.9% Northgate Technologies Limited 14.9% Lingo Media Corporation 12.0% NetDragon WebS of t, Inc. 12.0% Fluid Mus ic Canada , Inc. 10.0% Perfect World Co., Ltd. 7.9% G ree, Inc. 7.7% DigitalTow n, Inc. 7.7% S ohu.com Inc. 7.7% Modern Times G roup Mtg A B 7.6% V alueClick Inc. 7.5% S handa Interactive Entertainment Ltd. 7.4% G igaMedia Ltd. 7.3% Quepas a Corp. 7.1% LookS mart, Ltd. 6.7% My riad Group A G 5.6% Neteas e.com Inc. 5.1% Eolith Co. Ltd. 4.9% DA DA S pA 4.8% PNI Digital Media Inc. 4.4% Tencent Holdings Ltd. 4.3% Webz en Inc. 3.7% CDC Corp. 3.5% IA C/InterA ctiveCorp. 3.5% K ings of t Co. Ltd. 2.7% S hutterf ly , Inc. 2.7% TheS treet.com, Inc. 2.7% Openw ave S y s tems Inc. 2.1% Changy ou.com Limited 2.0% The9 Limited 1.9% Mix i, Inc. 1.7% G ameOn Co Ltd. 1.7% A Q Interactiv e, Inc. 1.6% S park Netw orks , Inc. 1.3% United Online Inc. 1.2% Giant Interactive G roup, Inc. 0.9% NeuLion Incorporated 0.0% XING A G 0.0% Ngi G roup Inc. -1.2% Cy berplex Inc. -3.0% Y edangOnline Corp. -3.6% Tree.Com, Inc. -3.7% Chines e Gamer International -4.4% S K Communications Co., Ltd. -5.5% Open Tex t Corp. -5.8% NEOWIZ Games Corporation -6.2% HanbitS of t, Inc. -8.0% A ctoz S of t Co., Ltd. -10.1% Gamania Digital Entertainment Co., -11.3% Y nk K orea Inc. -14.6% -20.0% -15.0% -10.0% -5.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Figure 6. 1-Week Price Performance Source. Capital IQ
  8. 8. Page 8 INDUSTRY NEWS (PARTNERSHIPS, FINANCIAL RESULTS, NEW PRODUCTS) K ey Developments C ompany Headline Notes United Online Inc. (Nas daqGS : UNTD) United O nline Inc. Announces E xecutive P romotions O n Augus t 14, 2009, F rederic A. R anda ll, J r. , who ha s s erved a s the E xecutive V ice P res ident, G enera l C ouns el and S ecreta ry of United O nline Inc. , wa s elected to the pos ition of E xecutive V ice P res ident and C hief S trategy Officer, a newly-created executive officer pos ition of the company, effective Augus t 15, 2009. In his new role, Mr. R a nda ll will focus on matters related to s trategic planning and a cquis itions . C harles B . Ammann, who ha s s erved as the compa ny's S enior V ice P res ident, Deputy G enera l C ouns el a nd As s is tant S ecretary, wa s promoted to the pos ition of E xecutive V ice P res ident, G enera l C ouns el a nd S ecreta ry of the compa ny, effective Augus t 15, 2009. S NM G lobal Holdings (OTC PK : S NMN) S NM G lobal S eeking Acquis itions It is learnt that, S NM G loba l Holdings continues its ques t to s ecure funding to pa y down debt a nd continue with the development of infras tructure a nd s eeking a cquis itions . T he compa ny is a ls o exploring expa ns ion into other indus tries tha t will complement as well as divers ify their Media –E ntertainment/S ports content development, delivery a nd dis tribution model. DigitalP os t Interac tive, Inc . Digita lP os t Interactive Inc. R eports E a rnings R es ults for Digita lP os t Interactive Inc. reported earnings res ults for the s econd quarter a nd s ix months ended J une 30, 2009. T ota l revenue for s econd- (OTC B B : DG L P ) the S econd Qua rter a nd S ix Months E nded J une 30, qua rter 2009 ros e more tha n 161% to $376, 400, from $144,200 in s econd-quarter 2008. T he increa s e was driven by more tha n 211% growth 2009 in s ubs criptions revenue, which was due to the compa ny's pa rtners hip with K iddie K andids , a nd more than 126% growth in profes s iona l s ervices revenue. C a s h us ed in opera tions improved s ignifica ntly to $2, 700 for s econd-qua rter 2009 a s compared to $460, 800 for the s a me period la s t yea r. T he improvement reflects the compa ny's ongoing effort to s trea mline opera tions while driving more revenue through the growth of recurring s ubs criptions a nd through the profes s iona l s ervices contracts that have been a warded. Net los s for s econd-quarter 2009 narrowed to $424,200 from a net los s of $1. 5 million in s econd-qua rter 2008. F or the firs t s ix months of 2009, net cas h us ed by operating activities declined to $64, 900 from $873,000 for the firs t s ix months of 2008. T ota l revenue was $687, 400 compared to $195, 500 in the precious yea r period. C DC C orp. (Nas daqG S : C HIN.A) C DC C orp. R eports Una udited C ons olidated E a rnings C DC C orp. reported una udited cons olida ted ea rnings res ults for the s econd quarter a nd s ix months ended J une 30, 2009. F or the quarter, R es ults for the S econd Q ua rter and S ix Months E nded the company reported net income a ttributa ble to controlling interes t was $3, 249,000 or $0. 03 ba s ic a nd diluted ea rnings per s ha re on J une 30, 2009 revenue of $81, 654, 000 compared to net los s attributable to controlling interes t of $9,996, 000 or $0.09 ba s ic and diluted los s per s hare on revenue of $111,040, 000 for the s a me period a yea r a go. Income from continuing opera tions was $3,409,000 or $0. 03 ba s ic a nd diluted earnings per s hare from continuing opera tions compa red to los s from continuing opera tions of $7, 450, 000 or $0. 07 bas ic a nd diluted los s per s ha re from continuing operations for the s a me period a year a go. Income before income ta xes was $4,662,000 compa red to los s before income ta xes of $6,978,000 for the s ame period a yea r ago. Adjus ted E B IT DA from continuing opera tions was $12, 477, 000 compared to $9, 973, 000 for the s a me period a year a go. Net ca s h provided by operating a ctivities wa s $11,168,000 and ca pital s pend in purcha s e of property, plant & equipment was $391,000 compared to net ca s h provided by opera ting a ctivities of $5,573,000 and ca pita l s pend in purcha s e Myriad G roup AG (S WX: MYR N) Myria d G roup AG S igns C ontra ct with T -Mobile C zech Myria d G roup AG announced that it ha s been s elected by T -Mobile C zech R epublic to provide the US S D platform for its cus tomer ca re R epublic to P rovide the US S D P latform s ervice. T he s olution exploits the s trengths of the Myriad S ervices P la tform to a llow the operator to offer US S D as a s imple trigger for s ubs criber s elf s ervice, s o helping to reduce cus tomer churn. T he s olution is a s elf-s ervice s ys tem tha t a llows cus tomers to quickly acces s s ervices and informa tion on their mobile hands et and cha nge their s ettings . T he s olution improves cus tomer s a tis fa ction, reducing the need for cus tomer s ervice reques ts a nd can be upgra ded to s upport a dva nced s elf s ervices us ing gra phical interfa ces in the future. F or T -Mobile the us e of US S D provides a n intuitive cha nnel which a llows a ny cus tomer to immediately s elf-provis ion cus tomer ca re. Gamania Digital E ntertainment C o., G a ma nia Digita l E nterta inment C o. Ltd. R eports Audited G ama nia Digita l E ntertainment C o. L td. reported a udited cons olida ted fina ncial res ults for the firs t s ix months ended J une 30, 2009. F or the L td. (GTS M: 6180) C ons olida ted F ina ncia l R es ults for the F irs t S ix Months qua rter, the compa ny reported cons olidated operating revenue of T W D 2, 671, 670, 000, opera ting income of T W D 384, 453, 000, net income of E nded J une 30, 2009 T W D 291, 943, 000 a nd earnings per s ha re (E P S ) of T W D 2. 00. B enefited from the product divers ification s tra tegy, the operating revenue s trongly increa s ed 42. 37% yea r-over-year for the firs t ha lf year 2009. T he operating revenue of the parent company a ls o performed quite well a nd grew 24.66% yea r-over-year due to the contribution from three flags hip titles . L ingo Media C orporation (TS XV: L M) Lingo Media C orporation, Annua l G enera l Meeting, Aug L ingo Media C orpora tion, Annual G eneral Meeting, Aug 18, 2009, a t 11: 00 E a s tern Da ylight. L ocation: W eirF oulds L LP , 130 K ing S treet 18, 2009 W es t, S uite 1500, T oronto, ON M5X 1J 5, Onta rio, C anada. Agenda : T o receive the audited financia l s tatements for the fis ca l year ended December 31, 2008 and the report of the Auditors thereon the compa ny; to elect the directors of the company; to appoint C ollins B a rrow T oronto L LP as auditors for the ens uing year a nd to a uthorize the directors to fix their remunera tion; to a pprove a n ordinary res olution of dis interes ted s hareholders a uthorizing the a mendment of the company's s tock incentive pla n to increas e the ma ximum number of s hares is s uable under the P la n; and to trans a ct s uch other bus ines s a s may properly come before the Meeting . Giant Interactive G roup, Inc . G ia nt Intera ctive G roup Inc. R eports Una udited G iant Interactive G roup Inc. reported unaudited cons olidated financia l res ults for the s econd quarter ended J une 30, 2009. F or the qua rter, (NYS E : GA) C ons olida ted F ina ncia l R es ults for the S econd Q ua rter the company reported net revenue was R MB 364.1 million compa red to R MB 373. 5 million in the firs t qua rter 2009 and R MB 504. 8 million in E nded J une 30, 2009 ; P rovides R evenue G uidance for the s econd qua rter 2008. Net income a ttributa ble to the company's s hareholders wa s R MB 231. 9 million compared to R MB 231.9 million in the T hird Q ua rter 2009 the firs t qua rter 2009 and R MB 350. 6 million in the s econd qua rter 2008. T he year-over-year decrea s e is attributable to the decreas e in net revenue. Non-G AAP net income a ttributa ble to the compa ny's s hareholders excluding non-ca s h s ha re-ba s ed compens ation was R MB 239. 8 million compared to R MB 240.2 million in the firs t qua rter 2009 a nd R MB 362. 5 million in the s econd qua rter 2008. B as ic a nd diluted non- G AAP ea rnings excluding non-cas h s ha re-ba s ed compens ation per ADS were R MB 1.06 and R MB 1. 03, res pectively, compa red to ba s ic a nd diluted non-G AAP ea rnings per ADS of R MB 1. 50 and R MB 1. 45, res pectively, for the s econd quarter 2008, and ba s ic and diluted non- G AAP ea rnings per ADS of R MB 1.06 and R MB 1. 03, res pectively, for the firs t qua rter 2009. T he compa ny reported income from operations o IAC /InterActiveC orp. (Nas daqGS : IAC I) IAC /InterActiveC orp. Appoints L ouis C as tle a s C E O IAC /InterActiveC orp. a nnounced that interactive entertainment veteran and lifetime a chievement award recipient L ouis C as tle ha s joined IAC 's Ins ta ntAction Holdings as its new C E O. Under C as tle's lea ders hip, Ins tantAction will purs ue a n expa nded bus ines s s trategy that will build upon the vis ion of true, frictionles s web publis hing, and will more effectively connect developers directly to cons umers while crea ting a ll new IP a cros s multiple ga ming pla tforms a nd genres . C as tle, a 26-yea r gaming indus try veteran, joins the online ga ming leader to help s pearhea d the tra ns ition of ma ins tream video ga mes to the web. C as tle s ucceeds former C E O J os h W illiams who will as s ume the role of fellow and chief technologis t at Ins tantAction. UOMO Media, Inc (OTC B B : UOMO) UO MO Media, Inc. R eports Audited R evenue R es ults for UOMO Media, Inc. reported a udited revenue res ults for the year ended April 30, 2009. F or the period, the company reported revenue of the Y ea r E nded April 30, 2009 $858, 137 s etting a record a s the highes t in the company's his tory with a corres ponding growth in tota l a s s ets .
  9. 9. Page 9 S oc ialwis e, Inc . (OTC B B : S C L W) S ocia lwis e Inc. Appoints Mark Miller to the C ompany's S ocia lwis e Inc. a nnounced the appointment of Ma rk Miller, former S enior V ice P res ident of DC S hoes and action s ports indus try vetera n to B oard of Advis ors the company's B oa rd of Advis ors . In this role, he will us e his extens ive network of online mercha nts , Actions S ports athletes , a nd indus try connections to pos ition B illMyP arents as a leading youth payment s ys tem. He will be in charge of s ecuring pa rtners hips with leading online a ction s ports brands a nd reta ilers a s well as building us er ba s e of young cons umers a nd their pa rents . Ma rk Miller has over twenty-five years experience working in Action S ports and youth culture bus ines s es . As a s enior executive, Ma rk focus ed on developing and executing go-to- market s tra tegies for cons umer goods compa nies . Mos t recently, he s erved as the S enior V ice P res ident a nd G eneral Ma nager of DC S hoes , a s ubs idia ry of Q uiks ilver Inc., where he ma na ged the America s ' divis ion including s trategic pa rtners hips with both reta il a nd online dis tribution channels . S NAP Interactive, Inc . (OTC B B : S TVI) S NAP Intera ctive Inc. Announces Una udited S NAP Intera ctive Inc. announced una udited cons olida ted ea rnings res ults for the s econd quarter a nd s ix months ended J une 30, 2009. F or C ons olida ted E arnings R es ults for the S econd Q ua rter the quarter, the compa ny's revenue was $784,242, a s compa red to $533, 257 for the three months ended J une 30, 2008, a 47% increa s e. and S ix Months E nded J une 30, 2009 Net income for the quarter was $46,430 as compared to net income of $144, 862 or $0.01 per diluted s hare for the three months ended J une 30, 2008, a 68% decrea s e. Income from opera tions wa s $131,035 compa red with $145,133 for the s ame period a yea r ago. Income before provis ion for income ta xes was $137,985 compa red with $144,862 for the s ame period a yea r ago. F or the s ix months , the compa ny's revenue was $1,553,214, a s compa red to $1, 053, 159 for the s ix months ended J une 30, 2008, a 47% increa s e. T he increa s e in revenue wa s prima rily due to higher enga gement on its a pplica tions in 2009 compa red to the s a me time period in 2008 as well as the introduction of premium fea tures to its a pplications to genera te additional revenue. Net income for the period wa s $112, 902 or $0. 01 per diluted s hare a s compa red to net income of $335, 371 or $0. 03 per diluted s hare for the s ix months ended J une 30, 200 Open Text C orp. (Nas daqGS : OTE X) Open T ext C orp. P rovides E a rnings G uida nce for the O pen T ext C orp. provided ea rnings guida nce for the yea r of 2010. F or the year, the company expects to s ee s ingle-digit growth for revenues , Y ear of 2010 double-digit growth for a djus ted ea rnings . K ings oft C o. L td. (S E HK : 3888) K ings oft C o. Ltd. Announces to R elea s e O pen B eta T es t K ings oft C o. L td. a nnounced that it would releas e the date for the open beta tes t of J X 3 O nline at a pres s conference to be held on Augus t of J X3 O nline 24, 2009. T he compa ny will a ls o la unch open beta tes ts of J X 2 O nline W ai Zhuan, a s is ter ga me to J X 2 O nline, and C hun Qiu W a i Zhua n, a nother s is ter game to C Q Online, on Augus t 20 a nd Augus t 21 res pectively. S o will the firs t expans ion pack of T he F irs t Myth 2 on Augus t 27. T hree more online games are under proprieta ry development a nd will meet gamers by the end of 2009, including Y ue Y ing C huan S huo a nd Du G u J iu J ia n. Y ue Y ing C hua n S huo is being developed by Zhuhai Xis ha nju S oftwa re C o. L td. (S ea s on S tudio) under K ings oft. IB 3 Networks , Inc . (OTC B B : IB NW) IB 3 Networks Inc. will C hange its T icker to IB NW E from E ffective Augus t 24, 2009, IB 3 Networks Inc. will change its O T C B B s tock ticker s ymbol to IB NW E from IB NW . IB NW B eyond C ommerc e, Inc. B eyond C ommerce, Inc. has filed a S helf R egis tration in B eyond C ommerce, Inc. ha s filed a S helf R egis tra tion in the a mount of $15.00 million. (OTC B B : B YOC ) the amount of $15. 00 million. Moggle, Inc Moggle, Inc ha s filed a S helf R egis tration in the amount Moggle, Inc has filed a S helf R egis tra tion in the amount of $12. 00 million. of $12.00 million. ValueC lick Inc . (Nas daqG S : VC L K ) B a rra ck, R odos & B acine Announces S umma ry Notice of B a rrack, R odos & B a cine a nnounced that purs ua nt to R ule 23 of the F ederal R ules of C ivil P rocedure and an Order of the C ourt, tha t a P ropos ed V alueC lick Inc. C la s s Action S ettlement a nd s ettlement for $10 million in ca s h ha s been propos ed in the a bove-ca ptioned certified clas s action a ga ins t V alueC lick Inc. A hea ring will be S ettlement Hea ring held before the Honorable Dea n D. P regers on, a t the United S ta tes Dis trict C ourt for the C entral Dis trict of C alifornia , W es tern Divis ion, 312 North S pring S treet, L os Angeles , C a lifornia 90012, at 10:00 a. m., on November 9, 2009 to determine whether the propos ed s ettlement s hould be a pproved by the C ourt a s fair, rea s ona ble, a nd a dequate, and to cons ider the a pplica tion of P laintiffs ' C ouns el for attorneys ' fees a nd reimburs ement of expens es . Wizzard S oftware C orporation W izza rd Media Announces T ii P odcas t App Hits T op 100 W izzard S oftware C orporation a nnounced the a va ilability of the T ii P odca s t iP hone App currently ra nked number 58 on the 100 T op P a id (AME X: WZE ) Lis t in iT unes App S tore Apps lis t in the P roductivity category after only three days in the iT unes App S tore. T he new App, priced a t $1. 99, is the companion App for the T oday in iP hone podcas t. In a ddition to providing direct s trea ming acces s to the entire back catalog of T oday in iP hone podcas t epis odes , it a ls o offers exclus ive bonus content with iP hone T ips , T ricks a nd T utoria ls via audio a nd video footage. T he company is offering cus tomized podca s t compa nion Apps to the 11 600 podca s ts on the W izza rd Network as well as other interes ted top podcas ts as a new mea ns to monetize the content they crea te while offering their a udience members an enha nced viewing experience. Open Text C orp. (Nas daqGS : OTE X) Open T ext C orp. Announces Una udited C ons olidated O pen T ext C orp. announced una udited cons olida ted earnings res ults for the fourth qua rter a nd full year ended J une 30, 2009. F or the E a rnings R es ults for the F ourth Quarter a nd F ull Y ear qua rter, the compa ny reported income from opera tions of $34, 395, 000 a ga ins t $29,293,000 a yea r a go. Income before income ta xes was E nded J une 30, 2009 $28,508, 000 agains t $39, 875, 000 a year ago. Net income was $19, 481, 000 or $0.36 per diluted s hare on tota l revenues of $203,356,000 a ga ins t $27,254,000 or $0. 51 per diluted s ha re on tota l revenues of $200, 269,000 a year ago. Net cas h provided by operating activities wa s $38,627, 000 agains t $44, 611, 000 a year ago. Acquis ition of capita l as s ets was a mounted to $5, 842,000 a ga ins t $1, 481,000 a year ago. Non- G AAP ba s ed a djus ted net income wa s $39.2 million or $0.73 per diluted s ha re agains t $33. 3 million or $0. 63 per diluted s hare a year a go. Non-G AAP net income wa s $41.6 million or $0. 78 per diluted s ha re on non-G AAP revenues of $203. 9 million. F or the year, the company reported income from opera tions of $97, 584, 000 a ga ins t $100, 379, 000 a year a go. Income before income ta xes wa s $80,777,000 agains t $76, 497, 000 a year a go. Net income was $56,938, 000 or $1.07 per diluted s hare on tota l revenues of $785,665,000 DigitalFX International, Inc . Digita lF X International Announces E xecutive C ha nges O n Augus t 17, 2009, Digita lF X International, Inc. 's C hief Operating Officer, Allen La ngford, res igned his pos ition with the company for (OTC B B : DG FX) pers ona l reas ons a nd the company a ppointed Mr. J ohn P retto, a ge 46, as its C hief O pera ting O fficer, pending a pprova l by the company's B oard of Directors . Mr. P retto has over twenty years of bus ines s a nd Informa tion technology ma nagement experience including s erving on the board of directors of other publicly tra ded corpora tions . T he company's B oard of Directors a pproved Mr. P retto's a ppointment as the C hief O pera ting O fficer on Augus t 20, 2009, effective a s of Augus t 17, 2009. Figure 7. Key Developments Source. Capital IQ

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